Efficient financial management and accounting is the difference between the success and failure of every restaurant business. Since the competition is very high and profit margins are slim, a restaurant business must make use of efficient bookkeeping and accounting to ensure sustainable growth post-pandemic.
Restaurant Accounts Payable – The Most Common Pain Point in Restaurant Accounting:
While the standard accounting principles and practices remain the same, restaurant accounting has its nuances. From accounting periods to inventory management, sales tracking and payment processing, restaurant accounting has its way of performing accounting operations for better financial management and sustained development. But Accounts Payable is where restaurant accounting strays further away from the path of the general accounting process. And naturally many restaurants, especially the budding ones often fall short of efficiently managing their Accounts Payable which is crucial in fluctuations and margin-sensitive restaurant industry.
In this blog, with the inputs of our restaurant accounts payable experts at Back Office Accountants, we help you understand how Restaurant Accounts Payable differs from general AP. And then give you a solution to simplify and optimize the restaurant AP process for improved financial accounting and management. Read on:
Why restaurant accounts payable is challenging?
Accounts Payable in general is the most time consuming, tedious and errors prone accounting process in accounting for any business. All this tediousness and errancy only tend to amplify when it comes to restaurant accounts payable for the following reasons:
High volume of invoices: The restaurant industry has to deal with a higher than normal volume of invoices when compared to other industries. Also, this high volume of invoices tends to increase year-on-year. In addition to this restaurant accounts payable had to process a diverse set of invoices that arrive from versatile vendors. More invoices demand better organization, entry, processing, and approval.
Processing high volume and diverse invoices also increase the chances of errors burning more time and money. Also with multiple touchpoints, the workflow tends to be disjointed lacking visibility making it difficult to audit or improve. Without adequate tools and expertise to efficiently deal with this high volume and diverse set of invoices managing restaurant accounts payable will be a herculean task for any AP team.
Ad-hoc Invoice adjustments: If processing a high volume of invoices is in itself a time-consuming activity, ad-hoc adjustments to the invoice that usually happens in the restaurant industry is another headache that must be endured.
Given the high volume purchase, the chance of errors from the vendor is high. There can be cases when the order from the vendor doesn’t meet the set quality standards and at times the restaurant may not even receive the order in the first place. In such cases, the invoices had to be adjusted either in the form of credit or short-pay. As the chances of these ad-hoc adjustments are higher the restaurant accounts payable team will have to maintain diligent documentation with proper reconciliation. Without a dedicated Restaurant AP help, these invoice adjustments will end up burning precious time of the resources.
Price fluctuation: Restaurants too have both fixed and fluctuating expenses but the latter occupy the major share which is why it can become difficult to budget. While loan payments, rent utilities make fixed payments, food costs, and hourly wages are part of fluctuating prices that are most volatile. Profits depend on these fluctuating expenses which are difficult to track and manage without dedicated support which is not often possible with an in-house accounting team.
Not only does lax restaurant accounts payable may lead to double payment and errors it also strains other accounting processes. And this is why every restaurant business needs a dedicated restaurant accounts payable team either in-house or outsource to efficiently manage and optimize the entire restaurant accounts payable process for sustained growth.
How Back Office Accountants can help?
As one of the best remote accounting firms in the business, Back Office Accountants has been providing outsourced accounting services to businesses across all business sectors. With years of experience in accounting, our versatile team of Accountants possess demonstrated expertise in all industry, especially real estate and restaurant industries.
Working with restaurant businesses for more than a decade now, our accounts payable experts have mastered the art of strategizing and executing efficient and accurate accounts payable workflows that help achieve higher efficiency and productivity. Whether you are looking for an overhaul of your restaurant accountant payable process or need to fill gaps in your current accounts payable process, Back Office Accountants can provide comprehensive assistance and support with our dedicated Restaurant Accounts Payable Services.
You can find us here: https://www.backofficeaccountants.com/