How to Automate Payables with ServiceTitan and Virtual Assistants | Podcast Ep. 76

Maybe your gross margin is right in QuickBooks because you've done the work to get the bills in there and they're pretty much hitting the right GL accounts. But if you have it in ServiceTitan, it's definitely hitting the right accounts because you're using all the items. And you can go to individual jobs and say, this job did poorly, what did we do wrong?

Welcome to Mastering ServiceTitan, where you get expert advice from power users I'm your host, Josh Lew, and today I'm joined by Jessica Woodruff-Smith, the president and co-founder at Boxed for the Trades, a ServiceTitan certified provider. Welcome back to the show.

I'm happy to be here.

And we are talking about a big topic today. This one is very, very popular. It's accounts payable. And, uh, we just did a webinar a couple weeks ago, and I'll link that in the description if you want to get the full detail with a demo and screen share and all that. But, uh, we're going to dive in from the ground up. So if we can start off, Jessica, if people haven't even heard of this, what is Accounts Payable?

So Accounts Payable is a module in ServiceTitan. It's a core product, doesn't cost you any extra money. I know that's important to people. It allows you to take that bill that gets created when you receive a purchase order and take it all the way through the, I have a bill, I'm going to put it on a statement, I'm going to mark it paid, all inside ServiceTitan. Which is key because then you ensure accuracy in your costs so you can go look at accurate job costing.

And before accounts payable, how was this process done?

So before accounts payable, you'd have your purchase order and someone would write that purchase order, ideally before the order is placed, for however much they expect to spend. And then often that's where it would end. And then, you know, you'd go to QuickBooks and you'd put in the invoice there and your actual cost would be there, but you wouldn't have a window in ServiceTitan into how much you really spent on that order.

So accounts payable makes it so it does it just automatically keep track of that through each stage versus before it's, it, there's like a gap in where it needs to be inputted.

It does. If your process includes payables and you're adding the actual vendor bill that matches what you're actually paying the vendor. That updates your, your job cost to what you're actually paying the vendor, not what you thought you might pay when you wrote that purchase order.

And should everybody use accounts payable, or are there some prerequisites to using it?

I'd say have a good purchasing process in place. You're already writing purchase orders. You, you understand having the materials in your price book and having fairly accurate costs. Payable is just the next logical step once you've got that process in place.

Okay, that makes sense. For most of the people, uh, that you all work with, or, you know, you talk to so many customers, what level are they at in terms of this area in the business? Are most people doing that already and ready for accounts payable, or?

I think it's, it depends on the company. Part of it is how long have you been on ServiceTitan? Part of it is, has that process been a priority for you to this point? And sometimes we have to build that purchasing process before we can build the payables process and. Sometimes it's in place and we can just turn on payables and jump, right?

Maybe we can talk about that purchasing process a little bit, just in case there are people listening who's like really, really behind and, and they need to get that set up.

Sure.

What are some of the basics there with having a good purchasing workflow?

So if you have a good purchasing workflow, you've got your vendors in ServiceTitan, they're all set up. You have your materials in your price book, preferably with each vendor you purchase them from with the separate vendor costs. So when you write a purchase order to say Johnstone Supply, it's got the cost that you expect to pay Johnstone, whereas if you bought the same thing from say FW Webb, it would have the cost you expect to pay Webb and not just one default cost across all of them.

Is that pretty hard to set up? It sounds pretty simple the way you put it, but.

So it can be hard. The hardest part I think is to get your vendors to say, here's the stuff you buy from me and here's how much it costs you. Once you have that, there's an import template where you can paste all that information in, pull it into ServiceTitan on an Excel file, and then it's just there.

Okay, gotcha. And then how often do you update it? Because I know, I don't know when it was, that was, it was a pretty hot topic of like material prices fluctuating quite a bit.

