Accounting for franchises is a complex web of responsibilities. Teams have to manage multiple entities, all the while maintaining consistency and streamlining processes across each location. Accounts payable (AP) automation has become a popular tool for franchises to overcome these obstacles. In this article, we will discuss the challenges associated with franchise accounting and how AP automation helps solve them.
What are the Challenges of Franchise Accounting?
Franchise accounting presents several challenges that make AP difficult to manage without the proper tools and processes. One significant challenge is that many franchises have a small staff engaging in multiple roles. This requires staff to context switch throughout the day and makes it harder for them to establish consistent workflows and processes. Ultimately, this can lead to more errors like duplicate or late payments, costing your team significant time and money.
In addition, multi-entity consolidations can be time-consuming and complex, requiring significant efforts to reconcile financial statements across various locations. Different stores may use separate accounting systems or procedures, which leads to further inconsistencies and errors. This often delays reporting and creates disorganized financial statements. It also prevents staff from gaining a clear view into the franchise’s overall financial health.
6 Benefits of AP Automation for Franchises
AP automation has become a popular tool for franchises looking to streamline their accounting processes and overcome the challenges associated with managing multiple entities. Here are six benefits of AP automation for franchises and how it can help resolve the common obstacles listed above.
1. Centralized Routing for Invoice Approvals & Payment Authorizations
Centralized invoice and payment routing is one of the most significant benefits of AP automation. This capability routes invoices and payments directly to specific individuals using predefined rules, so they each get approved or authorized by the appropriate personnel. This eliminates the time-consuming and error-prone process of manual routing, and instead provides a clear and consistent process for invoice payment approvals across different locations.
Beyond streamlining the approval process across different locations, AP automation also enhances security by preventing unauthorized spending and reducing the risk of fraud. Additionally, it increases visibility and control for franchise owners and managers across the entire AP workflow.
2. Accurate Invoice Data Capture and Coding
Accurate and automated invoice data capture and coding is another essential benefit of AP automation, erasing the need for the time-consuming process of manually processing invoices.
AP automation software utilizes OCR technology to extract data from invoices, ensure accuracy, and reduce the risk of errors. MineralTree takes this one step further by combining OCR technology with human review to deliver 99.5% accuracy in line item information. Once the system extracts the invoice data, it automatically codes and categorizes the information to the correct general ledger accounts. Additionally, MineralTree uses invoice information in AP analytics and reporting immediately upon invoice capture to deliver better financial forecast models.
3. Segregation of Duties
Segregation of duties is an effective way to maximize security within internal controls in accounting. It divides workflow responsibilities across multiple individuals or departments so that no single person has complete control over the entire AP workflow.
This additional layer of protection minimizes the risk of errors, omissions, or malicious activities that could harm the franchise. It also provides a better audit trail than manual methods. By providing evidence of who did what, and when, digital tools create more accountability throughout the entire accounts payable process.
4. Single-Tap Invoice Approvals & Payment Authorization
Single-tap invoice approvals provide real-time visibility into approved and pending invoices. This allows franchises to access invoices from anywhere via email, making it even more convenient to view invoices for various store locations with just the click of a button.
Once invoices are approved, AP automation offers single-tap payment authorization to help franchises quickly and securely approve payments from their mobile devices or desktops. This ensures the right people receive payment authorization requests, reducing the risk of errors and delays in the payment process. It also checks that payments are made in compliance with internal control requirements.
5. Easy Access to Electronic Payments
With electronic payments, franchises can pay invoices quickly and securely, without the need for paper-based checks or manual bank transfers. This switch can save them a tremendous amount of money by eliminating the costs of time, stamps, and printing paper checks. Electronic payments also provide real-time visibility into payment status, allowing franchise owners and managers to track invoice payments and see when they have been processed.
AP automation software can also send out automatic reminders to approvers to reduce late payments. This helps maintain good vendor relationships and ensures a steady supply of goods and services. Moreover, an AP automation software allows for multiple payment methods such as ACH, wire transfers, and virtual cards, accommodating a wider range of vendor payment preferences.
6. Increased Productivity
AP automation saves staff time by reducing the risk of errors and eliminating manual data entry. This allows AP teams to focus on high-value tasks like financial analysis, while real-time visibility into the status of invoices and payments enables prompt issue resolution. The result is stronger communication, fewer administrative tasks, and better business performance.
AP staff at franchises often have to log into multiple disparate systems in order to check on AP tasks for each different store location. Alternatively, an AP automation tool like MineralTree eliminates this headache by allowing teams to view all of their stores’ AP data on a single platform.
What to Consider When Choosing AP Automation Tool for Your Franchise
When choosing an AP automation tool for your franchise, there are several factors to consider. Here are some of the essential features and capabilities to look for:
If your franchise operates across different countries or regions, it’s essential to choose an AP automation tool that supports multi-currency capabilities. This ensures that all transactions are recorded accurately and that currency conversion is automated, reducing the risk of errors.
