Credit card tips should be paid when ?

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Permalink Reply by Jerry Ruta on April 9, 2008 at 5:39pm

Hi Marty

Do you think the additional paperwork and time is worth the effort?

You might want to review how you determine the amount of cash due back to the restaurant at the end of each server's shift. Your POS system should be able to determine this for you.

You can also discuss with your bank when credit card transactions are paid to you. There are many banks that pay the next day. The less you have to wait for your money, the better.

I would stick to paying your service team immediately and look into ways to minimize the impact to you by talking with your banking and POS partners.

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Permalink Reply by Steve on April 9, 2008 at 6:00pm

Marty
I share your pain! Two of our restaurants are close to 100% in credit card payments and the other two are not far behind. And as you know that means there’s no cash to pay the tips which means more runs to the bank.

Fortunately we pay the tip outs the following day which allows our home office time to send a check so the bookkeeper can go to the bank to pay out the tips. Then there is the accounting problem, but I will save that for another time.

We too have contemplated putting tips on checks but that is a huge cultural change for tipped employees that are used to replenishing their cash reserves on a daily basis and who might also have a problem with full disclosure of income.

Unfortunately I’m afraid that until more restaurants decide to put tips on paychecks it might make the hiring and retention of tipped employees more difficult for those restaurants that do.

This is a great subject and I am also interested if anyone has any ideas!
Steve

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Permalink Reply by Marty R on April 10, 2008 at 6:02am

I find your approach too cut and dry....you obviously live in an area where the labor force is plentiful and labor to you is a dime a dozen....in western rural N.C. there is no labor force to speak of and you cherish your restaurant family. Sounds to me like you are too detached from the "nuts and bolts " !

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Permalink Reply by Natalie Grindstaff on April 11, 2008 at 12:59pm

We are a small independent restaurant, we struggled with this same issue, our most recent solution has been to have tip envelopes for each server which they can get the next day during the weekdays. On weekends (when we do the majority of our cc transactions and pay out the most tips) we hold the Fri/Sat/Sun tips until Wed. There was some inital resistance, but most of the staff admits that they only go to the bank once a week anyway, so it really didn't cause too much of a problem. And of course we are flexible if someone has a issue and need the money immediately. So far this has helped to alleivate some of the problems.

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Permalink Reply by Eddie Valente on April 13, 2008 at 7:54am

Wow! I can not imagine not putting on a paycheck. If you are an owner, you want the comfort of knowing the Big Bad Meanie (IRS) is not going to hit you for your share taxes on under-reported tips. If you are a server it is nice to be able show your actual income when it comes time to buy a car or a house. For the last 10 years companies that I worked for paid servers on their paychecks with no problems, assuming you have more than a cash register for a POS system. Getting servers accustomed to it make take some time for existing staff, for new staff it takes no time at all. One caveat, make sure that when you are interviewing that you tell the applicant about it up front. Long term, most professional servers like it because they are able to pay taxes up front, withour having to file quarterly and they are able to establish income levels for credit references.

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Permalink Reply by Jeremy Fogle on April 13, 2008 at 10:29am

I aggree with Jerry's post. If you can figure out a way to have the pos system take it out of the server's check-out that is definately easiest on you. I have worked for two "big corporations" that do it this way and it is great. If you don't utilize server banking it may be a little more tricky.

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Permalink Reply by NatashaCK on August 18, 2008 at 3:25pm

I dont think you will have a postive reply to your question. Your headaches will be more like migranes if you put your servers tips into there paychecks.

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Permalink Reply by Marty R on August 18, 2008 at 6:12pm

I appreciate all the feedback and I am going to finish our season with paying out every night but I guarantee that next year we will initiate a new "payout " system.The trips to the bank are crazy trying to reimburse the Petty Cash....I can't keep it up. The veterans and any new hires will just have to deal with whatever system we have in place !

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Permalink Reply by Paul Paz on August 18, 2008 at 10:37pm

Hi Marty...

It all looks good on paper until...

Have you run the idea by your staff to get their feedback? Maybe a more frequent in cycle of paying out tip income.

I have heard, and please don't take this an affront to your credibility, that lately some restaurants have move to this practice to 1) Use the tip money to float the company's cash flow 2) Have done it just prior to filing for bankruptcy so they won't have to pay the lost itps and/or wages to employees. Not pretty!

If it ain't broke... why try to fix it?

Good Luck!

Paul

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