Hospitality is one of the most dynamic and quickly growing industries for accountants to serve and the use of technology is key in transforming these established business models. ‍

Regardless of a client’s size and specialisation, one of the vital priorities for businesses in the hospitality sector are transparency, traceability and overall spend control within their procurement operations.‍

The challenge ‍

The Haines Watts’ client – a large regional hotel – numerous procurement requests get initiated by various operations personnel within the hotel.  The hotel operates 24/7, people work in shifts and are away from their desks, stations and computers most of the time.

Historically this used to cause major problems in terms of authorisation, delays to goods arriving and coordinating procurement decisions.

Haines Watts: “With this type of business it is impossible for the finance team, who are located in an office, to go and ask, let’s say the chefs in their kitchen or the housekeeping staff, about the purchase orders and approval-related information.”‍

Purchase orders and bills were being processed using a combination of manual approvals and emails. Paper clutter, lack of transparency and the inability to trace back approval decisions – those were the significant drawbacks of this former process.  

Haines Watts: “There was not enough control in place. Everyone could basically order what they wanted for no reason. At the same time, we could not just halt operations while collecting approvals. So, we needed a solution that puts spending under control and keeps the business running at a pace.” ‍

To gain the necessary oversight of all procurement operations and implement a straightforward, quick, transparent approach for handling them, we decided to implement an automated purchase order and invoice processing – called “Bill automation” by Xero.

Bill automation as key for spend control

The automation of our purchase order approval process was essential for introducing efficient spend control, and we could not have done it without ApprovalMax.

Today, every purchase order goes through ApprovalMax. Both their creation and approval can be done either on the go using the mobile app, or via the web interface.

Firstly, purchase orders are created outside of Xero. This protects financial data from unauthorised access and also enables us to define certain rules for specific purchase order requesters to limit them regarding the suppliers they can use and items they can order. These additional controls to what Xero has in place have been very beneficial.

Purchase orders are then run through a business-defined authorisation process, making sure that purchases of a certain size or type get authorised by budget holders. All approvals can be done on mobile devices, helping budget holders to review and approve (or reject) on the fly, making the whole process much faster and a lot more efficient than before.

After having been authorised properly, purchase orders are synched to Xero for further processing. This includes emailing purchase orders to the supplier and making them available for the “Bill to purchase order” matching at a later stage.

“ApprovalMax allows us to embed the approval process into a system, gather all approval-related information and route purchasing documents to all required authorisation levels. It implements the necessary layer of control; and makes the process efficient, standardised and therefore audit-ready.“ - Haines Watts

Bill to purchase order matching‍

ApprovalMax provides the capability for matching supplier invoices (or bills) and the respective purchase orders, which have been created and approved in ApprovalMax beforehand.

Two scenarios for “Bill to purchase order” matching are supported: we can match either multiple bills to a single purchase order, or one bill to multiple purchase orders. During this procedure, proper checks and validations take place.

Once a bill has been matched with the correct purchase order(s) and the coding has been reviewed and validated, the bill authorisation process as set up by the finance manager will start. All fully approved bills are then synched to Xero.‍

Hospitality App Playbook by Xero‍

The Xero Hospitality App Playbook is a reference book on using Xero and choosing the right integrated apps for customers in the hospitality sector. It is a guide for hospitality advisory and contains recommendations and app solutions for each of the hospitality focus areas.

Among a number of other apps required for the delivery of accounting and advisory services, ApprovalMax features there as a bill automation app which addresses complex multi-level approval workflow automation.