What to check in your supplier onboarding to avoid late-costing and margin erosion in hospitality

Onboarding a new supplier in hospitality can feel dull compared with menu design or front-of-house training, but get it wrong and you’ll see late costing, margin erosion and frustrated teams fast. Over the years I’ve seen kitchens lose margin because a line was coded incorrectly, pubs pay for delivery charges twice, or a new menu launch comes in over budget because supplier pack sizes weren’t checked. Here’s a practical checklist of what I check when a supplier is brought on board — the things that actually stop costs drifting and keep profit where it belongs.

Agree clear product descriptions and SKUs

One of the most common causes of late costing is mismatched product descriptions. Your purchasing team orders “chicken breast” but the supplier’s invoice says “chicken fillet 250g pack” and your cost-per-portion calculation no longer matches. I insist on two things:

• Standardised SKUs: ask the supplier to provide SKUs that match the way you record items in your EPOS and inventory system (or agree a map between their SKUs and yours).
• Detailed descriptions: size, pack count, unit of measure (kg, g, each), portion yield and any preservatives or pre-trimming details that affect prep loss.

Confirm pack sizes, conversions and wastage

Pack size errors are killers for food cost. A 10kg box vs a 2.5kg box changes how you cost a portion and how often you reorder. When onboarding I always:

• Record the pack size and the usable yield — for example, a 10kg leg of lamb might yield 60% usable meat after bone and trim.
• Note the conversion factor (e.g. 10,000g box = 40 x 250g portions) and ensure your recipe costing uses this.
• Agree how waste and trim are handled — if the supplier charges a trimmed product at a premium, that’s OK but it must be reflected in your menu pricing.

Pricing structure: unit price, tiers and expiry

Supplier pricing isn’t always static. It can vary by order size, account tier, season, or even promotional CSVs. To avoid surprises:

• Get unit prices in writing and confirm whether prices are per kg, per pack or per portion.
• Ask about tiered pricing or minimum order quantities that affect the per-unit cost.
• Clarify the date of price validity and the notice period for price increases.

Document additional charges

Delivery charges, fuel surcharges, packaging fees or minimum order fees can erode margin if they’re not included in your cost model. I ask suppliers to list any non-product charges explicitly and confirm how they appear on invoices.

• Is delivery free above a certain spend? If so, record the threshold and model the average delivery cost for smaller orders.
• Are there handling or pallet charges? Note whether these are invoiced separately or included in the line price.

Agree invoice format and coding

Late costing often happens when invoices don’t match purchase orders or your accounting codes. I make a habit of:

• Requesting invoices that include SKU, pack size, net price, VAT breakdown and the PO number.
• Agreeing a chart of accounts mapping so the supplier’s invoices can be automatically coded in your accounting software (Xero, QuickBooks, Sage).
• Testing a first invoice through your AP process to spot mismatches early.

Settle payment terms and early payment discounts

Unknown payment terms can affect cashflow and negotiating power. Confirm:

• Payment terms (14/30/60 days) and whether they’re calendar or month-end.
• Any early payment discounts and how they’re applied — does the supplier expect payment on invoice date, or receipt of goods?
• How disputes are handled and whether disputed items suspend the whole invoice or only the line in question.

Agree delivery schedules, lead times and substitution policy

In hospitality, timing is everything. Late deliveries force emergency purchases at higher prices. During onboarding I record:

• Standard lead times for each product — e.g. fresh fish 24–48 hours, dry goods 5–7 days.
• Cut-off times for next-day delivery and any weekend/higher-cost delivery windows.
• Substitution rules: will the supplier substitute an item? If so, at what price and do they get prior approval?

Quality control and returns process

Poor quality means waste or refunds. Have this agreed in writing:

• The accept/reject criteria on delivery (temperature, packaging damage, off-spec characteristics).
• How to report quality issues, the timescale for claims, and whether credits or replacements are offered.
• Who pays return carriage and how credits appear on subsequent invoices.

Integrations and data sharing

Technology can dramatically reduce late costing if systems talk to each other. I prioritise suppliers that provide electronic product lists (CSV, EDI) or integrate with common tools:

• Xero, Sage and QuickBooks for invoices and supplier statements.
• Inventory and ordering platforms such as MarketMan, BlueCart or Tevalis for hospitality-specific stock control.
• Simple CSV price lists that can be imported to your EPOS for fast updates.

Set up a supplier onboarding checklist (use this table)

Test run and reconcile first month

Once a supplier is live, I treat the first 30 days as a trial. I reconcile invoices to purchase orders, check deliveries against stock usage and update recipe costs if pack sizes or yields differ. I also run a margin check on the key dishes that use the new supplier’s products — if margins have slipped, act fast: renegotiate, tweak portions, or consider alternative suppliers.

Onboarding is an investment of time that pays back quickly. A clear, documented process saves hours in disputes, keeps food cost accurate and protects your margins. If you don’t already have a supplier onboarding template, start with the table above — tweak it for your menu and systems, and make the first invoice a mandatory test. Small steps here stop late costing and keep your hospitality business profitable.