Ideally, when your vendors are changing your agreed upon cost, they're sending you an email that says you're having an X% increase, or here's a new file, here's all our new prices for our items. They don't always do that. Sometimes they just kind of push it through, and if you don't have an accurate price book, you don't even recognize when your costs have changed, right? But if it's in your price book and then they send you a bill for something you ordered that you expected to pay $10 for and you paid $15, you can pump the brakes and say, "Hey, my price book says I only pay $10 for this part. Why is it $15?" Getting it set up correctly allows you to catch those Things the vendor may try to sneak through on you, or maybe you just missed the price increase email, right?

Mm-hmm. Perfect. Okay, so that's the, uh, purchasing workflow. I feel like that could be an entire own episode in itself, and so maybe we'll put a pin in that. Thank you for sharing like the fundamentals there. Now back to accounts payable, how does the setup work?

So the first thing you have to do is ask ServiceTitan to turn on the module. It's pretty simple. They flip some switches on the backend, right? But then you have to do some setup. So before you have payables turned on, you have vendors in your system and they're just purchasing vendors. Once you start using payables, that breaks into two categories, a purchasing vendor and a remittance vendor. A remittance vendor is who you're sending the check to, and a remittance vendor might have 3 or 4 purchasing vendors attached, and your purchasing vendor might be 3 or 4 different branches of the vendor. Right? So I'm going to buy this from Johnstone in Springfield, or I might buy it from Johnstone in Hartford, but I want to send the check to the same place, right? So you need to be able to know which actual branch you're buying it from, but you're paying one branch, right? So when you turn on the module, you have to go through and map all your vendors, your purchasing vendors that you ideally already have in there, to remittance vendors that are new.

Okay, so first step is the mapping. Yes. Yeah. Is that hard to figure out or is that pretty straightforward?

It's pretty straightforward. So when they turn it on, every purchasing vendor gets a remittance vendor. So then you just have to go through and say, no, there's only one Johnstone and deactivate one of those and get the information in there correctly for the other one.

Okay, cool. So first step.

And you just have to go through and make sure like the mail-to address is correct where you're going to send your payment, things like that.

Okay, cool. So first step so far sounds pretty simple. You got the mapping, double-checking every— the addresses are correct. What comes after that?

Then we're going to make sure our general ledger accounts are all correct for things like sales tax that you're paying on your invoices, on your bills. You can enter an account for shipping charges and you can enter in those general ledger accounts. So when you fill in that shipping charges box, the bill has an item for shipping charges that goes to the right general ledger account. After you do that, there's new steps in the process like reconciling bills. So when you're just using purchasing, you create a receipt, you create a bill, the process is done. When you're using Payables, you create that bill and then you have to go say, yes, I've checked this bill, it's reconciled and mark it reconciled. And that's what tells the system this is a bill we're ready to pay.

Okay. So that's kind of like the new habit to get used to is reconciling. Yep. Okay.

Yeah. And then from there, when the vendor sends you a statement, you can put all your bills in ServiceTitan on a statement and then say, I have this statement for $30,000. Are all the invoices I need on there? Does, do the totals match?

Okay, cool. And then if the, if they do match, let's say best case scenario they do, is that when it pushes to the accounting system?

So it pushes to the accounting system as soon as you complete, as soon as you mark the bill reconciled.

Reconciled. Okay.

And you can either batch post-export those bills or you can use touchless accounting, which as you know, I love.

Yes. Yes. Oh my gosh.

That.

The episode we did on touchless accounting was so good, and that was one of those features where it seemed like it just makes complete sense for everyone on ServiceTitan to get on touchless accounting. And so if you haven't listened to that episode, it's a previous one on mastering ServiceTitan. You can search Jessica Woodruff-Smith, uh, in our feed and definitely give that one a listen. It's such an amazing feature and it seems, sounds like it works great with payables.

It does. So when you reconcile the bill, you you either export it to QuickBooks or it syncs to QuickBooks or your whatever accounting system you're using. But then you get the statement and you reconcile that statement, confirm all the bills are in there correctly. And then when you mark that statement paid in ServiceTitan, which at this point is just a case of saying, yes, I paid it somewhere else, but you mark it paid. And then if you're using Touchlist, there's also a journal entry for that payment. That syncs over to your QuickBooks. And then when you're in your bank transactions, you're just clicking match. Here's my payment, here's my journal entry, the costs are hitting the right general ledger accounts and we're all good. So no guessing in QuickBooks that, okay, I bought this from Johnstone, so it must be for my install department and, you know.

