Spend Less Time on Invoices, More with Guests: AP Automation for Restaurants

Earlier in this series, Ben Spiegel, Ottimate’s growth product manager, discussed how cost file validation, advanced invoice approval routing, and flexible payment options improve grocery and retail store financials. 

In what he calls “a previous life,” Ben learned the culinary craft at Noma in Copenhagen, served as a sous chef at the Willows Inn on Lummi Island, and was executive chef at Skál in New York. Listen up as he dishes on how AP automation benefits the restaurant and hospitality industries. 

When you were a chef, what issues did you have with manually processing invoices and payments?

When I became a head chef running a restaurant, I quickly realized that much of my job was not really about cooking. It was about managing people, costs, and supplier relationships. There were many long hours and stressful days when, if a dishwasher broke, I was accountable for figuring out the solution. I had little bandwidth for mundane work like manual data entry. 

Restaurant margins are very narrow, so controlling costs is crucial for success. As an operator, having visibility into our P&L and the ability to drill down into product costs was critical. The basic steps of getting that data into the inventory and accounting systems often fall on the head chef or restaurateur.  

How does AP automation solve the challenges you just described for restaurants?

Ottimate is excellent for a single operator and exceptional for a multi-unit. It provides visibility into invoices as digital objects within a cloud-based environment, allowing for easy lookups. When I was working as a chef and talking to a vendor on the food side, I’d have been able to go into Ottimate and look up an item, such as apples, that I’d received from them. Then I’d have drilled down into price changes and examined invoice images to understand my costs at that time better.

With Ottimate, a restaurant has a flexible tool that sits in front of their IMS and ERP systems, providing visibility into seamless data and enabling invoice routing to the users who are accountable for them. Once you’re up and running, you can take the paper receipts that come to your back door, put them in a scanner, and be confident that what you’re uploading will be processed within 24 hours. Multi-page invoices are collated into a single file, routed according to your company’s policies, approved, and made available for payment.

What benefits does Ottimate offer multi-location hospitality businesses?

Ottimate is a single AP automation platform that supports multi-tenant operators. For instance, if you take a QSR model, you generally have a regional head office and a hub-and-spoke structure, with store-level operators dispersed throughout the region. Traditionally, they pack their paper into FedEx envelopes and mail it to the head office, or send it via delivery trucks. Then, all that paper is managed through the AP side. 

Installing a scanner in a restaurant, hotel, or country club provides operators with visibility into invoices, enabling them to complete approvals from a desktop or mobile device, which is a powerful feature. From an AP manager’s or controller’s standpoint, you can have fewer staff managing more locations more quickly because you’re not waiting for paper to be delivered, don’t have to worry about invoices being skipped, and don’t need to follow up via email or phone for approvals or exceptions.

What advantages does AP automation provide to a chef or restaurateur? 

Ottimate gives people their time back. If you’re a restaurant operator, you can reduce or reallocate headcount from financial operations to other aspects of your business. From a procurement perspective, you can spend more time negotiating rate discounts with your vendors and devote your energy more intensively to your business, ultimately providing better customer experiences. Chefs can concentrate on cooking. 

How does AI automation help AP teams in large hospitality groups?

Ottimate reduces manual work for the AP teams at restaurants and hospitality companies. It resolves data entry issues by digitizing invoices and pushing line-item and account-split dimension details into ERP systems. These are tasks that a human would otherwise do and then have to manage paper invoices and other documentation. Ottimate becomes an easily indexable and searchable digital filing cabinet for that data, delivering considerable ROI and making that information auditable. 

Where we offer tremendous value for larger multi-units is flexible and granular approval workflows. In a traditional organization, an AP clerk or controller manually scans invoices, sends them via email for approval, and manages multiple email chains. Ottimate seamlessly routes invoices to specific users, provides notifications and daily digests for pending invoices awaiting approval, and offers visibility into any delays. AP clerks control who sees invoices based on specific parameters, such as dollar amounts, vendor, or GL, and stay on top of their entire AP flow for every location in one platform. 

