New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021

HABITAT

BUILDING OPERATIONS

HOW NYC CO-OP AND CONDOS OPERATE

A Peek into the Process: Here's How Your Vendors' Bills Get Paid — or Not

Ronda Kaysen in Building Operations on January 7, 2014

New York City

Jan. 7, 2014

Invoices can get waylaid on the desk of a distracted co-op or condo board member; a check can be cut from the wrong account or, worse, paid to the wrong vendor. In some cases, a building doesn't have the cash to cover its costs, a predicament that leaves property managers doing a juggling act: holding checks that can wait while paying only the critical ones.

"When you're generating 10,000 checks a month, anything is possible," says Alvin Wasserman, director of asset management at Fairfield Properties. "There is no foolproof system and mistakes can be made. But when there are half a dozen eyes looking at every check that goes out for payment, it minimizes the chance for errors."

In general, bills fall into two categories: recurring and non-recurring. The vast majority of bills are recurring: they arrive at the same time every month or every quarter and offer few surprises. They cover costs for utilities, insurance, taxes, and mortgage payments. These bills are paid immediately and with little fanfare. 

When a management

company is generating

10,000 checks a month,

anything is possible.

But the process looks very different for a non-recurring bill. These one-off statements — for salt delivery in the winter; for the electrician who fixed faulty wiring in the hallways; or for elevator repairs — require far more oversight from management and the board. This is where the great machine of paying the bills comes to life. 

At Orsid Realty, which manages over 100 properties, dozens of non-recurring bills arrive at its Manhattan office daily. Andre Kaplan, the company's chief financial officer, and Neil Davidowitz, its president, sign between 2,000 and 3,000 checks a week. But long before any check is signed, the invoice begins its circuitous journey to approval.

Here's how it works: When an invoice arrives with the mail, it is date stamped and placed in a basket. An employee sorts the invoices, makes a copy of the document, and enters the information into the computer system — assigning the bill with a vendor code, invoice number, and building. 

The bills are then placed in folders for the property managers to review. Once a week, a property manager takes his folder to his building and sits down with the superintendent to discuss the details. Did the plumber really stay for two hours? Did he really have an assistant with him? Was the problem with the boiler resolved? Is the hourly rate correct?

The Board Steps In 

If a bill is large enough, a condo or co-op board member must also see it and sometimes sign the check too, adding days or weeks to a process. If the treasurer is traveling, for example, he may not review it until he returns. Or, if the board wants to review bills at its monthly meeting, it could further delay the process. Sometimes, board members receive a PDF of the invoice by e-mail, but in other cases the original is handed to them. 

"We encourage boards to sign their own checks because ultimately it's their property," says Wasserman of Fairfield, which both owns and manages properties. "It's their money and if the president and the treasurer sign checks, they know what's going on at the property. They can see what is happening in the life of the property by the bills that are getting paid."

Once the bill has been approved, it returns to the billing office where a check is cut. Timing is key. If an invoice arrives on the second day of the month, for example, but the board meets on the first, then the invoice has to wait an entire month just to be approved by the board. And, if the unfortunate invoice makes its way back to the management office a day after the company cuts checks for the week, the process could be delayed even further.

 

For more, see our Site Map or join our Archive >>

Ask the Experts

learn more

Learn all the basics of NYC co-op and condo management, with straight talk from heavy hitters in the field of co-op or condo apartments

Professionals in some of the key fields of co-op and condo board governance and building management answer common questions in their areas of expertise

Source Guide

see the guide

Looking for a vendor?