March 14, 2022

How To Improve Your Hotel Accounts Payable With Automation

by The Ottimate Editorial Team

Automation is innovation at its finest, and in the hospitality industry today, innovation is necessary to stay ahead of the hotel game. Automating key hotel operation areas like housekeeping inventory reorders, guest check-in and check-out, and hotel accounts payable is the key to boosting efficiency and saving time.

Let’s walk through how to improve your hotel accounts payable with automation so you can make changes that’ll revolutionize your hotel operations by covering: 

  • 5 Common Problems With Hotel Accounts Payable
  • Use Automation To Improve Your Hotel Accounts Payable
  • 4 Tasks You Can Automate
  • 4 Benefits of Automating Your Hotel Accounts Payable

5 Common Problems With Hotel Accounts Payable

Your hotel’s accounts payable workflow describes the complete end-to-end process from receiving invoices all the way through to vendor payment.

Like your other departments, your hotel accounting department covers a lot of ground, and your staff wears many hats. Your hotel accounts payable process includes critical financial transactions to keep track of and stay on top of — no pressure, but the success of your hotel depends on it. 

Let’s cover the top five common problems with hotel accounts payable: 

1. Slow manual AP process

Outdated, manual AP workflows slow the process down to a snail’s pace and open the door for human error. Nevertheless, many hotels still use a manual AP workflow because it’s what they’ve always done, and it feels comfortable, while change feels like rocking the boat. 

There’s no gentle way to say this — manual hotel accounts payable is painfully slow and incredibly inefficient. 

  • Manual purchase orders — If your PO system is manual, your hotel GM is most likely using an excel sheet while hunched over a laptop manually inputting items to be ordered and manually coding them. This is a huge time sucker and not the best use of your GM’s skills.
  • Manual tax calculation —  With this system, an AP associate is responsible for manually calculating the use tax on all hotel inventory. Why pay someone to this task when it can be automated?
  • Manual invoice processing — From manually entering invoice data to emailing a PDF copy of the invoice to a department head or manager for approval, then issuing and mailing paper checks, the entire manual invoice process moves along as cold molasses poured from an upside-down mason jar. 
  • Confidential info may not be secure — Paper invoices, mailing paper checks, or paying vendors online with a corporate card means a lot of eyes on confidential info, and that invites fraud, which is already a big problem in the hotel industry. 

Info text from Bloomberg that states "27.5% of companies reported inaccuracies from manual data entry into their systems, causing tax and accounting mistakes."

Electronic invoices and payments can tighten up security.  

  • Hotel vendor relationships could be jeopardized — Manual invoice processing is slow, and so is the mail. If your hotel vendors don’t get paid on time, those relationships could be in trouble, which means your supply chain might be too. 

Automating your hotel accounts payable speeds up the process so you can get your vendors paid promptly (or even early!). 

  • Guest satisfaction — Your relationship with your guests could get rocky if goods aren’t delivered on time due to invoices not being processed on time. If you’ve got to tell a guest that you’re out of a menu item or housekeeping doesn’t have soap or coffee, you can bet your bottom dollar that’ll drop your guest rating score when they leave negative feedback.

Streamlining your AP guarantees your hotel keeps running like a well-oiled machine. And that makes your guests happy and encourages them to leave  5-star ☆ reviews. 

  • Invoice storage — Paper invoices and receipts mean you need to find a place to store them and keep them secure and damage-free. Unfortunately, if you’re a multi-property hotel group, the paper storage alone can take up valuable space and staff time,  not to mention, it’s just plain wasteful. 

Digitized documents can be stored within your hospitality accounting software — safe, secure, and easily accessible.

2. High rate of fraud 

Hotel industry stats state that hotels lose 5% to 6% of their annual revenue from fraud committed by employees and guests.

Info text sourced from Berdon Accountants and Advisors that states, "Hotels lose 5% to 6% of their annual revenue from fraud committed by employees and guests."

Yeah, that’s an alarming and deflating statistic.

