How to streamline restaurant invoice management

Automated invoice management systems are quickly becoming a necessity for restaurant operators. So much detail and data is stored on those pesky little papers that typically end up in stacks on a back office desk or hiding in between boxes. Not only do you need to track purchasing data to keep the IRS out of your back office, you also need it to monitor budgets and improve profitability.

Hand coding that information into an accounting system or spreadsheet to track product prices is tedious, time consuming and error prone. It takes way too long to see your purchasing data after finally submitting invoices at the end of the period to your accountant, or if you’re coding in-house, after spending a few hours of quality time Madame Excel after closing to enter them in. Once the invoices are processed that way, you’re already two weeks into the next period, and the data isn’t particularly relevant or helpful for profitability at that point. 

The facts are, you can’t change what you don’t know, and automated restaurant invoice management systems streamline your operations and provide easily digestible, up-to-date purchasing information so you can make better decisions about how to run your restaurant when it counts. 

You might think it's simple enough to just pick whichever system’s salesperson annoyed you the least and run with it - and you totally can - but there are few important things to consider before pulling the trigger to make sure your investment is worth it in the long run.

Step one

Product-specific categorization

If you skim through the rest of this blog and only read one section, let this be the section. The most important feature to look for when it comes to a restaurant invoice management system or application comes down to how your products are categorized and whether that’s by product or by vendor specific item. So what the hell does that mean?

Let’s look at it this way: say you order green onions every week, sometimes from Sysco, sometimes from Larry’s Onion Co-op. When you order from Sysco, the invoice line item says, “onion green iceless”. But when you order from Larry’s Onion Co-op, it says, “scallion”. To you, whether it's called green onion or scallion doesn’t matter, because you know what the ingredient is, and you use either interchangeably in your recipes.

Your automated invoice management app should see it the same way and should categorize it for you.

This function is integral to having a clear and accurate view of your purchase costs, and therefore your plate costs. Here’s how it works:

Without product-specific categorization, you’d have to reconcile every recipe when looking at food costs to make sure that the 80/20 ground beef in your recipe is pulling the price information from your last order and not one from 4 months ago.

Step two

Truly automated data entry

How many times has there been a discrepancy between your bookkeeper and your ops team because an invoice number or total was copied wrong? Or how many times have you ever stayed late manually inputting invoice numbers onto an iffy spreadsheet on whether or not it’ll crash before you can get everything in?

We’re not here to shame manual processes- sometimes it's the best you can do with what you’ve got. In the grand scheme of tasks it takes to keep a restaurant running smoothly, it's understandable that inputting a metric crap ton of invoicing data each period is not first on the list of priorities.

Implementing an automated invoice management system can take hours spent every week down to just minutes a day- as long as the system truly is automated. Be sure to ask the system rep how much manual oversight from you is going to be expected.

The whole point of using automated invoice management is to eliminate the headache and mistakes that come from manual data entry, so look for a system that doesn’t require constant oversight of your product categorization, or worse, manual categorization.

The system should be able to recognize recurring purchases and maintain their set categories without you needing to set them every time. One of the best ways to ensure this is to find a system that categorizes by product (like we mentioned in the first section!). So when you order from Larry’s Onion Co-op for the first time, those “scallions” go into the produce category even though it's only seen invoices for “green onions” before, without you needing to tell the system where it belongs.

Step three

Customizable invoice categories

When product information from your invoice is processed down into categories, you’d hope those categories would automatically make sense. The truth is, even if a potato is a potato, is a potato - your restaurant may want to categorize it differently than the joint next door.

If you run a restaurant, this is probably not news to you, so please bear with us (or just skip to the next paragraph), but categorization is important mainly for two reasons: understanding food costs with a higher level of detail and tracking inventory more quickly. For many restaurants, breaking purchases and costs down by the standard food, beer, wine and liquor (FBWL) categories might be the best option. But it doesn’t have to be the only option for your restaurant.

Let’s say your restaurant is a sushi joint during the day but after dinner it turns into the hottest sake bar in New York City. Your sake bar is so hot, Stefon would talk about it on SNL, if Bill Hader were still a part of the cast. (We miss you Bill!!)

