What Is a House Account for a Bar? Understanding the Basics

If you own a bar, you may have heard of a “house account.” A house account is a type of special arrangement that allows a patron to make purchases without having to provide payment each time. This type of account has many benefits and is a great way to ensure that customers are able to purchase drinks and other items without having to worry about payment each time. There are several different types of house accounts, and it’s important to understand what they are, their benefits, and the considerations to make when setting up one.

What Is a House Account?

A house account is an arrangement between a bar and a patron wherein the bar allows the patron to purchase drinks and other items without being required to pay in full each time they make a purchase. Instead, the patron is allowed to open a credit line with the bar, with an agreement established between them to pay at an agreed-upon date or time. This type of arrangement can be beneficial for both parties, as it allows the customer to purchase their drinks without needing to worry about payment each time, and the bar can be sure that it will receive payment for the items eventually.

House accounts can also be beneficial for the bar in other ways. For example, it can help to build customer loyalty, as customers may be more likely to return to the bar if they have an established credit line. Additionally, it can help to increase the bar's sales, as customers may be more likely to purchase additional items if they don't have to worry about paying for them right away.

Benefits of Setting Up a House Account

Setting up a house account can be beneficial for both the bar and the customer. For the bar, it can help build customer loyalty, as customers who have house accounts may be more likely to return and make more purchases than one-time customers. It can also provide more convenience for customers, as they won’t have to worry about having cash or credit cards on hand. The bar also has the advantage of being able to offer discounts or special deals on drinks and other items, which can be attractive to customers.

In addition, setting up a house account can help the bar track customer spending habits, which can be useful for marketing and promotional purposes. This can help the bar target customers with specific offers and discounts that are tailored to their individual preferences. Furthermore, it can help the bar better manage its inventory, as it can track which items are selling the most and adjust its stock accordingly.

Types of House Accounts

There are several different types of house accounts. The most common type is a prepaid account, in which the customer pays a certain amount up front and then is able to purchase drinks, food, or other items up to that amount. Another type is a post-paid account, in which the customer agrees to pay at a certain date or time after making each purchase. Finally, there is a hybrid type of house account, in which customers can use their credit cards to make purchases and are allowed to settle their balance at an agreed-upon date or time.

House accounts can be beneficial for both customers and businesses. Customers can enjoy the convenience of not having to carry cash or worry about running out of money, while businesses can benefit from increased sales and customer loyalty.

Setting Up a House Account

Setting up a house account is relatively simple. First, it’s important to decide which type of house account you want to offer. Then, you need to identify and contact potential customers who might be interested in opening a house account. Once you have identified potential customers, you need to set up an agreement with them, outlining the terms of the house account. This agreement should include details such as payment terms, any discounts or specials that will be offered, and any conditions or restrictions that may apply.

It is also important to ensure that the house account is properly set up in your accounting system. This will allow you to track payments and keep accurate records of all transactions. Additionally, you should consider setting up a system for collecting payments from customers who have opened a house account. This could include setting up an online payment system or using a third-party payment processor.

Tracking & Reconciling a House Account

It’s important to track and reconcile all house accounts on a regular basis. This means keeping records of all purchases made with the house account and reconciling this information with the customer’s payments at the agreed-upon date or time. This is important because it helps ensure that any discrepancies can be identified quickly and that the bar receives full payment for any purchases made.

It is also important to keep accurate records of all house accounts, including the customer’s name, contact information, and payment history. This will help the bar to better manage their accounts and ensure that all payments are received in a timely manner. Additionally, tracking and reconciling house accounts can help the bar to identify any potential fraud or misuse of the account.

Establishing Rules for Use of a House Account

It’s also important to establish rules for the use of a house account. This includes things such as setting limits on how much can be purchased with the house account in one day or week, determining when payments should be made, and how many people are allowed to use the account. It’s also important to clearly communicate these rules to customers so that they understand what is expected of them.

Advantages and Disadvantages of Using a House Account

Using a house account has both advantages and disadvantages. On the plus side, it can help build customer loyalty, make it easier for customers to make purchases, and allow bars to offer discounts or specials. However, there can be downsides as well. For example, it’s important for bars to keep track of all transactions and make sure payments are made on time in order to avoid any issues with customers not paying their bills. Additionally, there is always the risk of customers using up their credit line and not paying their bills.

Troubleshooting Common Issues with House Accounts

If you encounter any issues with your house account or customers not paying their bills on time, it’s important to have a plan in place for troubleshooting these issues. This could mean implementing stricter rules for use of the house account or requiring customers to pay in full at the time of purchase. Additionally, you may want to consider implementing measures such as charging late fees or requiring customers to provide additional security deposits.

Considerations for Choosing a Payment Method for Your House Account

Finally, it’s important to consider which payment method you want to use for your house account. If you choose a prepaid account, you may need to consider ways to securely collect payments from customers up front. If you choose a post-paid account, you may need to consider how you will track payments from customers and how you will ensure that payments are made on time. Additionally, you may want to consider using payment processors such as PayPal or Stripe in order to provide added security for both you and your customers.

In conclusion, having a house account for your bar can be beneficial in many ways. It can help build customer loyalty, provide more convenience for customers, and offer discounts or specials. However, it’s important to understand all the considerations involved in setting up a house account, such as different types of accounts available, setting up an agreement with customers, tracking payments, setting rules for use of the account, troubleshooting common issues, and choosing a payment method.