Building the foundation of supplier trust is critical for real estate accounts payable
Corporate Payments And Payables
By now, you’ve heard about the many benefits of automated and enhanced accounts payable for commercial real estate businesses. Real estate AP can reduce reliance on paper checks and manual processes to become more efficient, more secure and better-positioned in terms of data and visibility, and that in turns saves the business time and money. Maybe you’ve felt the pinch of onboarding and retaining employees in difficult economic times. Or maybe your AP data capture isn’t adequate, and you’re working to make inroads there.
In other words, you may not need to be sold on making the change to electronic payments. As was discussed at Realcomm recently, you’re looking for more accessible, adaptable, aligned, and auditable accounts payable. The challenge is that your suppliers don’t feel the same level of urgency.
The key to maximizing all the benefits of AP automation for commercial real estate is not just making a switch to a new solution or training your team. It’s about ensuring your suppliers are ready to join you on the journey to better efficiencies and less paper, and that requires helping them understand the benefits of doing so.
Let’s talk about two you should be selling your suppliers on: speed and security.
The need for speed
If you can pay more quickly, especially to suppliers in industries like construction where working capital can and does run dry, you can set your real estate or property management company up to realize early payment discounts. Those paired with the cost savings associated with not paying $4-5 per check, can add up quickly.
To get there, you’ll want to show suppliers you can pay them fast, and with the remittance detail they’re looking for. That involves having a repeatable, effective payment and approval process built out within your ERP or automation solution, and then showing you can execute it effectively. Because you’re already asset-heavy and people-light, it’s not enough to automate one part of the payment process, because you won’t realize the full efficiencies and your suppliers won’t see the benefits of being paid digitally.
Once vendors see time-to-payment has been slashed—and in the case of virtual card payments, that they’re receiving remittance that simplifies receipt and reconciliation—they’ll see the benefits to electronic payments, firsthand.
Don’t take for granted that your vendors will let you do that without proof, though. Prepare to show them at a high level how your process works and how you’ve been able to slash time for other vendors, where applicable, to get them on board.
Speed is appealing and essential, but so is enhanced security. The best way to think of truly secure AP automation for real estate—the kind where payments are made in a proprietary network with enhanced protections—is in terms of its holistic benefits for payers and vendors alike.
Consider this scenario: a supplier’s email account is hacked, and the fraudsters send you an email asking you to send money to a new account. If you push that payment through without speaking to the supplier, you’ve lost those funds. You now have a strained relationship with that supplier due to a compromised email account, and delayed payment.
This can be a crippling situation, both reputationally and in terms of the bottom line. The town of Peterborough, New Hampshire, found that out the hard way a year ago when they reportedly lost $2.3 million. Town officials said these were sophisticated email fraud scams, making it clear that vigilance alone is not enough to prevent fraud.
With a closed network, that won’t work because account information is on file and a fraudster can’t access your account with just a compromised email, due to multi-factor authentication. And since these are secure electronic payments, and not checks, they can’t be lost or intercepted, another long-standing and frustrating AP fraud risk.
The cost of fraud for both parties should be well-understood, but it’s worth laying out the security benefits of the partner you’re working with to help suppliers really get on board with receiving payments via ACH and virtual card.
Your suppliers should know that your real estate AP improvements aren’t only for your benefit, though of course they’ll want to understand why you’re making the switch. If you and your solution partner communicate the benefits to your suppliers up front, they’ll come to see that there are huge benefits to receiving digital payments in the manner your company chooses. You’ll be more agile and less captive to human error, and your suppliers will be more willing to change.
If you can be an enthusiastic advocate for AP automation within your organization and with your strategic vendors, you’ll find the benefits of that change come about a lot sooner, and your suppliers will see the light.