Well, it happened again, and you didn't even know it. With the best of intentions, your overworked accounting associate or onsite property manager has entered incorrect financial data off an invoice. This is one of their many jobs and in their haste to get through the stack of bills, innocent mistakes occur. But how often? Although it may not seem like a big deal, those little mistakes add up quickly and wreak havoc on NOI.
Anyone who has worked an accounting or a data entry-focused job understands the detriments of incorrect manual entries and the toll they can have on the bottom line. The multifamily industry, in particular, has been tussling with this issue for years. Whether it's coding payables to the wrong accounts, overlooking or aggregating late fees with expenses due to cumbersome invoicing processes, or overall incorrect financial reporting, this problem is widespread and has significant negative financial impacts for operators. Worse yet, the problem could be costing the industry millions.
The Cost of Incorrect Data
The repercussions of poor data reporting can be far-reaching and costly. According to Gartner, organizations lose an average of $12.9 million annually due to poor data quality. While inefficiencies in standard accounts payable processes certainly play a role, those financial hits largely stem from inaccurate reporting. In fact, bad data could cost a business 20% of its revenue.
Research shows that the average error rate for manual data entry ranges from 10 to 40 errors per 1,000 key strokes. To put that in perspective - while automated systems may make between 1 and 4.1 errors for every 10,000 data entries, humans could make a staggering 100 to 400 errors. Consider this: it can cost up to $25 just to identify and correct one error. Therefore, if one mistake is found in 10,000 invoices, organizations stand to lose as much as $250,000.
The Remedy: AI for AP
Implementing an AI-based accounts payable coding engine could remove invoicing errors through more accurate and efficient processing. Operators can completely abolish manual data entry–drastically reducing errors and adding a much higher level of granularity and consistency across the portfolio.
By adopting an AI-based tool, accounting teams are able to eliminate the risk of human error, helping teams achieve nearly 99% accuracy rates. Additionally, these tools streamline invoice processing through faster workflows while enhancing financial reporting with true and reliable data–creating optimal operational efficiency.
Efficiency and Savings Unlocked
The advent of using AI in accounts payable processes has helped operators unlock improved efficiencies and notable cost savings. An AI-driven accounts payable solution not only delivers more accurate data reporting, it gives associates valuable time back in their day to dedicate their focus to their organization's overarching strategic initiatives as opposed to monotonous administrative tasks.
The ability to make data-backed decisions based on accurate financial information is a transformative advantage for operators in today's competitive multifamily landscape. AI solutions are no longer luxury tools reserved for elite communities; they are a necessity for organizations looking to remain efficient, sustainable and profitable.
This new type of tech can reach an even higher level of efficiency beyond simply saving time with onsite staff. Not only will the time spent on data entry decrease significantly, the technology is also able to centralize the knowledge that those tasks require, meaning that the role of data entry and review can be centralized as well. The focus of onsite staff should be on residents and leasing–not back office clerical work. With proper implementation of AI based coding technology, you can have a smaller, central team handle the review process, taking it off the plate of the onsite associates and giving them more time for higher value tasks.
Today's Solution is Tomorrow's Success
The data entry and accuracy problem that has been plaguing the industry for decades requires immediate attention. With potentially millions of dollars on the line, embracing an AI-based accounts payable solution is the only surefire way to effectively mitigate inputting errors, reduce costs and boost operational efficiency.
As with much of the multifamily sector, the future success of today's communities depends on the industry's ability to adapt and innovate–and automated data management is a pivotal step forward.