2024 was anticipated to be a period of growth for hospitality businesses worldwide, with experts foreseeing a "significant transformation." However, it has brought a continuous rise in food, drink, and utility bills, leading to a cost-of-living crisis that has left consumers with less disposable income.
In two years, operational costs have surged, with utility prices increasing by almost 30% in the UK and 18% in Australia, and the cost of food skyrocketing by over 25%. Coupled with the substantial decline in consumer footfall, this has significantly reduced profit margins and put pressure on venues that are barely breaking even.
Amid the pressures to maintain profitability, businesses are confronted with a multitude of technology solutions, all promising to reduce costs, improve efficiency, and solve profit-related challenges. With mounting pressure, how do businesses identify the solutions that will truly make a difference?
Getting the right solution will provide access to features designed to help businesses save money and spend more intelligently. Let's explore how these features achieve that.
1. Obtain Accurate Data & Leverage It
While there are numerous types of accounting software for hospitality, a purchasing and accounts payable solution consolidates various features into a single product, helping businesses save money and streamline staff training.
Here's the kind of data you can obtain from this solution:
Purchase order reporting helps identify popular products, enabling businesses to tailor their offerings to attract repeat customers and minimise waste.
Tracking the performance of individual locations assists in making strategic decisions regarding ordering, new locations, or investments.
Line item data and automated coding provide detailed product information, allowing for price comparisons across different vendors or spotting significant price increases.
By extracting product codes and quantity data from invoices, businesses can directly upload to their stock management solution to avoid over-ordering.
2. Spend Money Smarter
With costs rising and businesses seeking ways to recoup profits, 85% of restaurants are contemplating raising menu prices.
However, considering the current low footfall and shrinking disposable income, is raising prices the most prudent approach? Instead of hiking prices, businesses can explore smarter spending habits and cost-reduction strategies to enable pricing consistency.
By utilising a supporting app for hospitality accounting software, businesses can:
Compare product prices against agreed supplier pricing and receive notifications of any changes, facilitating quick identification of price hikes and negotiation with suppliers.
Analyse historical data for seasonal fluctuations and consumer buying trends throughout the year, supporting better stock management and improving cash flow.
Identify and address duplicate invoices to prevent overpayment.
By extracting line item data from invoices, businesses can reduce manual tasks for their staff by up to 90%, consequently keeping staff overheads low.
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3. Enhance Purchasing Control
Implementing controls on who can make purchases or establishing predefined processes before a purchase is made helps reduce wasteful ordering. Hospitality technology enables businesses to:
Develop advanced, multi-tiered approval workflows for purchase orders and invoices, mitigating duplicate orders and unnecessary purchases. Digital approvals also expedite invoice payments, potentially allowing businesses to take advantage of early payment discounts from suppliers.
Match invoices against purchase orders and goods received notes to ensure payments correspond to the goods received.
Flag fraudulent invoices by comparing bank details on invoices to those stored for each supplier.
4. Technology Integration
Given the array of software options available to hospitality businesses, it's important to consider the integration with your Xero accounting solution before selecting a provider. It's advisable to look for:
Seamless two-way data flow to prevent duplication of work, which can lead to errors. For instance, transferring supplier information from Xero into your new accounts payable solution.
The ability to push fully coded line item data into Xero alongside a PDF of the invoice for more detailed reporting.
Bulk uploads to your stock or inventory solution to eliminate manual data entry.
Key Statistics
Adopting new technology doesn't have to be overwhelming; it's a proven way to help businesses spend smarter and reduce costs.
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Additional Resources
Implementation eBook
Get started on your journey to AP automation with our step-by-step implementation guide
Savings Calculator
Calculate how much you would save by automating your AP and Purchasing processes
Hospitality Features
Take a look at the best features for hospitality businesses looking to boost profits
