Supplier invoices: from paper pile to a number

In many restaurants, supplier invoices live in a pile. Some arrive with the delivery and are stuffed into a folder by the door. Some arrive by email, to an inbox nobody checks daily. Some arrive weeks later, or as a monthly statement. At the end of the month, someone gathers them all, hands them to the bookkeeper and hopes the numbers add up.

That pile is where a lot of food cost hides. An invoice that is not checked is paid as it stands, whatever was actually delivered and whatever price was agreed. An invoice entered in the wrong month makes one month look expensive and the next look cheap. And a kitchen that only sees its purchases once a month cannot manage its food cost weekly, because the biggest number in the calculation arrives four weeks late.

This guide sets out a weekly routine for turning supplier invoices into a number you can use: where to collect them, the three matching checks worth doing by hand, how to get them into your costs in the week they belong to, and what to pass to whoever runs your accounts. Every figure in it is an example.

Purchases are the largest moving part of a kitchen's costs. They feed directly into cost of goods sold, which our guide to cost of goods sold explains: opening stock plus purchases minus closing stock. If the purchases figure is late, incomplete or wrong, the food cost built on it is too.

There is also money in the pile itself. Invoices are where short deliveries are charged for, where prices drift above what was agreed, where surcharges appear and where the same delivery is occasionally invoiced twice. Each of these is caught by checking the invoice before it is paid, and almost never caught afterwards.

Before checking an invoice, it helps to know what a complete one looks like. A proper invoice normally shows:

If a supplier's invoices are missing important details, such as the unit price or the quantity, ask them to include them. An invoice that shows only a total cannot be checked against anything.

The first step is to stop invoices scattering. Choose one place for paper invoices, a tray or a folder in the office, and one place for emailed ones, a dedicated email address or a folder that someone checks daily. Tell every supplier where to send invoices, and ask those who send paper whether they can email instead.

Delivery notes and goods received notes should go to the same place as the invoices, or be filed so they can be found by date and supplier. The checks that matter compare the invoice with what was received, so the two documents need to meet.

A simple log, in a spreadsheet, turns a pile into a list. One row per invoice, with these columns:

The log answers the questions that matter at any moment: which invoices have arrived, which have been checked, which have queries outstanding, and which have been paid. It takes a minute per invoice to fill in.

Compare each invoice line with the delivery note or goods received note for the same delivery. Every item that was short, rejected or substituted at the door should either be missing from the invoice or covered by a credit note.

This check is only possible if deliveries are checked at the door and the differences are written down. Our guide to the goods received note covers how to make that quick. Without it, the invoice is the only record of what was delivered, and you will pay for whatever it says.

Compare the unit prices on the invoice with the prices you agreed, quoted or last paid, at least for your top lines by spend. A difference is purchase price variance: the gap between the expected and the invoiced price, multiplied by the quantity.

Our guide to purchase price variance explains how to track it and which differences to query. The essential point is timing: a price queried before the invoice is paid is usually corrected quickly. One discovered months later rarely is.

The third check is the simplest and catches surprisingly much.

Duplicates are more common than they should be, especially when suppliers send both a delivery invoice and a monthly statement, or resend an invoice after a query. Checking the invoice number and delivery date against the log catches them.

Two awkward cases come up every month, and the log is how you catch them.

A delivery with no invoice yet is common: some suppliers invoice weekly or monthly, and some invoices are simply late. Record the delivery in the log from its delivery note, with an estimated value, so that the week's purchases are complete. Mark it as awaiting invoice, and replace the estimate when the invoice arrives. Without this, the week looks cheaper than it was and the week the invoice lands looks dearer.

An invoice with no delivery is rarer and more important. It may be a delivery that went to another venue, a delivery that was refused, a duplicate, or an order that was never placed. Before paying, find the delivery note or goods received note. If there is none, query the invoice with the supplier, and do not pay it until the delivery is confirmed.

When a check finds a difference, ask the supplier for a credit note the same day, with the invoice number and a copy of the annotated delivery note. Record the request in the log.

Then follow it up. Credits are easy to agree and easy to forget, on both sides. Check the log every week for credits requested but not yet received, and chase them. A credit that never arrives is money you are still owed.

For food cost, the week that matters is the week the stock arrived, not the week the invoice was dated, received or paid. A delivery on the first of the month with an invoice dated the last day of the previous month belongs to the new month, because that is when the stock was in the building.

Use the delivery date in the log to decide which week each invoice belongs to, and enter purchases into your costs by that date. If an invoice has not arrived by the time you calculate the week's food cost, use the delivery note value as a placeholder and correct it when the invoice comes. Our guide to the weekly food cost report shows where the purchases line fits.

Most kitchens need purchases split at least into food and drinks, and drinks often into beer, wine, spirits and soft drinks. Some venues also separate packaging, cleaning materials and smallwares, which are not food cost at all.

Code each invoice line, or each invoice where a supplier sells only one category, as it is logged. It takes a few seconds and it means each category's cost can be calculated separately. A single figure for all purchases hides the categories that are drifting.

Once invoices are checked, they become part of accounts payable: what the business owes its suppliers and when each payment is due. Wikipedia's article on accounts payable describes the general idea.

For a small venue, the log is the accounts payable record. Sort it by due date to see what needs paying this week. Pay checked invoices on time, and hold back only the part that is in dispute, paying the rest. Paying reliably is worth something in every negotiation with a supplier, and our guide to negotiating with suppliers without volume explains why.