Right, right. Oh, that makes life so much easier.

It is. It does for sure.

So if we were to look back to when you all implemented accounts payable, or maybe you implemented it for other folks, what are some lessons or, or mistakes or advice that you, you would have given yourself, uh, if you can go back in time?

Really make sure your price book is set up so you can enter those bills for the actual things you purchased rather than just having a generic line item where you're changing the cost every time. You know, it's garbage in, garbage out. If you're putting in the items that you're buying, you can then report on it and track your costs over time, see how often you're buying things. See how often the vendor's changing the price on you, things like that.

I hear this theme a lot in a lot of ServiceTitan features is that garbage in, garbage out. So, and it's so funny how many times it goes back to the price book as being like the most important piece.

The price book is the biggest, most cumbersome part of the system, but it also is, everything starts on the price book, right?

Mm-hmm.

You can't sell anything without it. You can't buy anything without it. You need the price book and it needs to be right.

Yeah. Okay. So first step, making sure if you can go back, you would make that as accurate as you can in terms of what you're actually buying and what prices you're actually buying them for.

Correct.

Okay, cool. Any other advice or how-tos if you were to go back in, in time when you guys implemented?

Make sure your processing purchase is solid. Every time somebody's buying something, especially if it's for a job and it's above the line and We want to have that job cost. Make sure they're writing a PO before they're ordering it. So I know I'm buying X, Y, and Z and it's on this purchase order and this is what I expect to pay. Not, I know I need to go to Johnstone and I'm going to put a bunch of stuff on my order when I get there. And you can guess what I was intending to buy when the bill comes.

For, um, payables, how's the change management and like getting used to the new workflow and all that? Is that Is this a tough one in terms of change management, or—

I guess it depends on your team. If you have one person sitting in your office whose job is accounting and they do everything, it can be easy because you don't have to teach a bunch of people how to do it. But it can also be difficult because they're trying to do it all right, and maybe they're not the ones doing the purchasing, but they also maybe don't have authority to crack the whip and to get the purchasing correct. So I guess the change management It really depends on your team. If you have a great team that loves the process and loves to learn, it's really not very hard. If you have a team that hates change and just wants to keep doing things the same way, the way they always have, mm-hmm, it'll be more difficult.

Right. How, how was it for you all? Can, can you describe a little bit about life before and then the transition and then the life on the other side of it?

Sure. I've taken Payables Live at two separate companies where I was a full-time employee. The first time was a very early beta. It went really well. I was in charge of the process from start to finish. I got to have handholding from the ServiceTitan team because it was a very early beta. The second time, it was okay. I had less control over how people were purchasing, if they were doing that process correctly, and there were some hiccups. But once we did get it implemented, I was able to outsource the data entry tasks of payables to a virtual assistant and she handled all the hard stuff and I just had to reconcile at the end of the month and hit, and hit pay bills, right? Go to the vendor website and pay them. I didn't have to get all the vendor bills, process them in ServiceTitan because she did that. The purchase orders were correct. She compared the bill to the purchase order. It matched, she processed it. Wow.

I am really curious about, uh, how you found this virtual assistant and how you set them up. Set them up to take care of that for you? What does that look like? That's, that sounds like a very advanced, um, thing to do.

It was actually really simple. I found her through an agency. I can share a link. They matched me. I told them what I needed. They matched me. The one they sent me had accounting background. I taught her what to do in ServiceTitan. I taught her what she was looking at. She had some like cheat sheets of if this, then that, when do I raise red flags, that kind of thing. and then she just started doing that tedious stuff and got it off my plate and, uh, I could focus on higher level things. And then every month I would do that statement process, you know, where I'd check the statements against the bills, make sure it was all there, and then I'd pay the bills. Wow. So rather than hours a day on payables, I was spending maybe a couple hours a month, right? Wow. It was pretty, pretty nice.

