ACCOUNTING FOR ACCOUNTABILITY WITH INVOICES

Invoicing processes can falter when performance and procedural irregularities occur, thus potentially processing invoices that have discrepancies. While some of us have a great accounting system, many are too busy to keep track of things as we should.

The routine processes we put into place to control invoicing and expenses do not always eliminate the billing discrepancies we expect them to. Therefore, we must frequently observe procedures to prevent invoicing errors.

Why Procedures Falter

Over time, the training we have in place can lose its preservation. This training reduction can be caused by employee turnover, shift changes, people with unequal skills, or quick-fix adjustments when overburdening levels of incoming business occur, to name a few.

We are human, and the hospitality business is far from static. As much as we want our employees to observe our procedures, unexpected and unintentional?causes can burden expenditure outcomes, and the anguish comes in overpayments if they are realized.

Marginal Mistakes Don’t Necessarily Mean Insignificant Expense Errors

Breaks in procedures do not have to be extreme to cause a significant or expensive error on an invoice. If the accounting office realizes an error, they are encumbered with lost time backchecking information with staff, otherwise, profits are lost when this goes unnoticed. Any invoice can contain an item that was shorted or not checked in accurately, and the cost of these errors can be excessive. Invoices are often returned to the department or called upon for clarification, and this can be a back-and-forth process until the invoice becomes whole enough to pay. In examining all types of hospitality operations everyone is vulnerable to invoicing errors. ?

Electronic Invoicing Controls

While some are beginning to rely on electronic processing considerations, human input remains in the pathway of collecting and documenting information, therefore we have not fully eliminated mistakes. The consistency in invoice inconsistencies remains even when electronic data mechanisms are used to manage the process. For example, while back-of-house electronic purchasing information transitions into inventory-ready data, variances occur when items received must be manually entered or documented on the invoice before the information is sent to accounting. While barcoding and AI could resolve some of these concerns, this technology is not yet mainstream or perfected. For example, during the receiving process, we must still verify weights, counts, and quality and compare and document discrepancies manually to the invoice. However, a company called Reeco is a good upcoming source for AI integration and invoice processing services.

Observation Management

Procedures that are not consistently managed, and the examples that follow, are equally important to the financial outcome of a business

1)????? Failure to observe vendors performing repairs, and to verify time and work or replacement parts being performed.

2)????? Failure to verify remaining warranties are still in effect before repair or replacements are performed.

3) Failure to categorize and document invoices properly can lead to duplicate payments or double billing, which can occur with adjusted invoice numbering and dates, or delays with duplicate deliveries of the same items.

4)????? Failure to properly categorize General Ledger Codes causing misplacement in departmental accountability, thus creating mistaken inventory counts and over-purchase results. This can also impact inventory management systems that assist with par levels and reordering.

5)????? Failure to recognize vague or incomplete repair or parts descriptions on invoicing.

6)????? Failure to recognize false or unfamiliar vendors being paid.

In all the above situations invoicing errors remind us of the significance and importance of effective procedural and accounting management.

The Maintenance of Repairs Invoicing

Let’s explore a common occurrence with maintenance and repair invoicing. Your refrigeration, heating, or air conditioning equipment has performance issues and you need someone to check and repair the system. From the point of an initial equipment failure through to the completion of the repair, some steps must be enforced to maintain a measure of accountability, otherwise, the invoice may be processed without regard to the reality of the conditions.

A technician shows up, works on the system, and leaves, but you never see them or they leave without a signature on the work order because you are busy. The practice of no signature required on repairs occurs regularly. Alongside this, the invoice for a repair is often not provided on the day of service. When the invoice does arrive weeks or months later, you must try to remember what occurred.

While numerous scenarios lead up to reasons for delayed invoices, the information may include a repair you do not remember. There may be labor or parts you do not recall or that you may question about being installed, and if you did not observe the repair or document the condition at the time of service, you may have no recourse. Repair invoices can show up weeks or months after a repair, and if you do not have a documentation trail, the memory of a repair may be called into question.

We must believe that the vendors we do business with are legitimate, even if some of the situations outlined here occur. Errors happen, pricing for parts can be incorrect on an invoice, and timelines of work after the fact can be subjective, so you must always try to have the information documented at the time of service.

?Repair Logs

Without direct equipment repair processes, you could encounter unnecessary expenses on an invoice.?

1)????? Create a logbook to document all repairs, dates, times, and vendor information.

2)????? Create and fill out a repair work order and log the instance.

3)????? Source repairs specifically to the needs of the equipment. The logbook should contain all vendors and their information.

4)????? Directly observe the techs’ time, from the last location to when they leave the premises, to ensure accountability of the process and work performed.

5)????? Follow up with the service tech for signature while in attendance and invoicing as quickly as possible.

6)????? Read the invoice carefully for detailed information about the repair, and ask for clarity, if necessary, before processing for payment. Create a copy of the work order to accompany the invoice.

The Invoicing Process

Effective management of processes is primary to the success of a business. Oversight and documentation are primary to reduce these failures.

1)????? Clearly document discrepancies on invoices at the time of service or receiving, which allows the accounting department to process and categorize invoices without the need for backchecking the information and reduces incorrect processing of payments.

2)????? Observe vendor repairs in real-time, from the time they leave their last location, which is when your clock time begins, and verify the work or replacement parts they perform and time on site while they are onsite.

3)????? Create a file for each piece of equipment in inventory. Create a file of all warranties in effect as this will remove the tendency for costs associated with the replacement of equipment or parts before their time. Very often repairs and replacements are made to warranted equipment. Vendors are not inclined to check if a warranty is in effect.

4)????? If General Ledger Codes are used, careful considerations must be initiated to avoid departmental coding mistakes. Prior to the invoice heading to accounting, GL Codes should be documented by the department receiving the service or delivery especially if items received on a single invoice are used by multiple departments. (ie: soft beverages and foods are often purchased in one delivery and coded for bar, catering, and restaurant with separate cost centers). Incorrect GL Codes occur between golf, tennis, facilities, housekeeping, and food and beverage departments all the time.

5)????? Categorize and document invoice filing by department and type, F&B, Pool, Golf, Facility Management, etc., in separate drawers, or cabinets, or electronically.? Departments that share an invoice, due to GL coding, should have a duplicate placed in each related file.

6)????? Delegate responsibility and train an employee in facility repair procedures to oversee this important task.

7)????? Consider steps to recognize false or unfamiliar vendors being paid.

None of us enjoy invoicing management as much as we enjoy the rest of hospitality, but it takes a focus on expenses to pay only what you owe. The constant management of invoicing, when effective, reduces backchecking needs, reduces expenses, and improves the expense management process.

1.?????? BWB: https://businesswebblog.com/2025/01/06/how-barcode-technology-is-revolutionizing-the-restaurant-industry/

2.?????? Centelli: https://centelli.com/ai-in-hospitality-streamlining-invoice-management/

3. Reeco: https://www.reeco.io/

3.?????? IFP, https://www.insightsforprofessionals.com/finance/accounting/types-of-invoice-discrepancy

4.?????? LHP: https://www.lopolitohospitalityconsultants.com/focusing-on-expense-loss.html

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