When it comes to overseeing your restaurant’s finances and payroll, managing tips can make things tricky.

You must calculate and distribute tips fairly and transparently. However, when you have many employees working across multiple shifts, tracking tips can take a lot of time and effort.

By using the right tip distribution software, you can automate this process and say goodbye to spreadsheets and manual calculations.

This guide explores exactly what tip distribution software is, and provides insights into some of the best tip distribution systems available right now.

What is Tip Distribution Software?

Tip distribution software refers to platforms designed to streamline and automate tip distribution among employees in service-oriented industries. Tip distribution software is commonly used by restaurants, hotels, spas, and any other environments where employees receive customer tips.

The software helps employers calculate and distribute tips fairly and accurately among the staff. It eliminates the need for manual calculations, reducing errors and saving time for both employers and employees.

Tip distribution software generally either focuses on fair tip pooling or calculates the accurate tip income for each employee. The software can then distribute this to employees' bank accounts.

When running a restaurant, incorporating tip distribution software into your payroll software and restaurant management system will make your life, and your staff’s lives, a lot easier. This software will typically integrate with your POS system to accurately keep track of the tip pool in relation to your sales.

Benefits of Tip Distribution Software

You must separate the tip pool from your labor costs when managing your payroll systems. This has become increasingly difficult for restaurant managers to track, as tips are usually paid directly into the restaurant’s bank account via credit card or other forms of non-cash payments.

Tip distribution software helps you separate and manage tips, which makes managing your restaurant’s finances a lot easier.

Here are some of the main advantages of using tip distribution software.

Tip Tracking

Tip management software keeps a record of all tips received by restaurant staff, either manually entered or imported from point-of-sale systems. This makes it easy to separate tip pools from your restaurant’s sales income.

Tip Calculation and Allocation

If your business uses tip pooling, then the software automatically calculates the distribution of tips based on factors like hours worked, sales generated, or a percentage split among employees.

This means each employee receives their fair share of the tip pool, helping you avoid disputes or unfair distribution.

Customizable Rules

The right tip distribution software should let businesses set up their own rules and requirements for tip distribution. This means your business can implement a fair and transparent process around managing tips, which is something employees love.

Reporting and Analytics

Tip distribution software can also generate detailed reports and analytics, which lets restaurant managers monitor tips over time. This can help you identify top-performing employees, assess the effectiveness of different allocation methods, and make informed decisions about the best ways to pay and incentivize your staff.

Streamlined Payroll

Tip distribution software should work with your payroll provider, making the entire process of managing payroll and tips a lot easier.

Without this, calculating each employee’s tips along with their regular wages can become a very complicated process. It also opens up room for human error, which could lead to unhappy employees.

And if the software integrates with your payroll system, you can use it to do bank runs and payouts. This makes distributing tips a much more efficient process.  

Tip Distribution Software: Best of 2023

Tip distribution software is a great solution for simplifying the way employees receive their gratuities. However, choosing the right solution can be tricky, as it needs to work seamlessly with your existing restaurant software and processes.

To help you out, here are some of the best tip distribution systems available right now.

1. Tiphaus

Tiphaus offers industry-leading tip software that automates tip calculations and manages payment distribution.

The system syncs with your restaurant’s POS and automatically calculates each employee’s owed tips in real-time. You can also easily customize how tips are distributed with features for tip pooling or adding a percentage of tips to other staff members.

Tiphaus then sends instant payments to employees each day, so there’s no need to spend time calculating and managing tip payments for your restaurant.

Main Features

• Automated tip calculation
• Daily tip payments
• Custom payroll reports
• Customizable tip management

2. Dolce

Dolce is a labor-management solution for restaurants that includes tip distribution software. The platform integrates with POS and payroll systems to help restaurants manage a range of different staffing tasks.

As a tip distribution software platform, Dolce offers everything restaurants need. Tips are pulled from the POS and pooled or distributed however your restaurant wants. There are excellent insights available for how tips are generated, and the platform can automatically pay the tip money as soon as the shift ends.

Beyond tip distribution software, Dolce also offers tools for payroll integrations, managing PTO and sick time, labor compliance, employee time management, and more. So, it’s a more robust workforce management solution for restaurants.  

Main Features

• Automated tip distribution
• Customized tip rules
• Syncs with POS and payroll systems
• Additional staff management and payroll tools

3. 7Shifts

7Shifts is a robust staff management platform for the hospitality industry. The platform includes modules for hiring, training, and scheduling staff, managing payroll, and keeping staff engaged. This can make it a valuable addition to any restaurant with a large workforce

Included in the platform is a tip distribution system. This lets you create custom tip pools that match the needs of your staff and business. Tips are automatically calculated and then sent directly to payroll. You can also automatically send out daily tips to employees, which saves time and effort and offers full transparency over how tips are managed.

Main Features

• Instant tip payouts
• Automated tip calculations
• Custom tip pooling
• Part of a larger payroll and employee management system

4. Kickfin

Kickfin is a cashless tipping solution designed for the hospitality industry. The platform makes it easy to accept cashless tips and manage tip payments for employees.

Restaurants can use Kickfin to calculate tips and pay out tips instantly and automatically. The platform pays tips as soon as employees’ shifts end, which can save your business a lot of time and effort in dealing with admin. It also means employees get instant access to their tips straight after their shifts.

Overall, it’s a straightforward solution that integrates with your POS system.

Main Features

• Accepts cashless tips from customers
• Instant tip payouts
• Automated tip calculation

5. TipReports

TipReports is another straightforward tip-pooling solution for the hospitality industry. The platform integrates with some of the biggest POS platforms, like Toast, where it automatically tracks tips and helps your business distribute them.

TipReports offers advanced reporting and analytics around tips. The platform also offers tools for employee performance tracking.

You can easily use the platform with your payroll software for easy tip payouts. However, the platform does not offer automated payouts for you.

Main Features

• Automated tip calculations
• POS integration
• Detailed reporting and analytics
• Employee performance tracking
• Built on a cloud database

Conclusion

By automating tip pooling and distribution with the right software platform, your restaurant can save significant time and effort. Not only this, but it also makes it a lot easier for employees to access the tips they have earned - which is important for building stronger relationships with your staff.

This is just one of the many restaurant management solutions available that can make restaurant owners' lives a lot easier. If your restaurant also hosts events, using the right event management platform can further streamline your operations. Try Perfect Venue for free to see just how much of a difference it can make in growing your business.

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