Dang. Okay. That is amazing. I, I'm sure people listening would love to put off that tedious work somewhere else so that they can focus like you said, more valuable things. How would you describe a, the rough job description of that virtual assistant? Like if someone's listening and they could just type one up real quick and submit an application to, to an agency, what, what would they say?

So she was hired to be my accounting assistant. She handled the payables. So her job was to reconcile bills against purchase orders and process them in the system doing the data entry. She also did some of the payroll clerking. Duties, so pulling reports, calculating things, preparing payroll. So then all I had to do was confirm some numbers and hit submit. So writing that job description, I would plug into ChatGPT, what tedious tasks do you want off your plate? And let ChatGPT make a job description.

Yeah, we could probably just take that little description you mentioned, throw it in the ChatGPT, turn it into a job description and go from there. You mentioned a couple hiccups in the second time you all implemented and Part of it was, you know, some not full control over the purchasing and things like that. What were some of those hiccups that maybe we can help people avoid?

I think that have a game plan before you dive in. Write those SOPs, make sure you know who's going to do what, what's important to be correct. Have one-on-one training sessions with everyone who's supposed to be involved so they know exactly what it looks like, why it's important. Because I think part of it is those people doing the purchase order maybe don't understand how important it is that it's accurate, right? Well, it has a PO number. We know what job it's for. Why does it matter if we know exactly how much it's going to cost, right? I think that having those things in place and explaining the why is really important. And sometimes that why can get lost if you're like, well, this is important, so we're doing it and leave that whole part out, right?

Yeah. Is it true? It seems like maybe part of it is a culture issue of people doing the purchasing, they're like, ah, it's not going to be right anyway. And they've almost like given up.

It's never been right. So why does it matter if it's right now? Right.

Right. Okay. So, cause maybe their price book's not or has never been fully accurate. And so they've just given up on like, ah, whatever, I'll just send it through, push it down the hill and then the next person has to deal with it.

That's absolutely something that can happen and is something you should watch out for.

Okay. If there's a business listening and they have that kind of culture, like maybe their price book's a little messed up and they have this culture of let's just push it down and like they're cutting The team is just like at the end of the line dealing with all this. Do you have any suggestions on how they can turn this around?

I think it all goes back to explaining the why. And maybe when you're explaining the why, ask the team, how can we make it easier for you? How can we make it so you can do what we're asking you to do?

They probably all point back to the price book, huh? Well, I got, it's like, hey, it was wrong when I got it.

And if that's the case, then you have to ask the team, well, how do we make it better? What's missing? How do we fix it? And then maybe you put a pin in payables and fix the price book first, right?

Yeah.

Yeah.

Right. Like maybe payables is the dream that we would love to get to and you can explain the why there and then back up to the price book and, and start from square one. Who on the team is usually doing the, the purchasing?

It's often a warehouse manager or a service manager, sometimes an install coordinator. It's really kind of company specific as to who's on the team. And some companies may have an install coordinator ordering all the equipment. Some may have an install manager, some may have the salesperson has to order their own equipment. So it goes back to company processes and who's on the team.

Okay. Gotcha. So, wow. It can actually be a pretty wide range of people doing purchasing. Yeah. Gotcha. Okay. Interesting. How long do you think it takes to, if there's a company, let's say they do have the prerequisites, they've got purchasing, their price book's in a decent place, and they want to take it to the next level and get payables. How long would you set aside to take on this project?

I would say set about 4 weeks, close out your previous month and then start thinking about it. Get your vendors set up, get your processes in place, and then try to take it live on the first of a month. So. Every bill I do from February 1st on is done with payables. Everything prior to February 1st was not payables, just so you have that clean cutoff date and you know this was done this way and this was done that way.

Yeah, that is such a great piece of advice. Okay. And something so actionable people can, can take away. So first of the month. After accounts payable, I'm trying to get to like how valuable it was to have accounts payable and maybe how people can frame this if they're introducing it to their team for the first time.

