Managing accounts payable (AP) processing for any organization is challenging, but in the multifamily industry, it can be especially complex. With numerous properties, countless vendors and a steady stream of invoices coming through, property management AP teams face unique hurdles. If mishandled, such challenges can lead to errors, strained vendor relationships and financial losses.

But by recognizing these obstacles and leveraging advanced AI-powered tools in AP processing, operators can drastically mitigate risks, increase efficiency and ultimately unlock greater profits.

The Domino Effect of Inaccurate Data
In the multifamily space, prioritization is often a struggle. Resident-focused tasks such as leasing and addressing immediate community concerns frequently take precedence over financial duties. That means crucial processes like account coding and invoicing–where more than half of all ledger entries originate from accounts payable–are done manually. With associates making hundreds or even thousands of entries per week, every keystroke increases the risk of errors. 

Each bill, vendor payment and operating expense must be addressed at the AP level. However, most multifamily associates lack an accounting background or the time to thoroughly examine every invoice. When AP processes are poorly executed and errors occur, a wide range of consequences follow: delayed payments, service disruptions that affect residents and strained vendor relationships, making it harder to secure reliable services and negotiate favorable contracts in the future.

Additionally, operators rely heavily on accurate revenue and expense projections, and coding errors can significantly distort those expectations. Manual AP processes are prone to errors, which can be costly to identify and correct, causing a multitude of inefficiencies. Without a clear picture of budget variances, operators lose control of controllable expenses.

Unnecessary fees, such as late fees, are another consequence of AP errors. In some cases, these fees are even omitted by accounting teams attempting to cover their mistakes, further amplifying financial losses and operational inefficiencies. An extreme example of this was when a major department store's accounting associate deliberately concealed more than $150 million in small package delivery fees. While the average multifamily portfolio may not be affected to that magnitude, incorrect coding can still lead to substantial financial setbacks.

Incorporating AI-powered tools into AP processes enables operators to be precise with budgeting and expense reporting, helping them to boost operational efficiency and profitability.

The Promise of AI-based AP Tools
AI-powered tools offer a transformative solution to eliminate the challenges posed by outdated AP processes. An AI-based AP coding engine can navigate the complexities of coding, including the ability to distinguish between recoverable and non-recoverable expenses, ensuring proper classification and streamlining invoicing. By automating repetitive tasks, human error is almost completely eliminated, resulting in data accuracy rates of 99% or higher. This drastic reduction in errors not only enhances financial accuracy, it also prevents unnecessary corrections and misallocated expenses.

These tools turn previously repetitive, time-consuming manual processes into streamlined tasks. Studies show that organizations adopting generative AI solutions see productivity increase by as much as 40% compared to those that do not. For AP teams managing high volumes of data and invoice processing, that type of gain in efficiency is invaluable.

Additionally, AI tools allow accounting teams to analyze thousands of invoices quickly, providing deeper insights into coding nuances and improving overall financial management.

AI for the Profits
By minimizing errors and boosting efficiency, AI-driven solutions drive substantial cost savings for operators. Faster processing times and nearly flawless data reporting lead to noticeable business growth and profitability.

Errors in AP processing severely hinder operations, but they don't have to be the norm. The multifamily industry is highly competitive, and by enlisting innovative AI-based solutions, operators gain a significant advantage.

With the power of AI, organizations can optimize operations, enhance accuracy and reach new levels of efficiency. In an economic climate where bad data is costing businesses millions and manual processes impede productivity, AI tools are leading the way to a smarter, more profitable AP management approach.