House Accounts: The 4 Numbers Behind the Credit You Give Regulars

In this article

1. Why this is more than a notebook behind the bar
2. The 4 numbers behind house accounts
3. Calculate your own house-account exposure
4. What to do this week, this month, and structurally
5. Trust and a number aren't mutually exclusive

"Just put it on our account, I'll settle up next week" is the most harmless-sounding sentence in the restaurant trade — and the one moment your business quietly extends a loan, with no contract, no interest, no due date and usually nothing written down at all. Four numbers put that credit on the table: how long your money is really out, what one unpaid tab costs you in fresh sales, where the line sits before a regular becomes an untracked liability, and what it's doing to your own cash position in the meantime.

Every independent restaurant gets the question sooner or later: a regular who's been coming for years, a fellow business owner down the street, the office three doors down that turns up five-strong for lunch every Thursday. "Just put it on our tab, we'll sort it out at the end of the month" — and nine times out of ten you say yes, because saying no to someone you already trust feels like an accusation they haven't earned.

That's not a payment term the way a supplier grants you one, or the way you'd grant one to a catering client — a legal framework with a due date, statutory interest for late payment and, as this blog worked out in the article on payment terms, a right of recourse if it goes wrong. What's happening here is simply a house account: informal customer credit, extended on a handshake, with no contract and no guarantee the money ever comes back.

The problem isn't that you trust a regular. The problem is that almost nobody ever puts that trust into numbers — how long the money is actually out, what it costs you if it goes wrong, where the ceiling is, and what it's doing to your own cash position right now. This article gives you those four numbers, in the order they should actually drive a decision.

Everything in the calculator below runs in your own browser; nothing is sent or stored.

Why this is more than a notebook behind the bar

A card payment is in your account tomorrow. A house account sits out for an average of 38 days — more than a month during which you've already fronted the bill: the ingredients, the wages of whoever served it, that evening's share of gas and electricity. You paid for the dish before you ever collect on it. That's not a bookkeeping technicality; it's a loan, and you're the bank charging no interest.

Why this happens everywhere anyway is easy enough to understand: the regular eating on account today is usually also the regular who carries your revenue all year round. The risk feels small because it almost never goes wrong — until the one time it does, and it turns out nobody ever wrote down exactly how much was outstanding, on whose name, or since when.

The ultimate guide Finance: the complete system behind a healthy restaurant Costing, margin, cash flow and benchmarks in one overview — the background to every number in this article. Open the guide

The 4 numbers behind house accounts

In the order they should actually drive a decision: first how long the money is gone, then what it costs if it never comes back, then where the ceiling sits, and finally what it's doing to your own cash position in the meantime.

1. Days Sales Outstanding: how long your money is really out

Days Sales Outstanding — DSO — is the number that says how many days sit, on average, between the moment a guest eats and the moment you actually see that money in your account. For a card payment that's practically 1 day: the transaction settles the next business day, whether the guest is a stranger or your most loyal regular. For a formal invoice with a payment term — the subject of the article on payment terms — that's often around 30 days by statute, with a contract, a due date and interest behind it if it slips.

An informal house account has none of that, and in practice runs longer for exactly that reason: no due date to point at, no automatic reminder, and a social barrier to chasing a regular that a formal debtor never triggers. Restaurants that actually track it see the average house account drift closer to 38 days than the 30 days everyone has in mind when they say "end of the month" — and on a share of accounts that quietly becomes two or three months, because nobody ever draws a line.

The gap between those two figures — a card payment landing tomorrow, a house account only settled after five weeks — is exactly the time you're carrying the risk with nothing to show for it. No interest, no security, just the trust that the end of the month will actually arrive.

The number of days between the moment a guest eats and the moment you actually see the money.

1

Cash or card

30

Formal invoice, payment term

38

House account, average

60

House account, no follow-up

The first two figures are enforceable: a card payment settles automatically, and a payment term has a due date and a right of recourse (see the article on payment terms). The last two aren't — they're typical real-world ranges, not statutory figures, and they drift upward precisely because nothing holds them in place.

2. The bad-debt break-even: what one unpaid tab costs in NEW sales

This is the number that makes it concrete, and remarkably few operators have ever run it. An unpaid tab doesn't cost you the amount on the tab — you've already spent most of that on ingredients, wages and overhead. It costs you what's left after all of that: your net margin. And to earn that same profit back, you need a multiple of that amount in brand-new sales.

Run it with a tab of €525, a fairly typical monthly amount for a regular or a small office lunching weekly. At a solid net margin of 8% — the top of the band this blog established in the article on restaurant benchmarks — you need €6,563 in brand-new sales to earn back that same profit. That's 12.5 times the size of the original tab, and that's at a HEALTHY margin.

At the more realistic average that same article notes for an independent operation, around 5%, that climbs to €10,500. And at a thin margin of 3% — closer to what many independents actually keep — you need as much as €17,500 to make up for that one unpaid tab. The lower your margin, the harder every euro of bad debt hits — the exact opposite of the instinct that a small tab can't be much of a problem.

This is also why a single unpaid tab is rarely a problem on its own: the real problem is that nobody ever puts this figure next to the sales that would actually have to offset it. The calculator further down runs that math with your own numbers.