If you’re selling that much sake, it would make sense to be able to separate those purchases outside of the typical FBWL buckets because they make up a large portion of your costs each period. If you’re in the weeds and don’t have the time to do a deep dive into your purchasing data, you can quickly glance and see how much you’ve spent on sake for any period and be able to make data-driven decisions for your restaurant.

This customizability can also come in handy when taking inventory if your automated invoice management app generates count sheets for you based on those set categories, and you can customize them to match the order on your shelves.

Step four

A human element

In a perfect world, every delivery would show up exactly the way you ordered it and every product would be in pristine condition. You wouldn’t have to worry about crappy onions or defunct egg flats and making sure to note on the invoice the product wasn’t received or you only accepted a certain amount.

Since vital information ends up being handwritten on invoices, it is essential your automated invoice management app can read them and code them accurately! The best way a platform can do this comes down to two things: having a process to flag handwriting and having actual human beings reading the handwritten notes and code them in for you.

The human element is essential because if your platform shoots back every invoice with a scribble on it so that you can manually enter it in, you’re not really dealing with an automated restaurant invoice management app. So make sure to ask your system sales rep how they handle handwritten notes on invoices and if you’ll need to approve or enter them yourself each time.

Speaking of humans, it’s also important to see what kind of customer service is available to you and if errors are remedied quickly. Do you have access to a real, live human if you have questions or something codes incorrectly? Errors will come up, so ask what the process is like to fix them and make sure it works for you and your operations.

Step five

Cloud-based accessibility

It doesn’t matter if you run multiple units or just one independent restaurant- being able to upload and access invoices from anywhere is essential to keeping operations efficient. Make sure your app is cloud-based, so it can be accessed from anywhere with a wifi connection. Better yet, look for a platform with a mobile app so you can snap and upload photos of invoices from your phone.

If you’re out doing the million other things you need to get done, your team can capture and submit invoices as soon as they get them, or they can send the photos to you.

A cloud-based system also comes in handy when it comes to accessing them later on down the line if there are any discrepancies. This is great news for your accountant or bookkeeper too, so  they can look up and reference invoice information within the platform from anywhere at any time.

Step six

Open-source integration

Chances are if you’re looking into an automated restaurant invoice management system, you’ve probably already invested in a POS and/or an accounting software. If you have, (trigger warning) then you know first hand what a pain in the tuchus it is to migrate to a new one. To avoid this pain, we recommend looking for an automated invoice management system that is open source.

In other words, choose an application that works and integrates with what you’ve got, rather than being forced to change to a new POS or accounting system. Many POS providers have invoice processing functionality that you can add on to your POS service which may be very convenient, but doesn’t always mean you’re getting the right tool for your operations.

Even if you aren’t deeply in love (or trauma bonded) to your POS or accounting software, having the ability to change systems and know that your invoice management app will still work with them provides both freedom and flexibility. Open-source platforms are crucial when it comes to making a lasting investment and not something you’ll have to switch out in another few years.

Step seven

Get more bang for your buck

The last thing we recommend looking for in an automated invoice management system is finding one that uses the mountain of data collected from those invoices for reporting like a daily P&L, tracking product prices, creating budgets and more.

Having an app automatically track cost data and information can free up hours of time a week and save you and your accounting team from spreadsheet hell.

Aside from purchasing reporting, your invoice management system should also offer other invoice-related services like being able to pay bills, monitor orders and manage recipes for automated, up-to-date food costs. Managing multiple disparate systems simultaneously is not going to make your life any easier no matter how much data they can provide, but finding the right all-in-one tool to work with your needs is like finding the last perfect puzzle piece that somehow made its way under the couch by some dust bunnies. Once it clicks into place, you can finally see the full picture and know all the time spent searching was worth it.

Automated restaurant invoice management saves time and sanity, but when it comes to choosing the right solution for your restaurant there are multiple factors to consider. This list is by no means exhaustive, and you may also want to consider time it takes to implement or onboard, overall financial investment (including if essential features cost an extra fee), and if the system is easy enough for your team to adopt or not.

Don’t be afraid to ask your system sales rep the hard questions to make sure you’re really getting what they’re offering you. These tools can dramatically improve profitability and efficiency, so it's worth the time to find the right one.

To learn how MarginEdge can help you say goodbye to the paperwork, reduce costs and streamline your restaurant’s operations, contact us to get a free demo.