Tech Report: Promise and Potential
Invoices can be processed electronically, providing multiple benefits
By Jeffrey Steele, Contributing Editor
Electronic invoice processing provides enormous assistance to property management companies on a number of fronts. An invoice processing partner can help property managers budget for the coming year, monitor consumption of key utilities and identify potential problem areas before they get out of hand.
A key benefit delivered to property managers by invoice processing services is more effective budgeting for the coming year, says John Gunn, vice president of sales and marketing for Chicago-based Ocius LLC, whose Utilities Express is one of MHN’s Tech Choice Award winners for 2013.
Invoice processing can produce historical consumption data with adjustments for occupancy to derive expected expenses and income numbers, he says. It can offer benchmarking data that helps property managers identify opportunities for energy conservation and lower utility expenses. Data can also be used to verify that utility expense recovery for each property is within regulation, and is maximized. And in the case of recent or new acquisitions, data from comparable properties can be used to identify savings opportunities.
Shveta Oak, product manager for Utility Smart by NWP Services Corp., based in Costa Mesa, Calif., another Tech Choice Award winner, notes that property management companies obtain the needed visibility into their utility consumption, rates and costs over time which can greatly assist in benchmarking and budgeting.
“By having this visibility into your historical trends, as well as the ability to benchmark against other properties, you can use this information to identify opportunities for savings and manage your utility consumption and spend better,” says Oak. “You can also project it forward by factoring in the knowledge of how much your utility rates are likely to increase in the year ahead.”
“Using actual information over time, our budget tools allow you to take into account factors such as seasonality and also allow the ability to make adjustments for anomalies. For example, if you know you will be doing a rehab at a property, you can plug in this information and get a projection.”
Monitoring costs, identifying problems
Invoice processing services also help property managers monitor costs in several ways, says Brad Chandler, industry principal with Santa Barbara, Calif.-based Tech Choice Award winner Yardi Procure to Pay.
Since invoices are digital, Chandler says, property managers can view them at any time without needing to search across various desks to assess property budget impact. This is key to financial decision-making throughout the month, and it also saves money, as there are no invoices to consume scarce office space.
“The workflows that guide each invoice to the correct approvers eliminate the need to mail invoices to regional managers or headquarters for eventual payment,” he adds.
According to Chandler, “Property managers are also able to view budgetary impacts prior to payable creation, to support future purchase decisions and also track service contract invoices against defined budgets as they are processed. “[This] provides insight of actuals against contract terms to ensure the budget continues to support the execution,” says Chandler.
In addition, invoice processing can identify potential problems before they become actual problems, Chandler reports. Linking invoices to service contracts provides insight into execution actuals versus planned budgets, with each invoice eliminating reactionary steps when the budget is exhausted and the contract is not completed. Invoice processing systems can also identify duplicate invoices to prevent potential duplicate payments, which can impact cash availability.
“Further, invoice workflows can be reported on when delays occur that could impact timely payment and payment discounts,” adds Chandler. “Property managers can assess the timing of payments to available cash and avoid insufficient funds and/or late fees. With electronic invoices, property managers can easily research vendor or client questions, no matter what workflow status the invoice is in.” According to Chandler, they can also expediently provide an invoice image and data, approval information and payment data to any party electronically.
Sizing up invoice processing partners
When comparing the merits of potential electronic invoice processing partners, it’s essential to closely examine a number of factors. According to Oak, property managers should seek partners that have been in the industry for many years and have a well thought-out platform that can securely house all information and enable users to maintain that level of data into the future.
“Make sure the partner you choose has best practices processes in place to ensure the highest data quality when paying and capturing data off the invoices,” she adds. “It’s also exceptionally important that your partner has the structure to pay the invoices on time, minimize late fees and protect your funds from fraud. It’s not just about entering the data into a spreadsheet or a database,” explains Oak, “but making sure that when that data goes in, it’s correct, normalized and standardized and can be converted into useful information.”
For his part, Gunn reports qualities to seek include deep knowledge of the current and pending regulatory landscape on local and state levels; a history of keeping clients out of regulatory hot water; the provider’s size, relationship and leverage with utility companies; and its ability to use big data analytics to determine how properties compare with others.
Finally, he says, seek “an EPA Energy Star partner capable of meeting reporting requirements.”
Invoice processing’s future
Chandler believes invoice processing will continue to evolve to become more efficient, driving costs down and eliminating need for properties to touch invoices.
“Systems will become smarter in processing invoices, only providing the exceptions to appropriate users for review,” he predicts. “Vendors will also become more agile and efficient in leveraging technology to deliver invoices and obtain payment, eliminating costs on their end,” adds Chandler. “The overall AP process will continue to move to an electronic state with increased automation.”
Oak says that with utility rates on the rise and with the enactment of state and city disclosure and auditing requirements, there will be an escalating need to focus on controlling energy consumption that will result in large energy savings. “Energy loads that were once private will now be public for all to see; we’ll have to be much more conscientious about these numbers to renters as owners, providers and property managers.”
Gunn envisions invoice processing becoming better, more accurate and more affordable. In addition, he predicts, it will feature the technology needed to make practical use of all the data available.
“This means customized reporting that is relevant to a client’s business model, expanded use for all services—including classic utilities and phone, trash, cable and more—and the ability to maximize income from ancillary income items such as cable, pest fees, parking and other items.”
To comment, e-mail Diana Mosher at [email protected]