Modern restaurants depend on various integrated technology for an increasingly large portion of their business processes. From POS systems to digital pay cards and HRIS solutions to data management software, automation is taking a front seat in restaurants’ abilities to increase efficiencies, decrease costs, and minimize overhead.
While digital automation continues to spread its wings, portions of the restaurant business remain stuck in paper-based processes. A crucial part of the business that handles supplier invoices and vendor payments, known as Accounts Payable, often falls within this category. This is detrimental to the business, as it’s time-consuming and hugely prone to human error. Restaurants working in these manual processes have a tremendous operational opportunity from accounts payable automation.
Accounts payable automation software saves your staff time by replacing tedious manual processes with invoice scanning and automatic data entry, speeds up the approval and payment processes, and increases error detection and fraud protection. Continue reading to learn how to approach automating your accounts payable process!
The Basic Functions of Accounts Payable
Accounts payable (AP) has several processes it manages in most restaurants. A few key members of the team typically handle AP. These employees are responsible for receiving invoices from suppliers, verifying the accuracy of those invoices against inventory, approving the invoice, and sending the payment to the supplier. Each of these steps relies heavily on the focus, time, and accuracy of each team member. Automating that process is valuable for a myriad of reasons.
An AP software solution establishes a complete digital chain of custody from invoice reception to review and approval, down to payment. Moreover, multiple users can access invoice information, request approvals, and view digitally stored drill-down information to understand where in the process the invoice sits. This is valuable when vendors call for payment. Empowering your team with accurate information sets the proper expectation for the vendor and sets your team up for success. Additionally, a digitized accounts payable solution eliminates human data entry errors and painfully slow manual procedures requiring staff time, freeing up your busy managers for more vital, revenue-producing activities.
How to Implement Accounts Payable Automation Solutions
When evaluating accounts payable automation software for your restaurant, it’s essential to know precisely how your current accounts payable process runs. Using data will establish your base case to make an educated decision wherein a new digital solution can increase efficiencies. A few questions to consider are the following:
- Who handles the invoice data entry?
- How long does it take them to input an invoice?
- How long does invoice review take?
- How many people touch an invoice through the review process?
- When is the supplier actually paid?
Once you know in detail how your restaurant’s AP currently functions, focus on the parts of the process that are most cumbersome and time-consuming—that’s where you have the most to gain from digital processes. Ensure your AP software solution improves those procedures.
WATCH THE VIDEO BELOW!
What is accounts payable automation, and how can it help your catering business, bar, restaurant, or other food service enterprise? Here are a few areas where accounts payable automation can help enhance your restaurant accounting processes:
1. Manual Invoice Data Entry
Most restaurants receive paper or PDF invoices and then manually enter invoice information such as vendor, address, invoice amount, items received, total due, and invoice due date into their accounting system. This is a repetitive and inefficient task susceptible to human error. The consequent costs from transposed numbers, incorrect due dates, and mistaken payments are unnecessary to a business with already narrow margins. Operators can reduce this manual work with an AP software solution that scans incoming invoices and subsequently tracks and categorizes your expenses.
What’s more, automating accounts payable processes in this area helps control food costs as well. From the occasional error to rare situations that cloud the waters for your expense tracking and invoice processing, accounts payable automation is the ideal way to reduce errors, accurately track invoices and ensure every last detail is accounted for. As any experienced restaurateur can attest, there are always circumstances that can easily go unnoticed by your accounting platform. By automating your accounts payable system, you have everything on “accurate auto-pilot” which gives you a more precise picture of your bottom line at all times.
2. GL Coding
General Ledger (GL) account codes are numbers used to assign a financial business transaction to specific categories on your General Ledger. This is especially important to accurately tack your restaurant Cost of Goods (COGs) Purchases to establish inventory level and generate accurate COG sold. Examples include the House Bank, Gift Cards, Tips Payable, etc. The larger your restaurant is, the wider the range of your GL codes. The more invoices you receive mean more GL coding for your team members. And the more lines of code required to track all your expenses increases the chance of error or miscategorization of important expenses. It’s a laborious task that takes away from revenue-producing activities and opens the door for significant errors. But there’s a better way to handle GL coding through machine learning – namely, by automating accounts payable processes. Digitizing invoices automates the GL coding process by extracting the data from each invoice and automatically classing it to each necessary GL.
3. Vendor Payments
By default, most restaurants pay vendors in disparate ways that vary according to the preferred mode of the supplier. This often includes cutting and mailing checks. The varying approaches make payments a slow, manual process. An AP automation solution reduces the manual process to scanning and approving invoices, ultimately standardizing digital processes and online banking in which operators can schedule payments to optimize their cash flow.
Checks and balances is the core of any accurate accounting system, and accounts payable automation is the ultimate “hack” when comparing multiple sets of financial records to ensure accuracy. The key is reconciling different vendor statements and balance sheets for pre-determined amounts of time. Automating your accounts payable platform allows custom reporting when reconciling statements, making it easy to identify and rectify any discrepancies in accounting records. RASI’s AP & Cash Management tools give you the flexibility and agile methodology to reconcile any statements on your terms, so you can always ensure records are accurate and up-to-date! Plus, accounts payable automation in regards to reconciliation helps prevent fraud, too.
5. Accurate Documentation
From eliminating costly paper invoices to reducing the amount of time, space and money for document storage, accounts payable automation isn’t just a more efficient way to document your restaurant’s historic ledger – it’s also a much more environmentally-friendly method! Another benefit of accounts payable automation for documentation? For franchises, paper records are usually consolidated at a central location, which means critical historical data isn’t immediately available for district managers or individual proprietors that are part of a wider network. As a bonus, accurate documentation also saves your restaurant time and money for research and proof of purchase in a use tax audit as well. By automating an accounts payable structure, everyone has access to all documentation, all the time…from wherever they’re doing business!
The Benefits of AP Automation
A fully digitized AP software solution will save time previously consumed by tedious manual data entry and verification tasks while simultaneously eliminating human errors (your restaurant managers will thank you for taking this work off their plate). Further, the software will establish a straightforward, user-friendly approval process, ensuring that invoices are routed to the right people and processed in a timely fashion. Lastly, the AP solution will standardize your payment process, reliably getting payments to vendors on time, strengthening your reputation with critical suppliers. In sum, AP software improves your internal processes, reduces opportunities for fraud, saves valuable staff time, and enhances your vendor relationships.
LISTEN TO THE FULL PODCAST EPISODE BELOW!
Selecting the Right Accounts Payable Automation Software
It’s vital to have AP software that caters to your restaurant’s needs, understands your operational processes, and, most importantly, integrates with your accounting system. Most generic accounts payable software solutions fall short of this measure — fortunately, RASI has a fully digital AP software solution uniquely built for the restaurant industry.
Years of operational experience as restaurateurs have provided RASI with the distinctive background to design a solution uniquely tailored to the hospitality industry’s challenges and opportunities. RASI assists thousands of restaurants across the nation to realize immediate profitability gains through purpose-built software and expert educational guidance. Request a demo today!