In the hospitality industry, managing finances is an essential task that can significantly impact the success of a business. Key aspects of financial management include accounts receivable (AR) and accounts payable (AP). This blog will discuss AR and AP, why they are essential, and how you can effectively manage them for the hospitality industry.
Accounts Receivable
AR is the money a business owes its customers for goods or services that have been provided but have yet to be paid. In the hospitality industry, AR typically includes charges for hotel rooms, food and beverage, event space rentals and other services.
Management of AR is crucial because it directly affects a business's cash flow. The longer it takes customers or vendors to pay their bills, the longer the business has to wait for the money it needs to pay its bills. In the hospitality industry, where cash flow can be unpredictable, this can create significant problems.
To effectively manage AR, hospitality businesses should:
- Establish clear payment terms and policies for customers
- Send out invoices promptly and consistently
- Follow up on overdue payments
- Use software or other tools to track and manage AR and payment collections
Accounts Payable
AP is the money a business owes to its vendors for goods or services that have been received but have not been paid. In the hospitality industry, AP typically includes payments to vendors for food and beverage, supplies, equipment and other goods and services.
Effective AP management is critical for maintaining good vendor relationships and ensuring the business has the resources to operate effectively. In the hospitality industry, where vendors often have strict payment terms, failing to pay on time can result in late fees, damaged relationships and even legal action.
Managing AP effectively is essential for the smooth operation of any hospitality business. Here are some key considerations to keep in mind:
- Set up a system for reviewing and tracking invoices
- Build relationships with vendors and suppliers
- Secure payments and the use of rebate-earning virtual cards
- Reduce the time and money spent on manual processes
Check-In to Streamlined Payments
Automating hospitality businesses' AR and AP processes using electronic payment solutions can simplify how businesses make and accept payments.
The right digital payment solutions can integrate with existing enterprise resource planning (ERP) software to eliminate time-consuming file imports and software updates, saving you time and effort the moment it's connected.
Powering eCommerce Through Simplified AR
Simplifying the AR experience can help businesses collect customer payments faster, reduce risk and provide the best payment solutions for customers.
Omni-channel payment acceptance technology should offer the following:
- Multiple payment methods
- Lower processing costs
- Detailed data for each transaction
- Increased productivity on the back end
- Secure cash flow and improve operational efficiency
Full-Service AP Solution
Vendor payments should be fast, simple and secure. Implementing an automated AP solution can help businesses save time and reduce costs by automating the entire outbound payment process to pay vendors faster without manual effort.
A full-service solution should:
- Eliminate paper checks and processing costs
- Improve vendor relations by paying on time
- Reduce manual labor needed for AP
- Track and update payments automatically
- Reconcile easily with robust reporting
Get more from your ERP
Integrating digital payments into ERP software can help businesses better manage operations and automate back-office functions. A robust AP solution should fit seamlessly into a business’s existing workflow and offer a consistent flow of information between systems.
Look for a provider who easily accepts batch invoice files and removes costly and manual data entry for AP teams while securely storing critical vendor payment information. This will maximize business efficiency by saving time and money, reducing human error, mitigating fraud risk, speeding up payment processing and improving workflows.
REPAY is your AR and AP payments concierge
Managing AR and AP is a critical component of running any business. By automating your AR and AP account processes with REPAY, you can simplify and help ensure your hospitality business's financial health and success for a long time to come.