Softening the blow of real estate upheaval with AP automation

This blog was written by Tom Runyon, Head of Strategic Solutions at Bottomline Technologies.

About Bottomline: Real estate businesses deserve to benefit from the vastly improved simplicity, speed, security and visibility that comes with digital payments. Paymode-X, powered by Bottomline, is an MRI preferred partner for AP and Payment Automation that aims to optimize and make all your payments (Virtual Card, ACH, Check, International payments and B2C), mitigate risk of payment fraud and improve cashflow by realizing new rebate opportunities. Learn more about Bottomline here.

The business world has been on quite a roller coaster lately – especially in real estate. First came the pandemic and its lingering effects of supply chain issues and underused spaces. Now we’re facing bank failures, rising interest rates, increasing layoffs, and warning signs of a recession. It’s no wonder property management groups constantly search for ways to weather the volatility, strengthen revenue, and stay ahead of competitors.

Automation has long been the go-to investment for managing costs and uncertainty. But one sometimes-overlooked area has become a focal point for many organizations: Accounts Payable. Why the big push for AP automation and payments software? Despite a wealth of PropTech solutions, many AP processes remain paper-based or only partly automated – which means they’re a bigger drain on productivity and efficiency.

4 ways AP automation strengthens real estate organizations

Automating AP processes lets accounts payable teams get more done in less time while increasing payment accuracy and reducing costs. But the benefits extend well beyond the back office. Here are four ways AP automation future-proofs your business – whatever the ride holds in store.

Improve hiring and retention in AP teams

A team’s success is fueled by having great people – and ensuring they’re equipped to perform at their best. But those needs become tricky in a challenging economic environment. Rising costs and interest rates make resources scarcer, leading to a pervasive “do more with less” mentality.

Most people want to be more efficient, but that approach can go too far. Teams navigating cutbacks while trying to keep up with growing workloads are less productive and run higher risks of burnout. The risks are even higher in AP teams where traditional processes are cumbersome. If you can’t provide the right support, talented people will think they’re being set up to fail and look elsewhere – including the team members you rely on today.

Automation improves both hiring and retention for AP and finance teams. With automated invoice and payment systems, new employees can train and get up to speed in their roles more quickly. A new team member can not only learn more efficient processes right away, but also start contributing to the team’s goals from day one – an attractive prospect for potential talent. Current team members get more job satisfaction because they’re no longer bogged down in repetitive, manual tasks like cutting paper checks.

Automating processes and managing vendor payments online saves AP teams hours every week. That time adds up, creating more opportunities for team members to focus on more meaningful tasks that create more value for your stakeholders.

Gain more control over spend

Controlling spend is critical when interest rates and inflation remain high. Prices fluctuate constantly, and your purchasing processes must adapt so you always pay the best price. That’s why procurement offers some of the biggest opportunities for AP automation.

Purchase catalogs

Some AP teams take advantage of online supplier catalogs embedded directly into their AP automation tool to help track spend and stay within budget. With this functionality, you can gather all the items from the many suppliers you work with into a single interface, creating a continually updated one-stop shop within your AP system. Instead of visiting multiple websites to find items, looking up vendor, item, and budget codes, and entering all the information in your AP system, users select the items they need and automation takes care of the administrative work – little to no coding required, and always with up-to-date pricing.

A good, embedded supplier catalog tool even automatically converts purchases into POs with all necessary coding based on the catalog data. The PO can then be routed instantly to the team member’s assigned approver chain, and then dispatched to the supplier upon approval to complete the procurement. This automated process saves time, and ensures that spend gets approved before a purchase is made instead of afterward, giving you an added layer of control.

Some real estate organizations have reduced procurement costs by up to 15% by using pre-negotiated rates and centralizing procurement processes in their AP system.

Automated PO matching

PO matching can unlock even more procurement savings. Many purchasing rules require the total dollar amounts of a PO and an invoice to match. While great for controlling spend, manually reviewing each purchase requires extra time and resources, creating repetitive and time-consuming tasks.

Automated two-way matching verifies whether the PO and invoice amounts match or land within a predetermined threshold, letting AP teams quickly determine if an invoice needs to route for additional review or can be approved immediately. Systems with highly configurable workflows let you set rules for routing by GL codes, GL category, vendor, and other factors such as job code or contract number. Once approvals are secured, the AP automation tool transfers the invoice directly to your real estate management system for payment.

Unlock rebates with digitized payments

Features like embedded purchase catalogs and automated POs obviously save time and thus resource costs. But did you know that digitizing and centralizing your vendor payments process can have an even greater direct impact on revenue streams?

When you use an AP automation solution to pay your vendors, a variety of revenue-generating payment methods are often available. For example, you can issue virtual card payments to suppliers. Suppliers receive these card payments via email, and simply plug the card information into their point of sale just as they would with a regular credit card. Each virtual card payment generates cash-back rebates to you as the buyer. Suppliers underwrite the rebate as part of the card interchange rate.

Some AP automation providers offer even more payment types with rebates, like Premium ACH. This payment type works similarly to regular ACH, so many suppliers accept it as a trusted form of payment. The vendor pays a small transaction fee to accept it, and a portion of that fee is rebated back to you.

Prevent invoice and payment fraud

AP is a frequent target for fraud because this team deals directly with an organization’s money. Real estate companies traditionally collect stacks of invoices from many different areas and forward them to a corporate headquarters. The AP team must then sort through everything, secure the proper approvals, and pay the vendors. This lengthy, manual process doesn’t offer much visibility or ways to track payments – but it does leave many gaps for bad actors to insert themselves.

Fortunately, automated invoicing and payment solutions can mitigate that risk. An automated AP system puts all payment information in one place, giving you far more control and visibility into where your organization’s money is going. AP automation keeps you updated on your Current Operating Income (COI) and alerts you when teams risk exceeding their budgets. A centralized, digitized process also gives fraudsters fewer gaps to exploit.

Automated payment software also prevents fraud by screening vendors when they enroll in your electronic payment program. AP systems cross-reference invoice details with several databases. You can immediately verify that vendors are legitimate businesses, aren’t on the OFAC sanctions list, and are submitting invoices that match the vendor information in your system. It’s another step to ensure issued payments don’t fall into the wrong hands.

Before you begin with AP automation

Before implementing AP automation in your organization, it’s critical to determine if the solution you’re considering was developed with the real estate industry in mind. Many tools and systems marketed for real estate users are actually repackaged general-purpose AP software. You need solutions designed with features that support the industry’s unique needs and integrations with the major CRE and ERP systems.

Ready to learn more information about how AP automation helps you fight real estate volatility?  Watch the recent webinar with Bottomline and MRI Software for all the details.