Fraud not only costs a considerable chunk of your hotel revenue but is incredibly time-consuming to try to rectify. In addition, the more manual processes your hotel AP has, the higher your risk of fraud and the more fraud occurrences your accounting department is probably dealing with.

Reduce your hotel’s fraud risk with an AP automation solution like Ottimate that offers secure document storage and safe online vendor payments.

3. Manual GL-coding is inefficient

All other hotel accounting processes and their outcomes are suspect without accurate info in your general ledger. You know that a well-kept general ledger is the foundation of good hospitality accounting practices.

Proper GL-Coding is critical, and manually entering and coding each invoice item is incredibly time-consuming and risky business. Human error is part of life but can be costly and skew your ability to keep a close eye on expenses and have an accurate picture of your hotel’s financial health.

This is especially problematic for multi-property hotel groups — manual GL splitting between departments and locations is complex and slow. However, AP automation software that enables automatic GL-coding will revolutionize this part of your hotel accounts payable in no time flat.  

4. Slow invoice approval process

Many hotels are still using a manual invoice approval process that’s inefficient and utterly unnecessary with today’s technology. 

The usual hotel manual invoice approval process looks like this: 

  • The Department head receives the invoice, does GL coding, approves it, then sends it to the next approver.
  • The approver — usually the GM, also checks the coding, approves, and sends it on to the controller.
  • The controller confirms correct coding then marks the invoice ready for payment.
  • Check processing center issues checks weekly.

There are two major problems with this process:

  1. Too many people spend valuable time on GL coding, which could be automated.
  2. With this system, each approver is waiting until the invoice makes its way to them in the form of a paper invoice or an email with a pdf attachment.

Because of this workflow, invoices are often misplaced, and vendors don’t get paid on a timely basis. 

This is a problem — especially with food and beverage orders. If a food and beverage company doesn’t receive payment on time, they’ll put you on HOLD in a New York minute, and you’ll be up a creek without a paddle (or the goods). 

If you don’t receive the goods, your guests won’t be happy because you’re missing menu items. 

That’s from a guest satisfaction perspective. 

From hotel finance or management perspective, if you’re not processing invoices on time because the approval process takes almost a million years, then you’re not recording the expenses in the month in which they occur — that’s no bueno. 

If heaven forbid you misplace the paper invoices once they’re approved, you won’t be able to record and accrue them in the proper month. Translation: the expense isn’t recognized on the financial statement, and your income statement won’t reflect accurate info, and that’s a recipe for disaster!

5. Lack of oversight

The key to your hotel’s success is knowing what’s coming in and what’s going out on the daily. If your hotel accounts payable system is a hot mess, it’s easy for invoices to get lost, go unpaid, and you’ll have no concrete knowledge of your hotel’s financial health.

Multi-property hotel groups need to create benchmark reports to analyze & compare properties. Without automation, this process is messy, inaccurate, and timely oversight is difficult, if not downright impossible. 

Use Automation To Improve Your Hotel Accounts Payable

Automation is the name of the game when streamlining your hotel operation. Keep in mind some tasks don’t lend themselves to automation. Tasks like personalizing VIP welcome baskets or fielding a guest complaint require a human touch.

Other tasks lend themselves naturally to automation, and 99% of the time improve their efficiency. For example, your hotel accounts payable is a perfect example of an exponentially enhanced workflow through automation.

Info text sourced from Business Insider that states, "Enterprises experience 81% lower processing costs & 73% faster cycle times when utilizing AP automation."

 Your hotel can experience 81% lower processing costs and 73% faster cycle times simply by utilizing AP automation

4 Tasks You Can Automate

1. Invoice processing

Much of your hotel’s invoice processing workflow can be automated through AP automation software, like Ottimate. Quickly scan or snap a picture of your invoices, then upload them into your software and let the automation take it from there. 

Wave goodbye to those stacks of paper invoices to be manually entered, coded, approved, and stored.  

