Table of Contents
Introduction: The Operational Drain of Payouts
When you open your first new unit, running accounts from spreadsheets or manual ERPs should flow without too many issues. But as you scale, those higher numbers begin to slow down growth. Once a franchise hits five, ten, and more units, payouts become an unexpected bottleneck.
Payouts from the franchise owner to franchisees are more a constant source of operational friction for many COOs, CFOs and Treasurers. Every manual step creates delays, errors, and escalations, eating into the capacity your teams need to actually scale the network. In fact, nearly a third of financial professionals admit to making mistakes in manual, repetitive tasks every week.
It’s clear that manual processes hinder growth and create extra costs. But it can be challenging to part with “what has worked” for so many early-stage franchises. To better understand how to remedy the problems with manual and spreadsheet-based accounting, let’s take a closer look at the process.
Manual Means Reactive
So, what is the difference between manual and automatic payments? When payouts run on spreadsheets and email chains, every exception becomes a ticket. Manual review means optimization is finite and the chances for mistakes or subjective calls are many. Resolutions can stretch from hours to days, dramatically increasing friction. And, to top it all off, ops teams are pulled into finance work instead of focusing on operational improvements.
But it all boils down to a simple truth: Manual work is reactive. It looks backward instead of forward, meaning that the team is always catching up. Whether it’s making corrections or spending countless hours on tedious, low-value tasks, it’s impossible to anticipate needs or focus on strategy.
When using a manual approach, the entire finance team becomes blind-sided.
The Treasury Blind Spot
A common problem for the Treasurer and finance team is visibility. Expenses are often siloed by department, data often decentralized. Without a centralized approach to AP, liabilities are unclear and can stack up, putting a strain on liquidity and draining the float before it's strategically beneficial. And this liquidity risk only increases with network growth, for both franchisor and franchisee.
Lack of transparency and convoluted, time-consuming processes impact several growth-related functions, such as:
- Slower openings: Manual payouts constrict cash flow and hinder growth, leading to delayed expansion.
- Reduced efficiency: Doing payouts via spreadsheet or individually is labor intensive and exposes the process to human error. In short: It’s a significant resource drain.
- Greater fraud and compliance risks: Another often overlooked component to manual franchise business accounting is poor oversight and exposure to increased fraud risk.
- Overreliance on credit: As new units wait for payouts, the franchisor or franchisee may turn to credit lines to keep operations running if bank account funds get low. This, in turn, creates new liabilities for business.
Automation: The Quiet Force Multiplier
The answer to these issues of manual tasks and low visibility? Finance automation.
Automation may already be applied to other areas of your organization. It’s one of the primary tools to reduce workload, eliminate errors, and drive efficiency. In fact, the accuracy rate of automated workflows ranges from 99.96% to 99.99%. Let’s look at automation in payouts as an example.
First, automation enables you to standardize payout logic per location and transaction type. This provides flexibility required for your specific business model and revenue stream.
Next, automation consolidates expense request workflows and builds approvals into the chain. As a result, approvals are faster and compliant, reducing risks of overspend.
An automated payout workflow also allows you to schedule transactions to align with cash position and urgency based on franchise agreements—giving the finance team greater control, improved visibility, and the flexibility to optimize working capital while reducing manual effort and errors.
Finally, a best-in-class automation solution should make it easy to rack every transaction in a single dashboard.
The Payoff for Ops and Treasury
It’s rare that tools do the heavy lifting when it comes to business, but automation in finance offers a full shift in strategy.
Implementing automation isn’t just about speeding up manual tasks, although that is a significant benefit. For operational teams, automation results in fewer tickets, faster resolutions, and freed-up bandwidth to support expansion. The Treasury also benefits from real-time visibility, the ability to manage liquidity with more accuracy, and automated policy compliance enforcement.
With access to real-time, accurate data while reducing the finance team’s workload, it’s possible to turn franchise accounting into a proactive strategic asset. Consistent access to capital provides greater liquidity for growth, whether that be in new franchise locations or upgrading other areas of the franchise system.
Payout automation is just one component of capturing control over every franchise fee and revenue stream—a full suite of brand standard `spend management tools can further refine finance reporting.
Ditch Manual Payouts and Drive Growth
A manual franchise system creates costly bottlenecks, especially when it comes to payouts. Manual payout processes cost more than time, they also drain the potential for growth while limiting liquidity.
Automation offers franchisors and franchisees a more efficient system. Instead of wasting time on repetitive tasks or digging through spreadsheets, automated spend management systems return control of cash flow to the finance team. As a result, every dollar is timed for maximum impact.
Learn how Teampay can eliminate payout headaches and unlock operational scale. Request a demo today.
