Imagine this: at the end of the month, all the invoices are posted to the Income Statement on time and in the right place. Managers aren’t spinning their wheels figuring out what needs to be reclassed. The hotel’s operations can be evaluated easily because the financials are timely. The managers aren’t stressed out because they aren’t fielding calls from angry vendors or worrying about the cable getting shut off.
Instead the managers are encouraging their team, chatting with guests, and strategizing about how to improve operations and add more value!
That might not be your reality right this moment, but it is possible!
This week we’re talking about cutting down on time wasters like end of month reclasses. If items' invoices aren’t coded accurately, if they aren’t coded as they were budgeted, and if they aren’t coded uniformly across all the hotels in a portfolio,
They are going to be left that way and the Income Statement is going to be a big mess. You’re not going to be able to make decisions based off of the Income Statement. OR
The team is going to have to painstakingly dig through the activity for the month trying to figure out what was coded incorrectly and recording everything that needs to be changed.
There will always be room for error and knowing how to spot and correct them is important, but you also want to mitigate them as much as possible. You don’t want your managers spending hours every month trying to untangle the Income Statement.
To get coding right on the front end, our best tips are to:
Make sure whoever is coding is extremely familiar with the chart of accounts and all of the departments in the hotel.
For example, you may have an invoice for uniforms. Well in a hotel chart of accounts, there may be several different accounts named “Uniforms”- each starting with a different number signifying whether it was a uniform for the Front Desk, General Manager, or the Maintenance Engineer.
The person coding invoices needs to understand the differences in those accounts.
Make sure they are familiar with where things are budgeted. It’s important to gauge whether the hotel is staying on budget, and that’s impossible if invoices aren’t coded where they were budgeted.
Use default GL codes whenever possible. This is a code you set for a vendor in your accounting system if one GL code is used the majority of the time for that vendor.
Use a coding cheat sheet for items that are regularly coded to the wrong place. We give you a template for this cheat sheet and go into detail of how to personalize it in our AP training! It is just a simple document for the team to use to make sure everyone is on the same page on coding. It’s also a great resource to use when a new team member is brought on.
To recap: the person coding needs to know the chart of accounts intimately, know the budget intimately, use default codes when appropriate, and keep a team cheat sheet so everyone is on the same page!
So your tip for the week is to spend time creating a process for accurate coding on the front end, so that the team isn’t constantly spinning their wheels trying to get items reclassed and untangled.
Learn more about the AP Training HERE!