Are you making progress in becoming a trusted advisor to your restaurant accounting clients during the COVID-19 outbreak? We previously showed you how to help restaurant operators maximize their inventory with expert tips from the back of house. Today, we’ll dig into how you can empower those same clients with the data they need to have a leg up in dealing with vendors and other foodservice suppliers.
Last week, we discussed that most restaurants struggle to accurately track inventory due to the fast pace of the industry, but there’s yet another piece to this complicated puzzle that’s vital for accurate accounting: vendor credits.
Accounting for vendor credits
When it comes to the foodservice supply chain, change is the only constant. From products and pricing to orders and deliveries, it’s quite common to find inaccuracies on your invoices and inconsistencies between what’s been ordered and what was delivered.
Some deliveries are incomplete, while others may include substitutes, spoiled items, or products that weren’t purchased at all. Receivers at the restaurant are accustomed to inspecting each delivery to ensure the quality meets their restaurant’s standards as well as to ensure that the items on the invoice have been delivered in full.
In order to account for these inconsistencies between what was ordered by a restaurant and what was actually received, restaurants must record and keep track of vendor credits. Since it’s already a struggle just to properly track and manage inventory in restaurants, vendor credits add another layer of complexity in maintaining accurate books and tracking food costs. In a restaurant, credits are often jotted into the margins of paper invoices or written on sticky notes or spare sheets of paper, making them even more vulnerable to misplacement than the invoices themselves.
As a restaurant accountant, you may already have a system in place to properly track vendor credits; however, we strongly recommend utilizing restaurant AP software that not only stores invoices, but also allows your clients to document and record vendor credits at the time of receipt. Doing so makes them easily discoverable, searchable, and less likely to fall through the cracks.
Reconcile vendor statements with ease
When you apply a vendor credit to an invoice in xtraCHEF, our software automatically adjusts the total of those invoices despite what the vendor had indicated to be the payable amount. This comes in handy when it comes time to reconcile invoices and payments with your vendor.
Going a step further, xtraCHEF offers a Statement Reconciliation feature where users can upload periodic vendor statements and automatically reconcile those statements and the payable amount against invoices within that time period. In the event of a discrepancy or dispute, users can email the vendor directly from the Statement Reconciliation screen. Any notes entered by the user will also be included in the email to their vendor sales rep.
Users are able to upload multiple vendor statements in a single PDF, and each will be automatically and independently reconciled, saving both you and your clients time and money.
A simple, centralized source of truth for all vendor purchases
Another key benefit of an AP tool to complement your accounting system is the ability to sort and manage all data and transactions by vendor in a centralized, user-friendly way. Rather than sifting through stacks of documents to compare historical purchases or resolve a dispute, tools like xtraCHEF can provide you all of the invoices, purchase orders, and statements from one vendor in any specified time period.
A cloud-based AP solution ensures that both you and your clients can access the details and documents that matter from anywhere, at any time—which is more important than ever in the wake of COVID-19.
Track ingredient prices over time with ease
Because of supply, demand, and seasonality, ingredient prices fluctuate constantly. This makes it particularly challenging for restaurants to manage food costs. For example, an avocado that cost 75 cents one day may increase to $1.50 the next, making the margin on a menu item like guacamole much smaller than usual.
Manually tracking these price fluctuations is time-consuming and tedious, requiring a constant recalibration of recipe costs and menu prices (often managed by chefs in Excel). xtraCHEF does that heavy lifting for you. By digitizing invoices at a line-item level with accurate units of measurement, and therefore unit prices, our software automatically updates the cost of your clients’ recipes and the full value of their inventory.
Harnessing data for restaurant purchasing power
When your restaurant clients scan or upload invoices into their software solution, clear, user-friendly dashboards automatically show them how the price for specific ingredients—whether it’s avocados, apples, or arugula—changes over time. This information is crucial to have not only for calculating COGS and prime costs, but also to inform vendor negotiations.
Use data to answer the following questions for your restaurant clients:
- Which vendor does my client spend the most money with?
- Which vendor does my client buy from most frequently?
- Which vendors have the most fluctuation in ingredient prices?
For the vendors who your restaurant clients buy the most items from and most frequently, provide that dollar amount and cadence to your main point of contact. Your clients should be able to get some kind of bulk pricing deal with how often and how much they spend with those vendors.
As for vendors with frequently fluctuating prices, be sure to have your restaurant clients lock in a specific ingredient price—especially before the full impact of disruptions to the food supply chain hit, causing the price of some ingredients to skyrocket. This helps protect your clients from soaring food costs down the road, as well as standardize plate costs so a menu item doesn’t generate $7 in profit one day and $4.50 the next.
Seal the deal as a trusted advisor to restaurant clients
Check in with us next week to see how to use all of your knowledge along with the accurate data you’ve collected for your clients and turn it into plate costing and menu modification suggestions.
In the meantime, visit our website to see you can continue to support your restaurant accounting clients both during and after COVID-19. Request a demo of xtraCHEF to learn more!
Author Bio: Libby Peck is a writer, editor, and strategist out of Philadelphia. As the Content Marketing Manager at xtraCHEF, Libby creates educational content that empowers the restaurant industry.