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New systems allow boards and managers to approve payments with a simple click
High-tech systems like AvidXchange are changing the way boards and managers handle their building finance.
As the onsite senior property manager for the Kips Bay Towers Condominium, Maja Cobaj of FirstService Residential oversees a 1,118-unit, two-building complex so large it has four addresses. For Cobaj, workplace efficiency is a necessity. So, although her office at the complex officially opens at 8:30 A.M., Cobaj starts her workday half an hour earlier. That’s when she looks at her daily email alert from the condo’s automated invoice management software, which tells her how many vendor invoices are pending for payment.
Cobaj uses the half-hour to log into the program, review the invoices, and go over them with her resident manager. Then, she simply clicks to approve each invoice, automatically sending it to the email box of the signatory above her. Once approved, each invoice will turn up at accounting for the electronic processing of payment. FirstService is among the growing number of property management companies that are adopting software that speeds the purchase order, invoicing, and payment processes, improving efficiency and providing clients with greater transparency. The chief advantage of managing invoices electronically, Cobaj says, is it turns a stack of time-consuming paper invoices into a more manageable daily process. “I don’t have a stack of 50 paper invoices to approve all at once,” she says. “And it eliminates issues with stuff getting lost, trying to get them reviewed and signed, a signature missed.”
Speed and Transparency
AvidXchange is one of the more popular software packages. This application works on tablets, smartphones, and laptops, and it offers different service modules.
Avid differs from competitors like Yardi, a major property management software provider, because its invoice-management software includes the option of a payment processing system that pays vendors electronically, says Michael Catanzaro, the chief financial officer for Century Management Services.
“We had some issues that we were dealing with, like the timely processing of payments, and being able to track those payments,” Catanzaro says. “I had worked on Avid before I came to Century, and I knew it was the solution.”
Avid is linked with a base of more than 350,000 vendors, according to Kristen Thomasino, the company’s vice president for real estate and nonprofit solutions. Property managers can place a purchase order by simply logging onto the system and creating
the order with the appropriate supplier. If further approval of the order is required, the system forwards it to the next signatory, as designated by the client.
Once the order has been processed and filled, the supplier can submit an electronic invoice for payment through Avid. (Suppliers do not pay for access to the system, Thomasino says.) The property manager then gets an email notification that an invoice is awaiting approval. Payment is issued only after the manager designates that invoice for payment. “All the approvals and coding are done electronically,” says Jonathan Land, a senior regional account executive for Avid. “And invoices are automatically married up to the budget – there’s no more manual entry to their accounting system.”
Moving invoice management to an online system has greatly improved efficiency for Century, says Jacob Sirotkin, a vice president. “The entire process – from the invoice being generated and sent to us by a vendor, to the actual checks being cut – is all time-stamped and virtual. You can go back and look at that entire work flow. And we no longer have stacks of paper invoices all over the place where those invoices are subject to sitting on someone’s desk or getting lost.”
Boards that are clients of management companies using Avid or another online invoice system will find that it provides them with greater transparency, says Alvin Wasserman, the director of asset management for Fairfield Properties, which this year began implementing Avid for its roughly 60 properties in Nassau and Suffolk Counties.
“A board member can look back at every payment made through Avid and see what was done,” Wasserman says. “With paper checks, if a board has a question about an invoice, they have to either email or call the manager and ask them to look into it. Then the manager would have to go into the files or the accounting software, and check it out.”
Scott Rifkin, the board treasurer at the Crescent, a 285-unit co-op at 225 East 36th Street, says Avid has made it much easier for him to do his job. Once he logs into the system, he can view and approve invoices, or check out prior invoices to ensure there’s no duplication of payment. “Everything is in one consolidated, central spot,” he says. “Before, it was more of a haphazard process where it would be incumbent upon me to save certain things.”
On Management’s Dime
There are downsides to the system, however. Cost is one problem, says a management executive who uses the system and requested anonymity. “To begin with, it cost between $8,000 and $10,000 to implement,” he notes. “What we’re now spending on the system is close to what we’d spend to have one employee doing our invoices full-time. What’s more, there are substantial training fees of $3,500 to $4,000 a month. We also have a full-time person going in to correct mistakes and code everything, to make sure that things are applied to the right buildings. It’s not as big a cost saving as we expected.
“Additionally,” he continues, “the AvidExchange does not sync as well with our accounting system software as they said it would. For example, to get copies of paid bills, we have to go into Avid; they’re not saved in our accounting system as PDFs. You’ve got to go to two locations. It’s cumbersome.”
The executive adds that one of the biggest issues involves unpaid invoices. “Avid syncs with the accounting system at only one point: when the invoices are approved. After that, they get sent to our accounting system as though they are approved to pay. But I might not be ready to pay. The problem is that, unless it’s approved, I’m not going to see that invoice in my open liabilities report. That’s a huge issue, and we’ve had a lot of conversations with Avid about it.”
The expenses incurred by management companies for implementing the AvidExchange are not passed along to clients, however. “That’s on us – it’s our dime,” says Sirotkin, of Century Management. “But we feel it’s necessary to provide the additional service for our clients.” Thomasino, of Avid, advises that the investment makes the most sense for organizations that are processing more than 200 invoices a month.
Wasserman, of Fairfield, says the added efficiency and speedier payments have made the investment worthwhile. Vendors can be paid within a few days after submitting an invoice instead of a few weeks. And keeping vendors happy, he says, is good business. “We call them vendors and contractors, which is a neutral term. But those are people,” he says, “They are running a business, and they need to have reliable cash flow to pay their bills.”
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