Managing bill payments is a tedious and time-consuming process, but is integral to a restaurant’s day to day operations. You already understand why bill pay is an extremely important process but may not fully understand the benefits of having your accountant involved like the national chains do. This article explains why your accountant should be processing your bills.
When you think of outsourcing any function of your restaurant’s back-of-house operations, your first reaction may be, “we honestly can’t afford another service.” However, the cost is well covered when you consider the money that a skilled accountant can save you in overpayments to vendors. Your accountant should reconcile invoices against periodic statements to catch discrepancies between initial and final invoices, request vendor credit memos, and catch any missed invoices that would otherwise result in late fees and less generous payment terms. For restaurants, this can work out to thousands of dollars each month in savings. If your management team is already doing all of this in-house, passing this process along to your accountant will save your team entire days of each week to work on high-value activities like process improvements to reduce food or labor costs, developing or improving sales channels, growing the brand, or training the team for greater efficiency and better service.
Provide Segregation of Duties and Help Prevent Fraud
If you are processing all your bills in-house, you very likely have someone handling multiple duties, which increases your risk for fraud and human errors. Your accountant’s bill pay processes are built to mitigate these risks.
Theft & Fraud
One of the oldest schemes is creating fictitious bills to pay someone who shouldn’t be paid. For example, an employee creates an invoice designed to look like a legitimate bill from a pastry supplier for your café, but the payment information deposits the payment into their personal account, and your café is supplied with no pastries. Although it’s less common with restaurants, some fraudsters may also try spamming legitimate businesses with invoices for services or products never rendered. If the bill processing department isn’t carefully evaluating each invoice, they may pay the fictitious invoice.
Your accountant can mitigate this risk by establishing a solid step-by-step bill-pay process. This process is a bill’s only pathway to payment, meaning that it will only be processed entirely and paid if it is provided to the bill pay department in a specific way, and passes all of the built-in checks. It’s theoretically possible for a fictitious bill to sneak through, but it is considerably less likely with the right proper process. Part of this process includes a review by the accountant only to pay trusted and established vendors, approved invoices, and to carefully vet new vendors before adding them to the “trusted vendor” list.
When your accountant evaluates whether a bill is reasonable, they will also ask for corroboration from the vendor’s Accounts Receivable department in the form of an account statement. This invoice reconciliation process mentioned above can save you big dollars in late fees and vendor credits.
No Physical Checks
By having your outsourced accountant process your bills, you remove the physical check stock from your restaurant’s physical location. This reduces the opportunities for fraud and stolen checks, keeping your banking information more secure. Additionally, your accountant’s bill pay processing software (also available to you if you’re not outsourcing your accounting processes) likely has ACH capabilities. Sending an ACH, where a vendor allows and can receive them, is a much more secure and faster way to pay vendors, allowing for more accurate cash flow management (less lag between payment and “check cashed”) and better terms with vendors.
Segregation of Duties
Having your accountant process your bills inherently creates segregation of duties. “Segregation of duties” means that work assignments are designated between different people to reduce the opportunity for theft and fraud. Having your accountant process your bills using an integrated accounting and inventory system is ideal because it handles segregation of duties in two ways: the inventory process and the bill pay process.
In the inventory process, the person receiving the restaurant’s goods at the kitchen (your restaurant staff) is separate from the person recording the inventory in the accounting system (the accounting team when the invoice is received). If theft occurs, there will be a discrepancy between the inventory recorded, and the physical inventory count. Learn more about why physical inventory counts are important and how to do them efficiently in Inventory That Actually Counts.
In the bill pay process, segregation of duties means that the person entering the bills (AP Clerk) is separate from the person reconciling the bank statements (Accountant). Additionally, your accountant will very likely not be handling physical check stock or cash at all, further reducing the opportunities for theft.
Provide Accurate Financials
By having your accountant process your bills, you also get accurate financials, faster. While processing your bills, your accountant will ensure every bill is recorded for the right amounts, that the correct vendor credits and payments are applied, and that everything is recorded in the correct period on an accrual basis. This gives you accurate financial information in real-time, and ensures that your weekly statements are truly representative of your operations. Our article The Importance of Accrual Basis Accounting explains why this is very, very important.
Your Accountant Should be Processing Your Bills – and More
Having your accountant process your bills not only mitigates your risks in the bill pay process, but also ensures that your accounting properly includes the payments made, the bills payable, and vendor credits. This helps you get the most accurate, real-time financial information possible. Check out Why You Should Outsource Your Restaurant Accounting to learn more about outsourcing your restaurant’s entire accounting function.
Ready to get an accountant processing your bills? Schedule a call with us to get started with the Fork CPAs.