How to Automate Payables with ServiceTitan

If you've ever stared at a job cost report and wondered why the numbers just don't add up, our most recent episode of the Mastering ServiceTitan podcast is for you. Repeat guest, Jessica Woodruff Smith, President and Cofounder at Boxed for the Trades, explains how this core feature bridges the gap between estimated purchase order costs and actual vendor bills to provide real-time, accurate job costing. 

Woodruff Smith breaks down the essential prerequisites, including a solid purchasing workflow and a clean pricebook, while offering a step-by-step guide to mapping vendors and reconciling statements. 

In the following podcast recap, learn how Woodruff Smith leveraged virtual assistants to automate data entry and why she recommends a “first of the month” launch strategy to transform your accounting from a tedious daily task into a high-level decision-making tool.

What is ServiceTitan Accounts Payable?

To start, AP is a module offered in ServiceTitan’s core package, so there’s no upcharge to use it. The tool allows users to manage the entire lifecycle of a vendor bill, from the moment you receive a purchase order all the way to marking it paid, without ever leaving ServiceTitan. This helps ensure accurate job costing data. 

“Before Accounts Payable, 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,” Woodruff Smith says. “Then, you'd go to QuickBooks and put in the invoice. Your actual cost would be there, but you wouldn't have a window into ServiceTitan and how much you've really spent on that order.”

How to Set Up Accounts Payable

To get started with Accounts Payable, Woodruff Smith says to make sure you already have a good purchasing process in place. This includes ensuring your pricebook is up to date with accurate costs for materials broken down by vendor. 

“The hardest part is to get your vendors to say, ‘Here's the stuff you buy from me, and here's how much it costs you,’” Woodruff Smith says. “Once you have that, there’s an import template where you can pull all that information into ServiceTitan from an Excel file.” 

Keep your pricebook up to date as vendors inform you of any pricing changes.

“If you don't have an accurate pricebook, you don't even recognize when your costs have changed,” Woodruff Smith says. “But if it’s in your pricebook, and your vendor sends you a bill for something you ordered that you expected to pay $10 for, and you see $15, you can pump the brakes and say, ‘Hey, my pricebook says I only pay $10 for this part. Why is it $15?’”

Once your purchasing workflow is complete, ask ServiceTitan to enable the AP module for you. When the module is turned on, you’ll need to map all your vendors to remittance vendors. This requires separating purchasing vendors (the specific branches you buy from) from remittance vendors (the entity you send payment to), since multiple purchasing vendors can roll up to a single remittance vendor.

Next, review and confirm that your general ledger accounts are set up correctly by assigning the proper accounts for items like sales tax and shipping charges, so when those fields are entered on a bill, the amounts automatically post to the correct general ledger accounts.

After that, build in the new step of reconciling bills. AP requires you to review the bill, confirm it’s accurate, and mark it as reconciled. This signals to the system that the bill is approved and ready for payment. Once reconciled, you export it to QuickBooks. Or, if you use Touchless Accounting, it syncs with QuickBooks automatically. 

Woodruff Smith has set up AP at two separate companies. One tip she has is outsourcing tedious data entry tasks to a virtual assistant. 

“My virtual assistant handled all the hard stuff and I just had to reconcile at the end of the month and hit pay bills,” Woodruff Smith says.

She also recommends writing out standard operating procedures before turning Accounts Payable on, and training each team member who will be involved on what they have to do and why it matters. 

As far as how long it takes to onboard AP, Woodruff Smith says give yourself a month. That way, you can close out the month, work on implementing AP, then go live on the 1st of the next month. That provides a clean cutoff date for what was completed prior to AP.

Why Accurate Job Costing Matters

“The numbers guide the business,” Woodruff Smith says. “If you’re not using AP, you can probably make some broad level decisions based on how specific departments are doing. But once you get into granular job costing, you can break it down and analyze the jobs that need adjusting versus the ones that are profitable.” 

You can find this interview and many more by subscribing to Mastering ServiceTitan on Apple Podcasts, on Spotify, or here. 

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