Why Automating the AP Process Makes Good Business Sense
Most real estate companies in the past few years have taken numerous steps to increase efficiency in their accounts receivable department but have often overlooked the significant savings potential in accounts payable. Widespread adoption of internet-based transaction software has created an opportunity for real estate companies to implement a broad range of AP best practices solutions resulting in significant efficiencies. The following is an example of how one industry leading Commercial Real Estate company has used internet-based technology to implement an AP solution which allowed them to implement best practices with resounding success. This week we invited Tom Coolidge, CEO of Nexus Systems, Inc. to share his ideas on automating the AP process.
AP Situation Before E-Invoicing
Before implementing an automated accounts payable software solution, The Peterson Companies (Peterson) had many challenges in their daily AP processing. Invoices required multiple levels of approvals from users in disparate locations which resulted in delayed approvals and wasted time in tracking the whereabouts and status of invoices throughout the process. They quickly determined that eliminating most of the paper from this process alone would help them drive significant efficiencies by reducing the number of touch points required for each invoice.
Another ancillary need of Peterson's was to find a way to streamline the creation of their Common Area Maintenance (CAM) reports for their owners which required tedious tracking of expenses by property and by expense code. It was a very labor intensive process requiring seasonal temporary workers to be hired to pull a copy of each invoice from the filing cabinets and make copies of each invoice which had been coded to these common area maintenance expenses.
Desired Solution
As part of their internal business process analysis, Peterson quickly identified many areas for improvement that they used as a benchmark in evaluating potential software solutions. Peterson looked for:
- A third party to provide the administrative function for receiving, sorting, scanning and indexing of invoices
- A robust invoice workflow engine which could handle their diverse routing and approval rules
- An internet-based system which would allow any of their users to perform their AP related functions from any location
- Consolidated reporting across all their properties to ease the creation of management and owners reports
- Automatic bi-directional integration with their GL system (MRI) to avoid having to maintain multiple databases, manual data synchronization, or dual data entry
- Easy to use system to minimize training and change management for their users
Peterson underwent an in-depth evaluation of multiple vendors before moving forward with their solution partner. Part of the system implementation involved clearly defining their current AP process and desired improvements as well as identifying potential changes to their user's roles and responsibilities. Peterson found it critical to gain buy-in from all their users and incorporated strategies into their roll out training to achieve that acceptance.
The Results
The invoice processing solution that Peterson implemented starts with all invoices being sent to Nexus Scanning Services. Once received, invoices are sorted and prepared for scanning. All invoices and attached documentation are scanned and indexed by property name, vendor name, invoice number, invoice date and amount. Each image and associated indexing values are then electronically uploaded to Peterson's AP system ready for coding and approval routing. After the approval process has been completed, the invoice is electronically transferred to Peterson's MRI AP system for payment, where it then follows the MRI process for posting to the GL. After the invoice has been paid, all payment details are associated to the invoice in their AP software system for users to access.
The main areas of impact from this initiative are:
- Fully automated invoice workflow
- Central electronic repository of invoice images
- Peterson's GL system (MRI) is augmented by giving non-accounting users access to critical AP information
- Increased visibility to current budget and actual expenditures - avoiding budget surprises
- Easy to use and always accessible management reports
- Enforce control of AP policy and approval limits
- Automatically checks for duplicate invoices - even entries entered directly in the GL system
- Eliminated the need to hire seasonal workers to compile their annual CAM report
- Timely processing and approval of invoices resulting in reduced Days Payable Outstanding (DPO)
- Remote property managers no longer need to take time out of their week to drive to the main office to approve invoices
- Instant access to invoice status and payment details reduces inquiries to accounting staff
- Existing accounting staff will be able to accommodate growth without the need to add additional staff
- Psychological impact where people in the workflow actually enjoy the approval process and not having to look at the pile of invoices on their desk.
Peterson has consequently found that e-invoicing drives efficiencies on a number of fronts and enables them to perform their AP functions more rapidly, with less time and significantly more control than before. Cindy Singer spoke about Peterson's experience with e-invoicing and her e-invoicing partner, Nexus Systems, on a very informative panel at the Property Management @ The Speed of Light session on Tuesday, June 28th at Realcomm.
This Week's Sponsor... Nexus Systems is the leading software company specializing in payables management solutions for the real estate industry. Our software product, PayablesNexus, automates the AP process with e-invoicing, scanning, electronic approval routing and PO & invoice management. PayablesNexus is in use today by companies that want the efficiency, flexibility and cost savings associated with today's AP best practices and automation. PayablesNexus incorporates full two-way integration with all leading real estate accounting systems including MRI/IRES, Yardi, Timberline, Skyline, JD Edwards/PeopleSoft, Great Plains, Oracle and more. For more information about PayablesNexus please visit www.nexussystems.com |
