Plate IQ July 17, 2019
7 Ways To Optimize Your Restaurant Accounting
For many restaurant operators, managing the accounts payable process can be one of the most time-consuming, and least rewarding, parts of the job. On top of this — perhaps in part because of this — restaurant accounting often is fraught with human error.
The result is an inefficient and ineffective process that costs restaurants valuable staff time and profitability.
If you’re among those doing some or all of your bookkeeping manually, there is good news: Automating your restaurant’s accounts payable procedures may be one of the easiest and most effective ways to optimize operations and reduce cost.
Benefits of Accounts Payable Automation
Innovation and technology are everywhere in the restaurant industry, from the front of the house to the back office. Robots are being trained to take orders and serve food. Chefs are using internet of things (IOT) devices to monitor meat temperatures on their phones. San Francisco is preparing for food delivered by drones. One fast-food chain is using social media as an early-detection tool to improve food safety.
Yet, many restaurants continue to manage accounting and other back-of-house processes manually.
Perhaps you are among those operators still tracking expenses in multiple spreadsheets, or manually inputting GL codes. Perhaps you are still paying vendors or employees by check, or asking managers to reconcile accounts by hand at the end of the month. Perhaps you’re tracking restaurant food cost, but not in real-time. These are all areas that present opportunities to improve your restaurant’s bottom line.
Free Up Time for Customer Experience
Automating accounts payable processes can prove critical to a restaurant’s long-term success, because accounting touches so many areas of your business — from inventory control to invoice tracking to accounts payable reconciliation. Automating accounts payable can impact everything from the quality of your relationships with vendors and employees to the freshness of your produce. Perhaps most important of all is the control you gain over your cash flow, which can spell the difference between success and failure.
What’s more, automating your accounts payable process will free up valuable time for you to spend on other parts of your business, such as guest experience and innovation. You want to spend more time engaging with guests and planning ways to delight them and less time on administrative tasks like food costing and account payable invoice processing.
Where to Start – Restaurant Accounting Automation
Here are seven ways to optimize your restaurant accounting, to free up valuable time, reduce cost and improve operations at your restaurant:
1 – Digitize your restaurant accounting
If you are not already capturing all of your restaurant’s accounts payable information in one place on the cloud, start here. Find a service you like that collects line-item information from invoices and automatically inputs it into your accounting system, along with payroll and inventory. This is increasingly a standard accounts payable process for restaurants on the road to automation.
Services with optical character recognition (OCR) reduce the time you spend collecting this information — simply take a photo of an invoice and the data is uploaded automatically. Having invoices and other accounts payable information on the cloud ensures you and your team can access and track data in real-time, from anywhere. Accounts payable automation solutions also act as a digital document archive with search functionality.
2 – Pay vendors online
Online payments continue to gain traction among vendors, yet many restaurant operators have yet to transition to fully online payments. Doing so can save you time and allow for easier tracking of payments and expenses, helping to reduce costly errors. Most current restaurant accounting solutions, including restaurant bookkeeping software, include an accounts payable process flow with online payment. Other standard features include a food cost calculator to help you figure out food costs and accounts payable management.
3 – Manage inventory on the cloud
Restaurant solutions that include cloud-based inventory management allow you to track all aspects of your inventory in real-time. Gone are the days of waiting for the end-of-the-week inventory check to know how much produce is still on your storage shelves. By combining accounts payable information, you can track your inventory cost and adjust according to current market prices, which helps improve cash flow.
4 – Track credits automatically
It’s common for a manager to reject an item from a vendor, whether it was the wrong item or the wrong amount. But how do you track those credits owed to your business? Many operators do this by hand or rely on vendors to track credits for them — methods that are highly prone to error. Cloud-based accounts payable automated solutions powered by AI and machine learning can automatically track credits and losses that occur as a regular part of your inventory system.
No longer do managers need to track these manually, hoping for accuracy, or rely on vendors to track credits.
5 – Accounts payable reconciliation
For some restaurant operators, reconciling cash and accounts at the end of the month often can feel like a full-time job in and of itself. Automation can help alleviate that headache.
Accounts payable solutions can make sense of your records and automatically reconcile accounts, flagging potential discrepancies. This reduces the time you spend on administrative tasks while reducing errors and uncovering credits that may have been missed.
6 – Track and manage food costs and expenses
Automating your accounts payable allows you to unlock actionable expense data that can save your business money while reducing waste and errors. With food costing software, you can run food cost analysis, calculate food cost percentage and create food cost formulas unique to your business. Track current prices of ingredients and compare them with what’s in your storage room. From there, you can adjust menu offerings and make other changes to respond to changes in pricing.
Real-time tracking of inventory also allows restaurants to detect “leakage” or “shrinkage” — food waste or theft — by helping them keep better tabs on what and how much they are ordering.
7 – Create price alerts
Some restaurant solutions allow operators to easily view food price changes from one week to the next. One practical use for this is to keep closer tabs on food costs and adjust menu offerings, such as daily specials, based on current market prices. Set up alerts to be notified when prices of your common ingredients fluctuate up or down.
No matter how far along you are in automating your restaurant’s accounts payable process, there are ample opportunities to leverage accounting technology to optimize your operations. Doing so will free up time for you to work on the areas of your business that inspire you more than spreadsheets and paperwork.