Accounts payable is the record of money owed to vendors or other entities by your condo or HOA association. Sometimes it helps to think of it as a form of credit extended by the vendor or supplier, with services being provided first, and payment collected after.
There are a series of different variables to consider when working through the accounts payable (AP) process; it’s much more than paying bills. A strong AP system considers things like vendor communications and approval, bid management, and purchase order approval along with invoice payment.
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Even if there are only one or two people responsible for the admin work related to AP, this process is a team effort. It has the potential to be very tedious and time-consuming if the association lacks a formulaic process. Furthermore, if payments are delayed due to improper time management or human error, supplier goodwill may be eroded – resulting in slower delivery or response times, or more onerous payment terms.
Conversely, implementing a strategic AP process can yield definitive benefits, and you may even receive discounts or rebates from suppliers for prompt payment.
In order to establish a stronger AP system, accounts payable automation is often the solution. An online software system will help streamline operations, and ensure everyone is on the same page. Often, these systems can make things easier for vendors, too.
Digitize your AP system
If your condo or HOA is still using paper or some general software to manage AP, it’s time for a change. Simple technology can have a massive impact on your AP process.
For example, Condo Control’s accounts payable feature is a cloud-based system that eliminates the need to create or save paper records. Everything is automatically saved in the system. It encourages collaborative work and automation by providing associations with an AP framework that can be customized. Different people can access POs, invoices, bids, and more, at the same time, or after work hours. Since the platform is cloud-based, all you need is the software and a digital device.
Furthermore, digitizing your AP system eliminates hours of manual data entry, giving you and your team more time to focus on bigger projects and tasks.
Finally, an automation solution such as Condo Control speeds up the hiring and approval process. Instead of sending out individual bids to vendors using email, you can request quotes from multiple companies all at the same time. PO and invoice approvals can also be requested and submitted through the system.
Create an integrated AP workflow
Instead of saving bid responses, POs, communications, and invoices in different folders (or perhaps even different offices), implement a system that will allow your team to seamlessly switch between documents and communications. Associations tend to silo these different things, but that slows down the process and creates barriers for staff or board members. An integrated AP system creates a uniform system that speeds up the process from start to finish.
In order for the system to be truly comprehensive, it needs a vendor portal. A vendor portal improves communications between parties, and facilitates long-term relationships. Vendor portals enable vendors to:
- Submit digital bids
- Ask questions and provide answers about the service required
- Add and update insurance details and tax ID numbers to their profile
- Provide banking information
- Manage their team members
- Assign tasks or jobs to team members
Merchants are given a reliable platform to use, it’s easier to keep your team and vendors on the same page, and it’s easier for them to keep track of bids, invoices and payments, too.
Another great thing about integrated AP management systems is that admins can really save time on tedious paperwork. For example, instead of having to create a new purchase order, file it, and retrieve it later when reviewing or making an invoice, you can do a quick search for the PO, type in the PO number on Condo Control’s AP feature, and link the invoice to the PO. Not only are you more organized, but you end up being far more productive.
Make sure everyone’s following the same process
Centralizing accounts payable in a shared digital environment ensures all team members are following the same practices and standards. This is particularly helpful because it creates consistency and promotes best practices across the association. Mandatory fields mean that the necessary information is included with every purchase, every time. It’s also possible to set permissions so that only authorized admins have the ability to edit or approve requests. Similarly, associations can set rules making it mandatory to obtain multiple approvals after a certain monetary benchmark is reached.
If you aren’t quite ready for software, you can always use a template to create more consistency. Check out the free accounts payable template available here.
As a result, there will be fewer question marks and misunderstandings when it comes time for the board to approve POs or invoices. Furthermore, it makes it easier for new board members to understand and follow the AP process.
Make batch payments
Invoices should always be prioritized in order by the due date and payment terms. Most associations are not in a position to pay invoices early or as they come in. That would disrupt their cash flow. But paying vendors on time is very important, and one key way to create lasting relationships with great contractors.
Condo Control’s AP feature really helps when it comes to organizing invoices. You can include the date the invoice was created, when it’s due, and add any important notes as well. Admins with permission can also customize when payments are made, and create a batch payments system. This saves time by eliminating the need to make payments one by one, and you don’t have to worry about forgetting to make a payment.
Why make the switch to an online AP system?
Associations will enjoy multiple benefits when they switch to a cloud-based AP system. Not only does it reduce the time that teams spend on processing invoices in payments, it provides an end-to-end solution that streamlines multiple aspects of the vendor management process.
Advantages of using an online AP system
- Reduction in late payments. Vendors are happy when associations keep their end of the deal
- Real-time views. Boards have a snapshot of how much is owed, and invoices that require approval, at any time
- Minimizes liability. Associations don’t have to chase vendors for compliance documents, making the vetting process much less chaotic
- Convenience. Conversations and documents can be accessed from any device. You don’t have to be in the office to get work done
- Fewer errors. Since data entry is reduced, errors are minimized. It’s also easier to spot errors on an online platform
- Saves everyone time. Vendors, board members and management can be more productive when using a system that streamlines operations
Conclusion
Managing accounts payable is a critical part of operating a condo or HOA community. Lots of board members dread this process because of all the different moving parts. Staying organized is challenging when documents and emails are all over the place.
Make AP management less intimidating by streamlining and automating the process. A good online AP system will do much more than assist with invoices. It will improve the way your team solicits bids or quotes, communicates with vendors, and approves POs. Contact us if you’d like to see how our AP system works.