Accounting for Laundry Business

Accounting for Laundry Business

Table of Contents


Laundry is a business which never runs out. Many businesses would be struggling during the recent hard times of pandemic but Laundry business is a recession proof business and an essential part of life for most people in UAE. As long as there is demand for clean clothes and a good hygiene, a laundry business will be too on demand. In the busy life of Dubai, it might get hard to find time to wash clothes. This makes laundry industry a great option for budding entrepreneurs.

Technology advancements like mobile app services in this service industries like laundry business has boosted the economy and the business overall. Laundry business is a growing segment in the service market and it would not be a wise decision if not taken advantage of it.

By looking at the reports as a result of good accounting management can come to know if there would be different way of doing a Laundry business. Maybe a Laundromat wherein there is no much labour and majority of work is done via machines and its mostly self-service wherein coin-operated washing machines and dryers are used. High valuable machineries for Dusting, Washing, Drying, Pressings etc. are used. Commonly in this industry and the need to keep track of their depreciation, loan repayments ,rental becomes a important part.

Major areas of Accounting for Laundry Business

  1. Accounting for Cost Centre and Revenue Centre. There can be a cost centre where in all the materials are collected from different locations and is brought to single centre where its processed and then returned back to respective collection centres. Those cost need to be allocated to the revenue centre appropriately.
  2. Per Unit Costing is valuable calculation for laundry businesses to make sure the costs are lower than what a unit sells for. It can also be used to access the pricing for a unit to efficiently generate profit.
  3. Recording and keeping track of the Machineries used in a Laundry Business These machineries can be owned by the owner or can be rented out from machinery rentals. Accordingly the Depreciation, Repair/Maintenance, Rentals, Loans etc. need to be properly calculated and checked on while doing the Accounting.
  4. Recording and keeping track of the Vehicles used for delivery and collection. There can be specific cost related to the Vehicles like Fuel, Repair and Maintenance, Branding, Rentals etc.
  5. Payroll Management as the staff is very much important core of the whole businesses.
  6. Supplier and Customer SOA Reconciliation so as to maintain a healthy cash flow which is much needed in Laundry Business.
  7. Management and keep track of Inventory like chemicals used for cleanings and other services, packaging materials, straighteners, hangers etc.
  8. Different Client, Different Prices. Good accounting can help to set up prices for Target audience for example Corporate clients can avail the services at much cheaper price than individuals to attract more corporates and to boost the regular income flow.

By recording of above mentioned transactions, following benefits can be derived which supports growth of the business

  • Diversification and allocation of total cost to the revenue centre which give us much more appropriate picture of the business.
  • Preparation and presenting of Budgeted v/s Actual MIS reports
  • Per unit costing can help the management on many decisions like when to leave capacity and outsource the production in order to reduce the fixed cost
  • Appropriate calculation of major financials like GP, NP, EBIDTA for deriving current and future value of business
  • Calculating the cashflow requirements and provisions in proper manner
  • Calculating the working capital requirement
  • Assisting in defining the best business model
  • Identifying the best and worst revenue propositions
  • Future projection on the basis of current financials which helps in performing business valuation.

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