Partial automation yields partial payoffs in accounts payable
By Chelsea Figurski
Most hotel operators have invested in automation, driven by high hopes of speeding up back-office processes, making them more efficient, and reducing errors. But in many cases, their expectations haven’t been met. Invoice backlogs, payment errors, ever-growing fraud risk, and slow month-end closes continue to plague finance teams across the industry.
If automation is so widespread, then why are hotel finance teams still struggling with the same problems? A recent survey of more than 225 finance leaders across hospitality, retail, and healthcare uncovered a clear answer: While most operators have automated parts of their accounts payable (AP) process, very few have connected the entire invoice-to-payment lifecycle.
Manual Processes Cause Strain
Multi-property hotels rely on goods and services from a complex network of vendors, from food and beverage suppliers to maintenance contractors to linen services. With more vendors come more invoices. Nearly half of hospitality businesses process 5,000 or more invoices every month. One in five manages more than 10,000.
The volume itself isn’t necessarily a problem, it’s the fact that many hotel teams still rely on manual processes that can’t keep up. Nearly three in 10 hospitality organizations say it takes five or more days to process a single invoice. For hotel operators managing purchasing activity across multiple properties, that processing time quickly compounds.
The financial impact of AP inefficiency is hard to ignore, with late fees, strained vendor relationships, and missed early payment discounts getting increasingly common as volume grows. What’s more, when finance teams spend the bulk of their time on manual work, they have little leftover for strategic planning and analysis.
When workloads become unmanageable, the knee-jerk reaction is often to add headcount. But this isn’t a staffing problem; it’s a structural one. Invoice volume will only continue to grow, and adding headcount isn’t a sustainable solution. Yet, investing in automation doesn’t always solve the problem either.
An Illusion of Automation
Today, 95 percent of hospitality businesses have adopted some form of automation in their AP process. While this seems like the answer to the industry’s back-office problems, that’s not the reality.
While AP automation is prevalent, 90 percent of hospitality businesses take a partial approach, automating certain steps of the process while leaving others manual. Only 5 percent of hospitality finance teams have fully automated AP from invoice intake to payment.
Rather than eliminating manual work, partial automation simply moves it to another part of the process. For hotel operators, the extra work is often concentrated in areas such as invoice ingestion and approval workflows.
Because a partial approach has become the default, it’s not surprising that nearly four in 10 hospitality businesses feel their automation tools deliver little to no cost savings. While automation does work, a fragmented approach can’t fully address the challenges hotel operators face.
The Risk Factor
Today, 36 percent of hospitality finance teams have faced invoice fraud or overpayment in the last year. High invoice volume, multi-location complexity, and disconnected systems make these teams especially vulnerable.
Most hotel operators have put controls in place to reduce risk, with manual reviews, multi-level approvals, and periodic reconciliation of AP activity being the most common. But these human-powered controls can’t scale. Teams can either have speed or control, not both.
Reporting inefficiencies are also common. Nearly half of hospitality finance teams spend 11 or more hours each week running reports, and one in four frequently re-run them due to errors or missing data. As a result, operators often lack the real-time insights needed to make smart decisions about cash flow and vendor spend.
Closing the Gap
Automating one part of the AP process won’t solve hotel operators’ back-office problems. In many cases, this approach adds another disconnected system to the mix. The only way to truly close the gaps is to shift to unified automation, where the entire invoice-to-payment lifecycle is connected in a single system and manual touchpoints are minimal.
When data flows through a connected workflow, many of the challenges posed by partial automation begin to fade. Manual handoffs between disconnected tools are no longer needed, reconciliation becomes straightforward, and real-time visibility replaces the familiar month-end scramble.
Hotel operators who adopt unified AP automation see common themes. Invoices are routed automatically across locations, approvals no longer get held up in inboxes, and automated controls consistently flag potential issues before they become bigger problems.
Consider Pacifica Hotels in California, which processes more than 7,000 invoices every month across over 30 properties. Shifting to unified AP automation eliminated manual invoice routing across the operator’s locations, improving efficiency and providing visibility and control that weren’t possible before.
As volume and complexity grow, “good enough” AP automation will continue to hold back hotel finance teams. On the flip side, operators that embrace a unified AP automation will gain a competitive advantage through faster processing time, stronger vendor relationships, and a finance team that finally has time to support growth.
How to Get Better Than “Good Enough”
Hotel operators can start on their path toward unified accounts payable automation by taking a few practical steps.
- Identify where manual work still exists in the AP process. Intake, coding, approvals, and reconciliation are among the areas where teams spend the most time.
- Evaluate the current AP stack. Determine whether tools talk to each other or simply handle specific steps in isolation. More disconnected tools mean more manual handoffs.
- Establish performance metrics. Set a benchmark for invoice processing time and measure against it monthly to gauge the impact of process improvements.
- Prioritize ERP integration. When evaluating AP platforms, look for options that seamlessly integrate with the existing enterprise resource planning system. Separate reconciliation layers add unnecessary complexity.
Chelsea Figurski is the senior product marketing manager of hospitality markets at Ottimate, a Platinum Industry Partner. She is passionate about building products that help hospitality groups replace costly manual workflows with a streamlined solution for strategic growth.
Image: robu_s/stock.adobe.com
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