Many suppliers send a monthly statement listing every invoice, credit and payment on your account. Check it against your log once a month.

Resolve the differences before paying the statement balance. Ten minutes a month per supplier is enough for most venues.

An invented kitchen receives fourteen invoices in a week from six suppliers. The person who checks them spends about forty minutes in total, as an example.

The quantity check finds one invoice charging for a case of lemons that the goods received note records as short; a credit is requested. The price check finds chicken invoiced 4 per cent above the agreed price and butter up 6 per cent without notice; the first is queried and corrected, the second is genuine and noted for the next costing review. The arithmetic check finds one invoice that duplicates a delivery already invoiced the week before.

At example prices, the credit, the price correction and the duplicate come to a little under 300. The week's purchases enter the food cost report with every invoice in the right week, coded by category, and the butter increase is flagged for the menu. Forty minutes, done every week, is a small price for that.

Whoever keeps your accounts needs the invoices too, and the routine above makes their job easier. Agree with them how they want to receive invoices, how often, and how queries and credits should be shown.

Many bookkeepers prefer digital copies, which is a reason to photograph or scan paper invoices as they are logged. Some accounting systems can read invoices from email or photos automatically. Whatever the method, the kitchen's checks should happen before the invoices reach the accounts, because the bookkeeper cannot know what was actually delivered.

The checks need someone who can compare an invoice with what was delivered and what was agreed. In a small venue that is often the head chef or the general manager; in a larger one, an office manager or bookkeeper working with the kitchen.

Whoever does it needs three things: the invoices and delivery notes in one place, the reference prices for the top lines, and a regular slot in the week to do the work. A fixed time, such as the same morning each week, works better than fitting it in when there is a gap, because there never is one.

If the checker is not the person who receives deliveries, they need the goods received notes to be complete and legible. A short conversation between the two each week, about anything that arrived short or wrong, saves a great deal of guesswork.

In a group, the same supplier may deliver to several venues and invoice each separately, or send one invoice for all of them. Either way, each venue's costs need its own purchases.

Ask suppliers to invoice each venue separately, with the venue's name and delivery address on every invoice. Where that is not possible, split combined invoices by delivery note before logging them. Keep one log per venue, or one log with a venue column, so that each venue's food cost is calculated on its own deliveries. A group that pools its invoices cannot tell which kitchen is drifting.

The routine can be in place within a week, without any new software.

After two or three weeks, the routine settles into a fixed time each week and becomes much quicker. The first month usually finds enough errors and credits to show that it pays for itself.

Paper invoices are easy to lose and hard to search. Photographing or scanning each one when it is logged, and keeping the images in a folder named by month and supplier, makes every invoice findable in seconds. Ask suppliers to email invoices wherever they can.

Keep your records for as long as your tax rules and your accountant require. Tax authorities set minimum periods for business records, and invoices are among the records they expect to see.

Supplier invoices, delivery notes and accounts payable stay in your own log and accounting system today: servearound does not hold supplier invoices or purchases. Inventory tracking, for the stock behind the menu, is coming.

servearound covers the sales side of your costs. The menu report in Analytics shows units sold and revenue by dish and category for any week, so the purchases you log can be set against what was sold in the same period, and bills for a date range can be downloaded as a spreadsheet for your own records. If you would like to see it, get in touch.

Weekly at least, and ideally as they arrive. Checking before payment is when errors are easiest to correct.

Quantities against what was received, prices against what was agreed, and the arithmetic, tax and duplicates. Together they catch most invoice errors.

For food cost, the week the stock arrived, using the delivery date, not the invoice date or the payment date.

It is what the business owes its suppliers, and when each payment is due. For a small venue, a well-kept invoice log serves as the accounts payable record.

Charging for goods that arrived short or were rejected at the door. It is also the easiest to catch, as long as the delivery was checked and the difference written on the delivery note.

Yes, monthly. Compare each statement with your invoice log to find missing invoices, duplicates, missing credits and payment differences before paying.

Query it with the supplier the same day, ask for a credit note or a corrected invoice, record the query in your log, and pay the undisputed part on time.

For a single venue, perhaps thirty to sixty minutes a week once the routine is settled, plus a few minutes per supplier each month for statements.

Only after the kitchen has checked them. The bookkeeper cannot know what was delivered or what price was agreed.

Log each delivery from its delivery note as it arrives, with an estimated value, so each week's purchases are complete. When the monthly invoice comes, check it against those deliveries line by line before paying.

Usually, yes. Pay the undisputed part on time and hold back only the amount under query. It keeps the account in good standing and shows the supplier that the query is specific, not a reason to delay.

They are the purchases in the cost of goods sold calculation. Late, missing or misdated invoices make food cost wrong, even when everything in the kitchen is right.

Supplier invoices are where much of a kitchen's food cost is decided, and a pile checked once a month is where errors go unnoticed. Collect every invoice in one place, log it in a simple spreadsheet, and check it before paying: quantities against what was received, prices against what was agreed, and the arithmetic, tax and duplicates.

Request credits the same day and chase them weekly. Enter each invoice into your costs in the week the stock arrived, coded by category, so that your food cost is current and correct. Check supplier statements monthly, pay checked invoices on time, and pass clean, checked records to whoever keeps your accounts.