2. GL Coding

Streamline GL coding by utilizing AP automation software that automatically codes every invoice item every time based on department and property (if you’ve got multiple properties). 

This is a huge time saver and allows for more oversight. Automatic GL coding is especially beneficial for multi-location hotel groups who want to create benchmarking reports to analyze costs across different properties. 

3. Invoice approval process

Are you walking invoices from person to person to nab authorizations? Or waiting (and hoping) for your email to be opened and sent back with approval? 

There’s no need for that — you can automate approvals through your AP automation software so that invoices get routed to the right person for approval electronically. This significantly reduces the time it takes to get invoices approved. It also frees up department heads, regional managers, and your GM from wading through emails and manually opening PDFs that need to be approved.  

With Ottimate, any piece of data that appears on an invoice can be made into an advanced approval routing rule — vendor, date, amount, line items, you name it, you can create a rule for it.

4. Vendor pay

Still running checks and mailing them weekly to pay your hotel vendors? Don’t sweat it. You’re not the only hotel still paying their vendors this way. 

Pay vendors within your AP software by issuing ACH payments or, better yet, use virtual cards with pre-set limits to pay your vendors as soon as invoices have been approved. As a result, your vendors get paid faster, and you reduce your fraud risk with more secure payments. Plus, you have the option of earning cash back with a virtual card like the Ottimate Card.

Image text with a quote from Kirsten Haley, AP Manager of Golder Hospitality, stating, "With Ottimate, the GMs know that they can click on the invoice and see that it was paid. They can actually hover over the page to see the check number, click on the check number, and get a copy of the check. It's incredible how much time that user-friendliness alone has saved me."

Revolutionize your hotel accounts payable and increase oversight and real-time expense tracking with AP automation software.

4 Benefits of Automating Your Hotel Accounts Payable

It’s high time your hotel gets to cash in on the benefits of automating your hotel accounts payable. Automation of your hotel operations is an innovated, forward-thinking move to position your hotel for success in the future. 

Here are four benefits you could be missing out on if you haven’t automated your hotel accounts payable yet.  

Save time — Save valuable staff time by automating invoice processing, approvals and GL-coding

Reduce fraud — Level up your security and reduce your fraud risk

  • Digitized invoices mean fewer eyes on invoices
  • Using a one-time virtual card protects your banking and credit card info while allowing you to pay vendors online
  • Mailed paper checks won’t be a vulnerability any longer
  • Issue employees virtual cards with a preset limit and pre-authorized vendor to cut down on too many employees having hotel credit cards. (Especially with the high turnover in the hotel industry)

Efficiency — AP automation bumps up your hotel’s efficiency in these ways:

  • No more manual GL coding
  • Streamlined invoice and authorized processing 
  • Let managers & GM spend more time on guest service
  • Save bookkeepers and controller time automated redundant tasks 

4. Real-time expense tracking — Get more expense control

  • Issuing virtual cards like the Ottimate Card allows more expense control by tracking in real-time
  • See what has been paid and where invoices are in the process to monitor expenses
  • Virtual cards allow changes to limits and authorization with a click of a button

5. Enhanced oversight — More oversight means you’re in the know 

  • Multi-property hotel groups can see what’s going on
  • Create benchmark reports to analyze expenses (monitor costs by department, by coding…)
  • Automated GL-coding and splitting between departments ensures more accuracy when running reports

Improve Your Hotel Accounts Payable Through Innovation

Gone are the days of all manual hotel operations. What worked 10 years ago just isn’t going to keep you in business today. 

You’re going to have to automate and streamline. Don’t be afraid to think outside the box — get creative, get innovative. 

Automating your hotel accounts payable solves typical hotel AP problems, offers a boatload of benefits, and enhances scalability. 

Ottimate knows the hospitality industry and is here to make your transition to automated AP a breeze. Curious? Book a demo today!

Stay up to date on the latest news in AP automation and finance

This field is for validation purposes and should be left unchanged.