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Purchases-Accounts Payable (A/P)

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Prime Costs Controls

"An unsupervised buyer just buys and buys with no regard to costs."            

                                                                                                - Anonymous

Tracking purchases and classifying them correctly is a pretty easy task to accomplish. Controlling cost is the difficult task.

Purchasing happens on a daily basis and is usually done by the chef or sous chef. Purchasing happens in the 5-step routine:

1)      Open the refrigerator

2)      Look around for a minute

3)      Pick up the phone

4)      Call their favorite vendor

5)      Place the order

The order arrives and a steward (who has no idea what is going to be delivered on that day) accepts it. The invoice sits in a pile before making its way to the bookkeeping department for payment. Clearly, this is an inefficient system, but an all too common one. An operator in this case must make a few changes to ensure they the get the best price and quality. A few key suggestions are as follows:

1) Make sure all storage areas are neat and organized. Chefs hate moving things around. A neater room translates into less waste and easier ordering.

2) Vendors should be required to fill out a bid sheet and fax over prices daily. A minimum of three bids should be reviewed. The restaurateur can lay the bid sheets right next to each other and circle the lowest price for each item on the bid sheets.

3) Chefs and the Sous Chefs should not place the order directly. Each chef should fill out a purchase order (P/O).

4) The  P/O is passed on to the designated purchaser. The purchaser will contact the vendors based on the bid sheets and place the order.

5) The P/O goes to receiving. It can be placed on a clipboard and hung by the receiving area. The receivers will inspect the goods for quality, weight and quantity to make sure the price matches the P/O. If the delivered items do not have a P/O, they should not be accepted.

6) The invoice and the P/O are stapled together, initialed by the receiver and sent to accounting for payment. The accounting department matches the P/O and the invoice and enters the information in the purchase journal.

7) A schedule should be printed weekly showing which bills are due, when and how much. It is a good idea to enter each invoice separately and match them to the vendor statements. We have caught a lot of errors in vendor invoices, typically in price and math.

Note, although this system adds about ten to twenty minutes per day, the benefits are tremendous and the control over inventory is greatly improved.

Cash Disbursements

This area also has some pitfalls. The biggest problem is writing checks without telling anyone. These checks are the ones that probably do not make it into the system and are discovered two or three months later when they clear the bank. When manual checks are used, a copy of the check should be made and placed into the bookkeeperís file. At one of our clientís restaurants, the chef would take blank checks to the market and buy whatever he wanted. His food cost was terrific for a few weeks. Checks started bouncing and we could not understand it because our records indicated the restaurant had plenty of money. When we obtained a printout of the statement, sure enough, several unentered checks hit the account for several thousand dollars. The simplest way to avoid such a mishap is to avoid using manual checks.  Set aside two days a month for check writing and live by that schedule. A system like this would make everyoneís life a lot easier, especially the bookkeeperís life.

Table of Contents
Prime Costs Controls

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