How much brand-new sales delivers the same profit as the tab you never collected, at three different net margins.

The unpaid tab itself€525

New sales needed — at 8% net margin€6,563

New sales needed — at 5% net margin€10,500

New sales needed — at 3% net margin€17,500

The thinner your margin, the bigger the multiple — at 3% net margin that's 33.3 times the size of the original tab. The margins are the band this blog set out in the article on restaurant benchmarks for an independent operation, not a guarantee for your own result.

3. The credit ceiling nobody writes down

Ask an owner how much credit a single regular may build up before it becomes a problem, and the answer is almost always silence, followed by "it depends". That's the real risk — not the credit itself, but the absence of a number. A bank, a supplier and an insurer all work with a credit limit per client. A restaurant running on trust usually works with none at all.

Without a ceiling, a house account grows unnoticed: a regular who used to let €525 build up lets it run for two months instead of one after a while, and nobody notices because there was never a moment when someone said "that's the limit". By the time it's noticed, the regular you never had a problem with is suddenly the person with the largest outstanding balance in the building — and the most awkward one to raise it with, precisely because you've known each other so long.

A ceiling doesn't need to be strict to be useful. Even a simple rule of thumb — never more than one month's worth outstanding per account, and a fixed cap on the total of all house accounts combined — gives you something to measure against. The calculator further down shows what your own house accounts currently represent in total; that figure is the first benchmark for a ceiling you still have to set yourself.

4. The float: what that outstanding tab costs your own cash position

Every euro sitting on a house account is a euro that isn't in your till while you're still paying everything attached to it — the supplier, the wages, the rent. That's the exact same mechanic the cash-flow planner on this site already models, just running the other way: there, YOU are the one getting 30 days from your own supplier; here, you're the one granting that delay to your own customer. Where supplier credit eases your cash position, customer credit does exactly the opposite.

Over a year, that's not a small amount. Twelve house accounts at €525 a month each represent €75,600 in sales you front interest-free across the whole year — money no bank would ever lend you for nothing, and that you're giving away here without a rate, a contract, or even a conscious decision ever entering into it.

If you already track your cash plan with the cash-flow planner, you can enter the outstanding balance of your house accounts there as the opposite kind of line item — a receivable rather than a debt. That way the float stops living in a notebook behind the bar and sits next to the rest of your liquidity, where it belongs.

Calculate your own house-account exposure

Enter how many house accounts you allow, the average monthly amount on each, your own net margin and how long it typically takes to settle. The tool shows what's currently tied up in cash, what one fully unpaid tab costs you in fresh sales, and how much interest-free financing you're giving away every year.

If you know from experience what share of your house accounts is never fully collected, enter that too — the tool will immediately work out what that bad debt costs you on average per year. Everything runs in your own browser; nothing is sent or stored.

Treat the result as the start of a conversation with yourself, not a verdict on your regulars. A small outstanding amount isn't a problem today — the question is whether there's a ceiling keeping it that way, and whether you've ever said that ceiling out loud.

What to do this week, this month, and structurally

Scrapping customer credit overnight isn't an option for most restaurants — it's exactly the kind of trust that keeps regulars coming back. This order starts with visibility, then sets a rhythm, and only then bakes it into your cash plan.

This week: put everything currently outstanding on one list

• Gather every notebook, scrap of paper and loose note behind the bar into one overview: who's outstanding, since when, and for how much.
• Run the calculator above with your own numbers to see what the total actually represents today.
• Flag the two or three oldest outstanding amounts separately — those are the tabs that deserve a conversation first.

This month: give every house account a rhythm and a ceiling

• Agree a fixed settlement day with every regular or office — weekly or monthly, but always a concrete day, never "soon".
• Set yourself a simple credit ceiling per account, for example never more than one month's worth outstanding at a time.
• Send one polite, standard reminder once that ceiling is reached — the same wording every time, so it never feels like a personal attack.

Structurally: let it feed into your cash plan

• Enter the total of your outstanding house accounts as a receivable in the cash-flow planner, alongside your other running items.
• Revisit your own net margin via the article on restaurant benchmarks — the thinner that margin, the stricter your credit ceiling should really be.
• For your biggest, most structural clients (an office that comes weekly), consider a real agreement on paper with a fixed payment term, like the one in the article on payment terms — that's not distrust, it's simply the same protection you already give a supplier.

Trust and a number aren't mutually exclusive

None of the four numbers above says you should stop letting regulars eat on account. They say it's a financial decision — with a duration, a cost when it goes wrong, and a ceiling — and shouldn't simply be left to a notebook and the memory of whoever was on shift that night.

A card payment of €525 costs you nothing beyond the usual transaction fee. That same €525 on a house account, if it goes wrong, can quickly cost you €6,563 in fresh sales to make up for. The gap between those two figures is exactly the trust you're giving away for free today — sometimes rightly, sometimes not, but almost always without a number ever being attached to it.

Put that number on it, track your biggest house accounts, and let the total feed into your cash plan. Then customer credit stays what it should be — a favour to those who've earned it — instead of a loan nobody ever actually approved.