From Invoices to Inventory, Instantly
Updated: Jul 23, 2021
Once a week you walk around your store, and spend a solid amount of time shivering in the freezer walk-in, pen and paper in hand. Your task is to check the current stock levels against what was ordered the previous week to figure out what needs to be ordered this week. You squint at the discrepancies between what’s in stock and what was invoiced for that week’s deliveries.
You don’t recall if your team member had updated the inventory spreadsheet after the previous delivery.
It's Monday morning and the questions have already started.
Is that pen stroke a one or a seven? Did your employees follow your FIFO (first-in-first-out) directions or are things about to start expiring? Did your sister restaurant need to borrow a pallet of sugar? Is there a special on your menu or a large catering order you need to be aware of? Or was that last week and you don’t want to over-order?
You manually search through invoices and upcoming specials and those sticky notes tracking item transfers. It’s already 90 minutes into this goose hunt. You’ve already spent way too much time double and triple-checking, walking in and out of that tundra of a freezer before you finally place your orders for the week.
Finally, your delivery, and ultimately your invoice, arrives. You double and triple-check it before entering it into the AP system and copying the inventory item detail into your inventory excel sheet, carefully keying everything in and hoping you don’t make a mistake. All it takes is a couple of typos or an incorrect formula, and suddenly you can’t rely on the integrity of your system anymore.
On a typical day, most employees would check an invoice 5 or 6 times before finalizing the entry into the inventory system and AP system for payment. This is an immense waste of time and a huge drag on productivity. With 55% of businesses still manually processing invoices, it's no wonder that the going joke in back offices is that it costs more to process a $12 invoice than the actual invoice itself. Not to mention manually creating and updating inventory records too.
Automate Your AP And Sync Invoice To Inventory
What if you could create a paperless back office that automatically processes invoices, updates inventory records, and syncs with point-of-sale data to give you true control over your Inventory?
Here’s how it works: Use an AP automation platform to ingest and digitize your invoices and create digital copies of them in your system. A best-in-class AP system should be able to capture invoice details down to the inventory line item.
Sync your AP system to your inventory system so that digitized invoice line items are automatically imported to create and update inventory records.
Sync your inventory system with your POS system to understand and control your COGS through recipe management, menu engineering, and inventory usage variance analysis.
Everything included in your inventory is going to be reflected in your invoices, and, more importantly, the way that they are entered into your books.
Why Automate Your AP?
Instead of a person sitting there typing in each invoice, verifying all of the corresponding information (like vendor, item name, pack size, unit cost, and GL category), AP automation platforms can do the same tasks, to a higher degree of accuracy, in a fraction of the time.
This makes your Accounts Payable department the first stop on the road of truly understanding your Inventory. All of the data that already exists in your invoices can be sent over to your inventory system. Direct integrations like that of Plate IQ and COGS-Well allow for streamlined invoice to inventory management. Your pack size information, unit costs, and item name are all accounted for and allocated to the proper departments and recipe costs are automatically updated. These can also be updated each time a new invoice is ingested into the AP platform.
With this workflow, your starting inventory levels are no longer reliant on estimates driven by excel formulas that often break or are inconsistent. Instead, they’re driven by actual invoices for deliveries that arrive every week.
Take Control Of Your COGS
You can go even further by comparing actual and theoretical inventory numbers- something that wouldn’t have been possible with a manual process.
Here’s how to do that:
Using the sales mix from your POS and your recipes, COGS-Well will calculate the theoretical usage for each inventory item.
Using the starting and ending inventory counts, along with invoice receiving records provided by Plate IQ, COGS-Well will calculate the actual usage for each inventory item.
By comparing the actual and theoretical usage for each inventory item, you will be able to analyze how much of inventory (and ingredient) is lost due to waste, spoilage, spills, or shrink, and did not make it to the plate sold.
Knowing both how your restaurant actually performed, and how it should have performed, allows you to isolate problem areas and better manage your operations. Being able to optimize for efficient use of ingredients and inventory will only help you control your cost of goods sold.
In the past, having this level of fine-tuned control over COGS was only possible at massive QSR and fast food franchise operations, using multi-million dollar IT systems. Now with Plate IQ and COGS-Well, you can have what they're having!
Jillian Straw writes for Plate IQ covering technology in the hospitality industry from a background in restaurants and operations management.