Sure. I think the biggest piece is it gets your job costing accurate. If you don't have your costs right in ServiceTitan, maybe your gross margin is right in QuickBooks because you've done the work to get the bills in there and they're pretty much hitting the right GL accounts. But if you have it in ServiceTitan, it's definitely hitting the right accounts because you're using all the items. You can go to individual jobs and say, this job did poorly, what did we do wrong? This job did really well. What did we do right? Or what's missing? Did we forget to write a PO? Are, is there a cost missing? You know, and if you're not using Payables, you don't necessarily know on a job by job level how your pricing is, how your costing is, things like that.

For accurate job cost, maybe I'm biased because I, I'm not so great with numbers. I think I've mentioned this multiple times on the podcast, so avid listeners will know I'm not like an Excel guy. It seems like some businesses care a lot more. About how accurate they want to get things. And maybe I would imagine, I guess maybe some smaller businesses might not even have the time to get it super accurate. Is there a, um, I guess level of readiness some businesses have for something like this versus others? Maybe it's not as much of a priority.

How big is the team? But how can you make decisions if you don't know what your numbers are, right? Like the numbers guide the business. And like I said, if you're not doing payables, you probably have okay numbers in QuickBooks and you can make some broad-level decisions based on how specific departments are doing. But once you get into granular job costing in ServiceTitan, then you know, hey, my AC installation jobs are doing really, really well, but my plumbing service jobs are doing really, really poorly. You can break it down really, really granularly. And look at your specific jobs to say, hey, this job was priced at $10,000, but we spent $8,000. There's something wrong here.

Mm-hmm.

Right, right.

That's probably where like the fun of this starts to come in is where you can analyze like, oh my gosh, these types of jobs are, we need to change something in terms of our pricing because something's messed up here.

Yes.

Or these other types of jobs are really profitable and doing well.

So yeah, absolutely.

Can you give us, uh, an update on Box for the Trades? I'm sure you guys are growing really quickly and staying busy. What's the latest with Box for the Trades?

So we are growing really quickly and we are staying very busy. We are working on growing our team. We're doing that intentionally. Our ideal team member has experience in a trades company and with ServiceTitan. So in addition to knowing which buttons to click in ServiceTitan, they're going to know, I've been there, I know the effects in your business of what we're doing. And not just, yeah, ServiceTitan can do that. They know that it can do that and why it should or shouldn't.

Right. So you have that, that combination of both industry experience and with ServiceTitan.

Exactly.

So they have all the context for what these buttons are for, what's the real life implications.

Yeah.

And things like that. Cool. What type of people do you personally love working with?

I love working with people who want to maximize their use of ServiceTitan, who want to do things correctly, and who just need a little help getting there.

And is accounts payable something that you help people with?

It sure is.

Okay, cool. So we got accounts payable. I know Touchless Accounting is a huge one. Any other favorite features that you, you personally like to work with? I know there's others on your team who can still— things—

my primary focuses right now are Touchless Accounting, Payables, and Configurable Payroll. My brother is one of my business partners. He does a lot of focus on price books. So, okay. If you need help with your price book so we can get your payables rolling, we can help with that too.

Gotcha. So yeah, if you need to go to step 1, we've got someone for you, but Jessica can help you here with, with Payables. Anything else that I missed that we should, uh, tell people about when it comes to adopting Payables?

Every time you adopt something new in ServiceTitan, it seems like a huge beast. Right? But it's always doable. And generally it's going to be something that's going to be worth your while.

Yeah. And like Jessica said, 4 weeks, set aside 4 weeks. Maybe there'll be a couple hiccups, but at the end of the day, you'll have way better job costing and it'll all be worth it. Thank you so much for coming on the, back on the show for the third time. And then even though we just did a webinar like a couple weeks ago, and we'll link that webinar in the description on this topic of accounts payable. Sarah, the product, one of the product folks here at Servicetime, gives a full demo of how it works on video. And so we'll link that in the description and Jessica joins as well to share her story. So if you want to learn more, we'll link that all in the description. Jessica, thank you so much for coming back.

Thanks, Josh. Anytime.