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10 mins read

Accounts Payable Automation

A Multi-Course Workflow: Accounts Payable for Restaurants

by Yooz on 05.24.2022

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Next time you sit down in a restaurant, spend a minute to take in all the little details that make your meal an experience. A host will seat you and provide you with a menu, a server tell you about the daily specials and perhaps recommend a drink, and a busser will bring you water. The server then works with the kitchen staff to make sure the dishes for your party arrive in the right order and at the right seat. At some point you’ll settle the bill and leave then at which point the cycle repeats for somebody else.


This is the front view. However, in the background, a thousand little cogs have to turn smoothly to make this process and the restaurant itself a viable enterprise. These details involved in running a hospitality business are largely hidden from diners’ eyes but all the factors that enable you to have this experience? Just keeping track of the inventory and labor costs on a daily basis and ensuring that vendors are happy are all crucial to survive and thrive in an industry defined by razor-thin margins. Thanks to the use of accounts payable automation, restaurants stand a better chance of making a profit from cooking up and serving up memorable food and drink.


That said, restaurants operate under conditions and face daily challenges that are unique to their industry. They range from juggling extremely time-sensitive inventory, expenses which vary from month to month, and invoices from many vendors who expect prompt payment to correctly paying a roster of employees, some of which depend on tips for part of their income, on short cycles. There are just some of the factors that make restaurant accounting unique.

 

Dishing Out the Details in Restaurant Accounting

 

Accounting, and the accounts payable workflow in particular, leave little time to maintain the books and little room for errors. That’s true no matter whether we’re talking about a single fine-dining establishment or a fast-food franchise with dozens or even hundreds of locations spread out across a large geographic footprint, including international outlets.


The hospitality and service industry has to track costs, inputs and outputs in minute detail, day by day, and also needs to keep the communication flowing around all aspects of its operations, from supply to delivery, plus managing its properties and staff. Whether you’re serving burgers to customers in a rush, packing up food for delivery or carefully plating heirloom vegetables for a special dish, there’s one ingredient nobody should do without: a customizable yet easy-to-use accounts payable platform.


AP automation done right will streamline the complex workload of a restaurant. It lets operators save unnecessary costs and waste, prevent errors and delays, and improve communications, from suppliers to staff and from purchase to payment.

 

How the Accounts Payable Workflow Ensures a Well-Stocked Restaurant

 

Let’s start with keeping the kitchen stocked. Managing vendor relationships is a science and an art for any business, but running a restaurant, let alone multiple locations, gives a new meaning to the term “just in time.” Ingredients, fresh and perishable produce or dry goods and frozen supplies have to be delivered and replenished on a daily basis on a schedule that often runs like clockwork.


Deliveries come in as soon as the day starts, long before the first customers show up. They must be counted and accounted for in order to be ready for meal service. Missing a key delivery from one of the many suppliers is not an option, as customers won’t like to hear you’re out of bread, buns, patties, vegetables, or other staples. A disruption to this delicate supply chain can wreak havoc on the daily menu item availability and as a result, on the day’s expected sales numbers.


Likewise, vendors work on time sensitive margins so they love to be paid on time consistently and obviously without errors and delays. Ideally, they want to be able to immediately find out the status of their invoices and hate being given the run-around when they have questions.

 

 

Restaurant Accounting Revolves Around Keeping Suppliers Happy

 

Answering vendor inquiries can eat up valuable time when accounting staff should be doing something else, for instance sourcing suppliers for coveted seasonal items or calculating the prime costs that are the key metrics for any restaurant. Both sides of these regularly occurring B2B transactions have a shared interest, then, in things running as smoothly as possible. Optimal visibility improves cash management and makes vendors happy.


The accounts payable workflow for restaurants is different for another reason. Beyond the daily dance to order the right amount of supplies, having enough ingredients on hand and paying for them on time, restaurants also need to perform detailed financial analysis on a daily basis. That’s where real-time purchase order and invoice data are key.


A similar amount of fine-grained information is necessary to do weekly profit and loss statements. It helps a mom-and-pop bistro in the same manner as a global brand with lots of franchises; both need figure out if they are making money and lets them take corrective action such as adjusting prices on a menu or switching to less expensive ingredients.

 

Capture All Invoices With State-of-the-Art Restaurant Accounting

 

A smart platform for AP automation can address all of the challenges mentioned above including keeping everyone in the know, from the chef to the manager to the centralized finance function at a larger organization. A cloud-based platform like Yooz will address all the restaurant industry specific concerns, handling the entire workflow from purchase to payment in a secure and scalable way that grows alongside both a restaurant’s volume and supplier network. Let's examine a few ways how this is done.


It starts with multi-channel capture. The first step in the accounts payable workflow is all-too-often still paper-based, with invoices and delivery receipts coming in all shapes and sizes, such as a dog-eared document slapped on top of crates of produce. All this during a period where time - down the minute - makes a difference.


Typically, in other industries or even larger size restaurant organizations, there is a finance department with an AP team who handles these documents, getting those invoices entered into their accounting system as quickly as possible, day in and day out comparing the items delivered to the items ordered, and making sure the due dates aren’t missed. In smaller restaurant organizations this person is often the manager or owner themselves, and the entire AP process is just one of many tasks. In other words, lots of papers plus manual entry increases the risk of leaving out invoices, getting details wrong, or not catching an error from the supplier’s side.

