AP Workflows: 5 Tips to Keep Your Invoice Approval Workflows Working for You (Not the Other Way Around)

Invoices for Multifamily, CRE, and many other types of Real Estate companies often have multiple reviewers and complex AP workflows. These reviews can include the property manager and AP manager, both of whom need to OK an invoice before it gets paid. But many invoices require an additional set of eyes. For instance, when the invoice dollar amount is high, or if the invoice is over-budget. Or for many other reasons.

With AP automation software, adding an invoice workflow often takes just a few clicks. Robust AP solutions enable administrators to add invoice workflows as the business demands (such as when adding a new property).

But you want to avoid having too many AP workflows. It can dramatically slow your invoice processing time.

Just consider these two Real Estate companies. They are similar in size, but vary considerably in number of approval workflows and invoice processing times:

Data measures invoice processing time from receipt to ready-to-pay status

Thus, it’s important to be mindful of the number and types of invoice approval workflows in place before you automate - and once you’re automated. This way, you can realize one of the key benefits of AP automation – and that is faster invoice processing time.

What do typical AP workflows look like for Real Estate companies?

To get on the same page, approval workflows serve as a checklist – ensuring the correct reviewers see and sign off on a payment or order. Here are two invoice approval workflows a Real Estate company might have. Note, some AP automation companies, like Nexus, have multiple ways to receive pre-coded invoices directly into their software.

Capital Expenditure (Capex)

Invoice is submitted and coded --> AP Manager performs 1^st review and approves invoice --> CFO performs final review and approves invoice for payment.

Maintenance Expenditure

Invoice is submitted and coded --> Maintenance Supervisor performs 1^st review and approves invoice --> Regional Manager performs final review and approves invoice for payment.

After an invoice is ingested into the AP automation software, the invoices are automatically routed to the correct approvers. These reviewers can be located across the office or even on the other side of the country. Many AP systems, like Nexus, will alert approvers via email about invoices pending their review. Dashboards will also display the number of invoices awaiting approval.

Here are some tips to help minimize and optimize your AP workflows – and keep them working for you.

Tip 1: Take stock of where you stand and discard unused AP workflows

The first step to getting the most out of your automated invoice workflows is to assess your current situation. Identify how many you have, which you’re using, and if they are (or aren’t) leading to satisfactory invoice approval timelines.

For Nexus users, you can easily review your workflows by going to Administration> System Setup> Workflow Manager.

Once you know where you stand, you can act on any unnecessary or unused workflows – deactivating or deleting them. You won’t have a clogged-up AP automation system, and your AP workflows will be easier to manage, maintain, and audit.

Tip 2: Use consistent approval thresholds

One main reason for workflow chaos is that approval thresholds vary from property to property or region to region.

For example, you may have a workflow for your Main Street property that specifies invoices above $3,000 get reviewed by your AP Coder and AP Manager. Meanwhile, all your other properties are set so invoices route to these approvers only when invoices exceed a $4,000 threshold. That difference can cause confusion, increase AP workflow maintenance, and prevent timely processing times.

You should instead look to create consistent approval thresholds companywide. This will help you train internal employees more easily. It can also lead to less back-and-forth with suppliers since their invoices will route through one reliable, predictable flow, and avoid the need for exception management.

Tip 3: Keep tabs on AP workflow administrators and changes

With many AP automation solutions, there are reports and audit logs that allow you to identify who has changed a workflow, and in what way. It’s important to keep tabs of these changes because they can be indicators of internal fraud.

Let's say an employee - who is authorized to administer workflows - updates a workflow so invoices route only to them for approval. They could then approve high-dollar invoices for payment, and perpetuate further bad actions to direct funds to their own account. Checking your audit log would reveal this workflow modification and might prompt you to investigate further.

Thus, it’s critical to control who can modify invoice approval workflows, and then review audit logs regularly.

Tip 4: Create separate AP workflows for payment approvals

Another way to mitigate AP fraud is to have separate approvers for invoices and payments, especially for high-dollar purchases. So, one employee would approve the invoices and a different employee would authorize the payments.

This segregation of duties can help prevent fraudulent routing of funds and prevent financial decisions from being made by one person.

Leading AP automation providers, like Nexus, allow you to have separate approval workflows for different accounting processes. They know this functionality helps you maintain control and mitigate risk.

Here’s an example of how you might separate your invoice and payment approval workflows

Tip 5: Choose an AP automation tool that has highly configurable functionality for AP workflows

Lastly, one final way to achieve the right balance of AP workflows is to choose an automation solution with a highly configurable workflow builder. This way, you can pull in your business rules, no matter how complex or unique. Additionally, you won’t need to create what are essentially workaround workflows because the software can handle your different routing requirements.

For example, Nexus’s workflow builder has extreme flexibility to address multifaceted approval hierarchies and just about any workflow configuration.