Why are payments challenging for restaurants, and how does Ottimate help?

Cash flow is one of the most significant constraints for these types of businesses, so having visibility into all your payables within a single unified platform like Ottimate is very valuable. In winter, it’s a slow time for many restaurants and hospitality companies, and so cash flow can be very tight. Having the ability in Ottimate to segment and prioritize vendor payments is critical. 

One of our payment modalities is a virtual card, which is a digital credit card that offers a revenue share. The ability to receive cash back on payables is not typically offered to many restaurateurs. Ottimate VendorPay accelerates payment delivery times through ACH and expedited checks as well as vCards, which can allow restaurants to get early payment discounts that help with cash flow.

What are the benefits of Ottimate’s virtual and physical cards?

Ottimate’s spend management program is really useful in hospitality, especially as it relates to restaurants, and provides security and accountability. You can generate one-time or multi-use physical or virtual cards, assign them to specific team members or groups, and apply granular controls, such as MCC codes and dollar amounts. Before facilitating payment or exporting transactions into an ERP system, you can code them to the required GL codes and apply them as journal entries. 

The method restaurants traditionally use for expenses is a petty cash till. It must be reconciled quarterly, monthly, or weekly, and there is a theft risk associated with having cash on hand. Or, if multiple people have access to a corporate credit card that an owner guarantor may back, it’s challenging to control spending based on limits, as you can with the Ottimate Card.

Once a transaction is complete, you have access through the Ottimate mobile app to attach a receipt. You can also create rules for payments requiring approval before they’re posted back into the ERP as a journal entry. 

If you have spend cards on file with vendors, you can set each one up as a virtual card that’s reloaded monthly or at another cadence with a defined amount, so there’s no risk of fraud on the vendor side or overbilling based on that card on file. A restaurant’s food costs are typically 35 to 40 percent of their total spend, so the ability to get cashback through the Ottimate Card is another win. 

How can Ottimate help restaurants and hospitality companies improve their vendor relationships? 

Cashflow constraints are acute for restaurants and even more so for vendors. If you have 30-day net terms with restaurants, you don’t see a positive capital flow with any new customer for almost six weeks. Vendors are capital lenders to high-risk debtors. If I’m a vendor, I’m buying products, lending them out with a 25 or 30 percent margin, and hoping to get paid back as quickly as possible, so I can net around a three percent profit.

Suppose a restaurant with a traditional AP workflow has to send a package of invoices to a central office and wait until the CFO or CEO gets around to paying them using a checkbook that’s sitting on their desk. In that case, that puts significant constraints on their suppliers for getting payments on time and managing their own cash flow. Ottimate not only saves time and money for the restaurant operator but also provides significant benefits for their vendors. They’ll receive more accurate payments either on time or early.  

How does the VendorPay Network connect to your last point?

We have a vendor enrollment team that works within our payment operations organization to help qualify, train, and enroll vendors to accept virtual credit cards as a payment modality. Checks are printed, packed, and delivered using legacy methods that take some time to reach a vendor, even if they’re cut early. Vendors who prioritize cash flow and timely receipt of payments can accept credit cards through a virtual card program, gaining visibility into payment status and remittance for those virtual card payments through our vendor center.

Why do restaurant and hospitality customers enjoy working with Ottimate?

Many of our customer-facing team members come from restaurant, hospitality, or accounting backgrounds, so there is a shared language and a strong sense of empathy between our go-to-market and operations teams and our customers. From an implementation standpoint, each client has dedicated project and customer success managers, who have clearly defined benchmarks and transparent workflows. Then there’s responsive, ongoing support. 

From the moment you sign a contract, you’re working directly with real humans who will answer your questions and tailor Ottimate to your requirements. Everybody has their own way of running their books, so we don’t provide a cookie-cutter solution. We offer a highly configurable product that can be tailored to meet the specific needs of restaurateurs and other types of operators. 

Ready to turbocharge your financial processes with AP automation? Schedule a demo today.