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Over the past few months, the “I” word has been uttered by AP teams everywhere. They’ve experienced inflation personally at the supermarket and gas station. And, many in CRE, multifamily, and other real estate sectors have seen rising costs in their professional lives too, with big increases in utilities, maintenance supplies, and insurance.
In short, they’ve been surrounded by price increases.
While some real estate finance teams have put off projects, scaled back purchasing, and spent more time sourcing products, others have looked to become more efficient. They are turning to AP automation solutions to save time – as well as manage with reduced headcount – by eliminating paper processes and automating them.
But saving time isn’t the only benefit of electronifying the AP processes. Some AP automation software solutions can also decrease hard costs. And this then helps offset some of the rising prices.
Here are three ways AP automation software companies – like Nexus – can help real estate companies mitigate the bite of inflation.
1. Reduce overbudget spend – often by 15%
With AP automation software, vendor invoices are captured, coded, and approved – all online. There’s no spreadsheets to manage or paper invoices to sort, staple, and manually route for .
Budgets are routinely synced from a general ledger or property management system. So, the invoice approver (or approvers) can compare the invoice to budget and actuals, often for the line item, property, category, and code.
No one is ever in the dark. Approved users can seamlessly get up-to-date information about where properties are tracking compared to their forecasted spend. This gives property managers and AP teams the ability to switch gears in real time.
Companies can choose to hold back on spending to offset higher invoices and/or encourage property managers to adjust their spending. This at-a-glance visibility also allows companies to renegotiate their rates with suppliers, and secure better pricing.
Some Nexus customers say that by having that data easily at their fingertips, they can reduce over-budget spend by 15% or more.
2. Reduce duplicate ordering
Some AP automation software companies also enable property managers, maintenance teams, and others to generate an electronic purchase order before they purchase goods and services.
This electronic purchase order is then routed online to one or many approvers. It can get approved in minutes since it appears in the reviewer’s dashboard as a task that needs immediate completion. Some companies also alert these PO approvers – often on the AP or procurement team – via email, so they know they need to take action immediately.
By requiring an electronic PO for purchases before the purchase, rather than after, AP teams often can reduce duplicate purchasing. They know what they need because they can see spend from previous years. They can track what they’re ordering, and compare it to what has been ordered already and what they have on hand.
This is particularly true for office supplies, which can get out of hand easily. In fact, some Nexus customers report the online electronic PO system allows them to save 30% on office supplies alone.
3. Reduce procurement costs by using pre-negotiated rates and centralizing procurement – often saving as much as 15%
All companies want to reduce procurement costs but dedicating the time and talent to do it efficiently is often a challenge.
Some AP automation companies can function as a centralized purchasing agent and help ratchet down the cost of goods and services costs
Nexus, for example, can incorporate any retailers’ catalog into a client’s AP automation software platform. This makes the client’s pre-negotiated rates available to all purchasers. Some Nexus customers say they’ve reduced prices 10-15% off retail, using their embedded online catalog suppliers.
They also gain more control. Companies can restrict purchasing to approved brands and SKUs. This, in turn, gives them more control and accountability.
Inflation is on everyone’s mind – consumers and businesses alike. Finance teams who are contending with its effects on the bottom line might consider AP automation software. With its real-time spend visibility, e-purchase orders, and embedded supplier catalogs, there are several opportunities for cost savings.