Ability to Scale:
Your franchise may grow over time, so make sure to choose an AP automation tool that can scale with your business. Look for a tool that can handle a growing volume of transactions and users without compromising on performance. While certain ERPs may be better suited for companies of specific sizes, MineralTree can grow with your organization.
Easy Integration & Use:
It’s crucial to choose an AP automation tool that integrates with your existing ERP system and is simple for staff to use. Look for a tool that has a clear and intuitive user interface and integrates with any necessary systems. For example, MineralTree is ERP agnostic and can be used by your company even if you migrate to a new ERP system.
Multi-User Access and Controls:
Your AP automation tool should provide multi-user access and controls, allowing different staff members to access the system based on their role and level of authorization. This improves efficiency and reduces the risk of errors or unauthorized transactions.
Multiple Vendor Payment Methods:
Your AP automation tool should offer flexibility in vendor payment methods, allowing vendors to pay with their preferred payment type. This ensures that franchises can accommodate a wide array of vendors for each of their locations, improving vendor relationships and reducing payment delays along the way.
What Your Franchise Looks Like With An Automated AP Software
Implementing an automated AP software can have a significant impact on your franchise’s accounting processes. Here are some of the benefits your franchise can expect to see with an automated AP software:
Improved Vendor Service:
AP automation software enables faster and more accurate invoice processing, leading to improved vendor relationships. With streamlined payments and accurate records, vendors are more likely to continue doing business with your franchise.
By automating many of the manual tasks associated with the accounts payable process, AP automation tools improves productivity and helps staff focus on more strategic initiatives like data analysis and business planning.
Optimized Cash Flow:
Automated AP software provides real-time visibility into the status of invoices and payments, allowing franchise owners and managers to track transactions and promptly resolve issues. This reduces the need for time-consuming follow-up calls and emails, improving communication and reducing the time spent on administrative tasks.
Streamlined Company Audits:
Automated AP software creates an audit trail with evidence of who did what, and when. This makes it easier to track transactions and identify any anomalies, streamline the audit process, and reduce the risk of non-compliance.
Better Visibility into Invoice and Payment Status:
Real-time visibility into the status of invoices and payments helps franchise owners and managers better track transactions and promptly resolve issues. This improves communication and reduces the time spent on administrative tasks, providing better visibility into the financial health of the franchise.
Case Study: MTB Management Leverages AP Automation to Manage The Franchise
MTB Management is a fast-growing Taco Bell franchise in Western Montana. Since first becoming a MineralTree customer, MTB Management has increased its store locations from eight to 12 quick serve restaurants. These stores are hundreds of miles apart, making payments and vendor management a tricky process. Additionally, their only full-time AP staff member also manages the organization’s vendor relationships and must balance those additional responsibilities on top of his AP workload. Eventually, this prompted the team to explore ways to streamline their AP process.
Their search became especially important once Covid hit. “A lot of us were working remotely, trying to manage vendors and payments for our eight stores at the time,” said Matt Ogle, Accounts Payable & Vendor Manager. “However, because our AP process was entirely paper-based and manual, we had to go into the office to pay our vendors. That wasn’t working very well for anyone, of course, and it certainly wasn’t going to scale as we added new stores.”
Each of MTB Management’s store locations has 20-30 vendors, which include a range of localized suppliers and vendors serving the entire franchise. Through MineralTree, MTB Management now manages each store as a separate entity, while continuously mapping all the data to their ERP system of record, QuickBooks. As a result, the finance team has been able to focus on more strategic initiatives. “MineralTree has consolidated and simplified what was previously a tedious and time-intensive process,” added Ogle. “Since we deployed the solution, we’ve added four stores and I am handling approximately 50% more invoices each month. Yet, I’ve cut my time on AP by more than half. Now, I can focus more of my efforts on analyzing and optimizing our spend.”
Automated AP software is essential for franchises looking to improve efficiency, reduce manual tasks, and focus on strategic initiatives. By choosing the right partner and AP automation solution, you can achieve your business goals and take your franchise to the next level.
At MineralTree, our AP automation solutions provide the features and capabilities that franchises need to automate invoice and payment processing, improve vendor relationships, and reduce the risk of errors and fraud.
Request a free demo today to learn more about how MineralTree can automate your AP processes.
Frequently Asked Questions
How does the MineralTree solution look across multi-locations?
All multi-entity/franchise organizations can benefit from MineralTree’s multi-entity support to save them from using multiple systems to login and manage all of their payables. For many ERPs, MineralTree has APIs which enable a continuous two-way sync.
How can AP automation make franchises more efficient?
AP automation centralizes all documents in one system, so that teams can easily track and find the papers they need, whenever they need them. Automated invoice and payment approval routing also eliminates the need for AP staff to walk over invoices for approval and checks for signatures.