Modern restaurants depend on various integrated technology for an increasingly large portion of their business processes. Automation is becoming increasingly important in restaurants. It helps to increase efficiency, reduce costs, and lower overhead. Examples include POS systems, digital pay cards, and HRIS solutions, as well as data management software.
While digital automation continues to spread its wings, portions of the restaurant business remain stuck in paper-based processes. Accounts Payable is a crucial part of the business. It handles supplier invoices and vendor payments.
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 reduces the time spent on manual processes. It does this by scanning invoices and automatically entering data. This speeds up the approval and payment processes, as well as 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. A digitized accounts payable solution eliminates data entry errors and manual procedures. This saves staff time and frees up managers for more important tasks that generate revenue.
How to Implement Accounts Payable Automation Solutions
Evaluating accounts payable automation software for a restaurant requires an understanding of the current accounts payable process. It is essential to know how it runs precisely. 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…identify the parts of the process that are most cumbersome and time-consuming. These are the areas where you can benefit the most from digital processes. Ensure your AP software solution improves those procedures.
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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. Accounts payable automation is the ideal way to reduce errors in expense tracking and invoice processing.
As any experienced restaurateur can attest, there are always circumstances that can easily go unnoticed by your accounting platform. Automating your accounts payable system puts everything on “accurate auto-pilot”. This gives you a more precise view 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 track your restaurant’s 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.
4. Reconciliation
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 makes it easier to identify and rectify any discrepancies in accounting records. This allows for custom reporting when reconciling statements. 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
Accounts payable automation is a more efficient way to document your restaurant’s historic ledger. It also reduces the amount of time, space, and money needed for document storage. This makes it a much more environmentally-friendly method.
Another benefit of accounts payable automation for documentation? Franchises often consolidate paper records at a central location. This means that district managers and individual proprietors in the network cannot access critical historical data right away.
Accurate documentation has an added benefit. It saves your restaurant time and money for research and proof of purchase in a use tax audit. 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). The software will create an easy-to-use approval process. This will ensure invoices are sent to the correct people and processed quickly.
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.
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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.
RASI has years of operational experience as restaurateurs. This gives them a distinctive background to design a solution. This solution is 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!