 

Why Every Chef Should Use Machine-Learning For Their AP Workflow

 

AP automation, by contrast, will correctly capture the vast majority of invoices regardless of their format. Paper invoices, faxes, and/or email attachments are all ingested and the process automatically moves on to data extraction. In the case of Yooz, the system has the advantage of having seen tens of millions of invoices from tens of thousands of businesses and vendors across a wide range of industries, so the platform will accurately recognize almost any document.


Optical character recognition and a giant helping of artificial intelligence are capable of making sense of what’s on an invoice for 200 burger buns or 15 pieces of salmon. Machine-learning algorithms will extract all relevant info, correctly GL-code it, and even perform a three-way match with existing purchase orders if they’re in the system.


Even better, the software constantly learns as it sees more invoices and will require little to no human intervention at all. Think of it this way: let the robots take over the repetitive tasks in your back office, so the humans can focus on the storeroom, the kitchen, and the front of the house. And if that paper attached to the produce gets stained or torn? No worries, the electronic format didn't have that problem!

 

No Unwanted Specials: AP Automation for Restaurants Cuts Down on Errors

 

The system will automatically flag exceptions for human review or move along all invoices that check out for approval. Customization is key here to accommodate the individual needs of a restaurant depending on factors such the number of its locations or even the type of food it serves.


Thanks to smart, customizable workflow rules that any business can adjust to their own taste, invoices dealing with food stuffs can be routed and approved by the chef, while big-ticket or high-volume items will automatically go to the finance team, the general manager, or even the CFO. Invoices can also be routed according to a regional split or based on special set-ups such as airport-only locations or new establishments.


Invoices can also be routed according to a regional split or based on special set-ups such as airport-only locations or new establishments. Additionally, when you have a cloud-based platform, review and approval can happen from anywhere at any time. All you need is a browser or a mobile device.

 

Never Lose Invoices With Restaurant Accounting in the Cloud

 

Since all documents are indexed and stored in the cloud, no invoice is at risk of getting lost and can be opened anywhere, at any time. Employees can be on the road, working at a different location, in a different time zone -- cloud-based AP automation empowers them to get the digital “paperwork” done as quickly as possible.


Permissions for document access are equally flexible and customizable, so when an organization grows or staff changes, you can be sure that the right people will receive the right invoices to speed up the process. In short, AP automation puts no limits on the creativity of the AP staff or individual restaurant owner to slice and dice the workflow to their liking.

 

Short Order: How Restaurant Can Save 80% on Invoice Processing Costs

 

What’s more, filing cabinets or storage costs are a thing of the past, and real-time information makes it easy to calculate the cost of goods sold, crucial for any restaurant business. Speaking of costs, AP automation cuts processing costs per invoice by 80% and can reduce cycle time to hours, empowering restaurants to pay invoices the same day. That makes it possible to reap all early-pay discounts and avoid late payments even if you operate in a high vendor environment like the hospitality industry.


Once you’ve disentangled yourself from the mess of a paper-based process, setting up and executing payments should be next on your list. It’s worth repeating that restaurants need reliable vendors and paying them on time every time is crucial.


The same goes for payroll. Unlike other industries, restaurants with their bussers, waiters, cooks, and other staff have to deal with properly accounting for tips when making payroll, often at the end of the day instead of biweekly or monthly pay cycles. Therefore, getting all that information into one single system with the same intuitive interface helps streamline things and ensures staff get paid in a timely and consistent manner.

How much can I save

 

Serving Up Painless and Just-in-Time Payments With AP Automation

 

With a state-of-the-art platform for AP automation such as Yooz, making payments to suppliers and staff is also a snap. On the desktop or mobile device, pick an invoice to be paid, select the full or partial amount and choose the payment schedule. Paying for recurring orders such as daily deliveries of produce, baked goods, meat or beverages can be automated to happen at regular intervals. Once an invoice is approved, the system will take care of the rest.


All the vendor has to do is provide an email address and select their payment method of choice, ranging from paper check and e-check to payment by virtual credit card. The platform handles everything on the backend, including alerting the supplier when to expect payment. Its really that fast!


Using a virtual card has several added benefits. It makes it easier to track spending by customizable categories, it creates a detailed digital audit trail, protects against fraud and offers a restaurant a new revenue source in the form of cash-back for each invoice. When it comes to cash management, that’s low-hanging fruit to partially make up for the thin margins.

 

Farm to Pivot Table: How Restaurants Can Keep an Eye on Their Key Metrics

 

The last part of the AP automation workflow is also highly relevant for being successful as a hospitality business. Keeping detailed books is nice, but it only pays off if you can easily make sense of your invoices and other financial documents that quickly pile up. There’s a solution to this challenge, too. Exporting invoice and payment data to a financial software or ERP system helps to almost instantly reconcile the books instead of battling spreadsheets after a long shift in the kitchen. Creating a financial or auditing report is finally simplified.


In addition, when you implement a modern automation platform, it will seamlessly integrate with most accounting or ERP packages that work for your establishment. Yooz, for instance, connects with more than 250 such software packages that serve small, single-location businesses as well as global franchise brands.

 

Recipe for Success: It’s About Making Great Food, Not Worrying About the AP Process

 

The results of this integration are tangible. Having up-to-date information at your fingertips creates what we like to call financial intelligence. It adds value to many tasks almost instantly. It gives restaurants a powerful all-in-one dashboard to track their spending on key categories such as food, drink, rent, and labor. And it lets them keep a watchful eye on their cash flow, overall productivity, and many other metrics.


Running a restaurant, after all, should be about delighting guests with food, not worrying about billing and accounting. There’s a recipe to get this right, and all the ingredients are readily available. Why not position your business for growth and set up a customized AP workflow to start saving while you’re cooking.

 

Learn more now about AP automation