Real Estate and #APAutomation – 2 Reasons They’re a Natural Fit
For 15 years I have been helping companies transition from paper-based to automated accounts payable processes. Looking back, I have to admit that I have learned a lot over the years. The first ten years of my career was largely spent working in the real estate industry, but over the last few years I’ve widened my scope and have focused on assisting companies in a variety of industries. It was then that I realized that the problems automation solves, like lost invoices, late fees, and lack of visibility to expenses, were not exclusive to real estate. I have worked with schools, agencies, manufactures, rock quarries, dentist, hospitals, publishers, and the list goes on. However, real estate continues to be a better fit than those other types of businesses for two very distinct reasons.
Reason 1 – Spread Out
One of the biggest drivers for AP automation is having centralized accounting and disbursed operations. The more locations you have and the further away those locations are from the corporate office the greater your processing expenses become. Here are a few numbers to think about. The average cost to process an invoice is $22. I know this number, because I do two to three of these studies per week and $22 is the average. To contrast this idea, $97 is the highest, which was a real estate company in New York City that had locations throughout the northeast with an extremely complicated invoice approval process. The lowest I found was a single operation in Alabama; their cost per invoice was $11. The point is that automation will “naturally” stop the passing back and forth of invoices and speed up the process. The outcome is a reduction in processing cost from $22 to $9, and processing time from 21 days to 3.
Reason 2 – Quick Change
One of the biggest, and most measurable, outcomes of AP automation is time. AP automation creates scalable processes, which enables companies to grow without adding staff. Real estate is unique in the fact that an accounting staff can be humming along and then someone in leadership steps into an accounting meeting and says, “We have purchased a new portfolio. Get ready to double in three months”. The role automation plays is allowing the accounting staff to take on additional volume, and not additional hours. The average amount of time that a company gains from AP automation is 5500 hours for a company that processes 3,000 invoices on a monthly basis.
The Two Working Together
As I wrote in my introduction, companies outside of real estate can benefit from AP automation as well. However, real estate continues to be a natural fit for AP automation with big impact results, because of decentralized operations and the need to create processes that can scale for growth.
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