With rising food and labor costs already cutting into restaurants’ slim margins, time-consuming tasks such as manual invoice management and accounts payable processes simply aren’t sustainable. Automating essential but low-value tasks including data entry and GL coding makes invoice management and accounts payable more efficient. Just as important, automation makes it easier for both the kitchen and accounting departments to stay on top of expenses and control back-office labor costs by reducing the busywork required to keep a restaurant running.
When using outdated systems and practices, even the most skilled accounts payable department can only do so much to streamline invoice processing. Factors that contribute to extended invoice processing times include:
- Data entry: Keying in even a single invoice takes several minutes, especially if line item detail is sacrificed in favor of GL coding. A GM receiving more than a dozen invoices per day and has other pressing tasks to attend to, and finding the time to enter invoice data is no small matter.
- Approvals: Sending paper invoices for approval leads to significant delays, and a simple signature can become a big blocker to productivity.
- Vendor payments: A single check run may seem efficient because it doesn’t take much time. But when restaurants do multiple check runs each week in order to capture early payment discounts or avoid late payments, the time quickly adds up.
- Statement reconciliation: Reconciling statements may be a best practice, but it’s so time consuming that many restaurants simply skip the important task for all but a few key vendors.
- Exception handling: Where there are invoices, there are exceptions. Depending on complexity, resolution can stretch over several days and miles-long email chains.
Achieving true back-of-house efficiency means reassessing legacy processes. Technology that automatically processes invoices and manages accounts payable enables you to stay on top of your books without investing long hours in low-value tasks.
Piles of perishables, scarce storage space, and scant staffing. Combined, they create one of the biggest challenges for restaurant AP: invoice volume. Among Plate IQ customers, invoice volume increases an average of 13 percent annually—a number that skyrockets for restaurants following the trend of sourcing local ingredients.
Our data shows that, every month, the average restaurant:
- Receives more than 166 invoices
- Works with more than 35 vendors o Sends at least 50 vendor payments
- Reconciles as many as 30 statements
As invoice volume continues to increase, the accounting department, general managers and kitchen staff are affected as they receive more deliveries and have more inventory to manage. AP automation software makes it possible for restaurants to scale their invoice volume—and their operations—without increasing the size of their accounting staff. By eliminating unnecessary manual work, enabling hyper-efficient workflows, and making the hand-off from back-of-house to back office more transparent, AP automation optimizes traditional accounting processes.
Adding to the problem of invoice volume is the growing number of ways that vendors submit invoices for payment. Completing simple tasks such as tracking due dates and paying bills can require logging into multiple software systems.
Electronic invoices may seem like a solution, but it’s a partial one at best. Electronic invoices are an improvement in terms of filing and storage, but they do little to alleviate the difficulties of processing and managing invoices that arrive in other formats. Accounts payable automation software organizes all your invoices—paper, electronic, and EDI—in a single interface.
Invoice errors are also likely to eat into restaurants’ profit margins. A slip of the finger can result in hours of time spent tracking down a mis-keyed total, while a duplicated payment can become a snafu that takes weeks to unravel. Even errors that don’t result in duplicate or over-payments are a costly inefficiency that restaurants can ill afford. AP automation software uses validations to monitor the accuracy of extracted data and warns users about any duplicate payments.
Vendor Errors originating from supplier-submitted invoices are even more difficult to manage than internal mistakes. Consolidating costs by GL code can hide problems, as a reduced price for one item—for example, produce that’s just come into season—offsets an increase in another item attributed to the same expense account. This is where AP automation software is a game changer. Rather than relying on opaque GL codes and complicated spreadsheets (and even more complicated formulas), automation technology captures more and better data and produces detailed reporting that’s always current. And instead of simply recording transactions and cutting checks, restaurants’ AP departments can become powerhouses of data-driven insight and cost savings.
From receipt to processing to filing, it takes time to get an invoice through your accounts payable system. The situation is even more complicated for restaurants that submit bundles of invoices to the home office once a week. By virtually eliminating manual data entry and streamlining approval processes, automation can easily shave days off even top operators’ invoice processing times without implementing expensive ERP systems or employing an army of bookkeepers. By leveraging the power of accounts payable automation, restaurants can upload invoices from all their locations to a centralized account in the cloud, process them in a day or less, and get them approved for payment in mere hours. That efficiency enables real-time cost reporting, positioning those restaurants to proactively protect their bottom lines, not just belatedly react to losses when their P&Ls are completed.
In most cases, efficiency is about cutting costs—costs that creep even higher when errors, exception handling, and funds lost to late payments are taken into account. No restaurant would dream of washing every dish by hand. Instead, they reserve that degree of manual effort for fragile pieces like stemware or pots and pans that won’t come clean without serious elbow grease. It’s time accounts payable was treated the same way: as a series of tasks, many of which can be automated, leaving only the most delicate or complicated work to be done by hand.