Tip pooling can be a tricky thing to get right if you do it manually. As food businesses rely heavily on tips, you want to make sure that all of your employees are treated equally and fairly, and that tips are managed efficiently. Tip distribution is an important restaurant management responsibility, which is why using tip-pooling software is so valuable.
Let’s explore some of the main benefits of tip pooling software, and why businesses in the hospitality industry should be using it.
Benefits of Tip Pooling Software
Fair Tip Distribution
First and foremost, tip pooling software makes it easy to distribute tips among your employees.
Tipping can be tricky to manage, especially when you have many different employees working busy shifts. But, by using tip pooling software, you can rest easy, knowing that all tips are distributed fairly amongst all eligible employees.
Without this software, tip sharing can become difficult to track. This can result in disputes and disagreements among staff members. But, by using tip poling software, the process becomes fully transparent from the moment the shift starts.
Easier Business Administration
Manually handling tip pooling can be an incredibly time-consuming task. Not to mention the fact that manual tip pooling is prone to all kinds of errors.
As tips are not always accounted for in your POS system, it can be tricky to manage exactly how many tips were earned and who generated which tips. This becomes even more complicated when employees' tips come from multiple sources - like cash and card payments.
If you pool tips and manage this manually, you add a whole extra level of admin and complications to your payroll process. However, with tip pools managed by software, the entire process of managing tips is automated. This saves time and effort, eliminates errors, and makes handling the extra money far easier.
Not only this, but the right tip-pooling software can also automatically distribute tips for you. This eliminates the administrative burden of paying out tipped employees.
This automated tip pooling method also keeps your business’s cash flow separate from the pooled tips. Doing this is essential for maintaining clear financial records and improving accounting efficiency.
Improved Teamwork and Morale
When you use tip pooling software, tips will always be distributed evenly and fairly. This takes the pressure of worrying about tips off your employee's shoulders. It also means all employees are treated completely fairly every shift.
Whenever employees receive tips, they don't have to focus on calculating or properly distributing them. Instead, they can just carry on with their job. Taking this approach helps to create a far more positive work environment.
This boosts morale and fosters a stronger team spirit. Of course, reducing the stress and effort in tip pooling also helps employees become more productive at work.
Improved Transparency in Your Business
Tip pooling software makes life easier, but it also helps you establish a very clear system for how the tip pool is managed.
All employees must be on the same page when it comes to tip sharing. This helps each shift run more smoothly and avoids any potential conflicts.
By using tip pooling software, you can be completely transparent about how tips are accepted, held, managed, and distributed. With this added layer of transparency comes extra peace of mind for your employees.
You Can Customize Tip Allocation
Not all food businesses manage tips in the same way. By using tip pooling software, you can select exactly how the tip pool will work to match the specific requirements of your employees.
This means each business can set its own tip pooling laws, to ensure all employees are happy. You can also use the tip-sharing system to experiment with different types of tip-pooling methods until you find an approach that works best.
Valuable Data Insights
Using tip pooling software doesn't only help tipped employees manage their money, but it also gives your business some great insights.
You can use tip pooling software to see things like tip trends, peak business owners, and customer preferences. This data can be incredibly valuable in helping you understand things like who your top-performing employees are, how best to prepare your staffing operations, and how your different employees are performing.
Easier Reporting and Accounting
Tip pooling software streamlines your accounting processes, making it easier to manage tip income, expenses, and tax obligations.
As this software controls and distributes tips, you don't have to take a tip credit or worry about credit card processing fees affecting tips. Instead, the tip pool is automatically separated from your business finances, and all tipped workers are paid out via the software.
It Makes Scaling Your Business Easier
Implementing tip pooling software makes sense for food businesses of all sizes.
No matter what kind of output your restaurant is operating at, tip-sharing software will make it a lot easier to manage operations as your business grows. You can adapt the software to meet the demands of your restaurant, and as your restaurant grows, your tip pooling system can grow with the restaurant.
This makes it a lot easier to bring on new employees and manage tip-producing work on a grander scale.
Keeps Your Business Compliant
Using tip pooling systems adds transparency to your operations, and ensures your mandatory tip pool follows a very clear structure. This helps to keep your business compliant with the Fair Labor Standards Act (FLSA) and ensures that every tipped employee is treated equally and fairly.
So, not only is this important for your internal systems, but it helps keep your business up to date with federal law too.
If you still rely on a tip jar, then it's time to start pooling tips with the right software. Using the right tools makes it easy to implement a tip-pooling policy that keeps your employees happy and your business running smoothly.
If you run a venue that hosts events, then you’ll also want to implement an event management solution to improve your operations. Try Perfect Venue for free to see how it can help grow your hospitality business.