According to the Institute of Finance and Management (IOFM), the percentage of businesses that make at least half of their payments to suppliers using a check declined by seven percentage points during the past three years. What’s more, four percent of businesses now make all their payments to suppliers electronically. Three years ago, no IOFM members paid all their invoices electronically.
While Automated Clearing House (ACH) payments account for the largest share of business-to-business electronic payments, property management firms also are paying suppliers using virtual card, wire transfers, PayPal, and other methods, depending on the situation and supplier preferences.
That’s not to say that every property management firm has embraced paying suppliers electronically. Some property management firms are concerned that their enterprise resource planning (ERP) application or accounting software won’t support digital payments. Other property management firms fear that their suppliers won’t accept ACH payments or other electronic payment methods. The perceived impact of less check float is a concern for other property management firms. And some suppliers may initially push back on the fees associated with accepting virtual card transactions.
But paying suppliers electronically is gaining in popularity in the property management space. And best-in-class electronic payment solutions overcome the biggest objections to electronic payments
Why pay suppliers electronically?
Paying suppliers electronically offers property management firms several critical benefits.
1. Streamlined operations. Printing checks, chasing down approvals, stuffing and mailing envelopes, responding to supplier inquiries, and reconciling bank statements wastes lots of time. That’s time that accounts payable (AP) staff can’t spend on activities that can help grow the business – things like analyzing data, collaborating with coworkers, and building relationships with suppliers. Electronic payments eliminate these time-consuming tasks. A single file for all approved invoices can be uploaded to a secure cloud-based payments solution within moments. Remittance details are automatically generated and sent to suppliers. And transactions are synced back to the ERP or accounting software in real time.
2. Enhanced visibility. Managing working capital means more to property management firms in uncertain economic times like these. But there’s no telling when a paper check will arrive in the mail or its current location. This lack of visibility makes it hard for property management firms and their suppliers to manage their cash flow and often results in calls and emails from suppliers about the status of things. Electronic payments provide real-time visibility into the status of payments. Suppliers know when a payment will arrive in their bank account. There’s no chance the electronic payments will become lost or delayed in the mail. Rich remittance details make it easy for suppliers to post payments to a receivables system. And property management firms can instantly monitor their outbound cash flow.
3. Working capital improvements. Freeing up cash on existing revenues is an essential working capital management tool when revenue growth is hard to come by. Paying suppliers electronically offers CFOs at property management firms several ways to free up cash. Accelerated payment approval workflows create more opportunities for property management firms to capture early pay discounts. Paying suppliers with virtual cards enables property management firms to earn cash-back rebates and other rewards that can be returned to the business. And the visibility provided by electronic payment solutions enable property management firms to uncover new opportunities to optimize their payments to suppliers.
These are some of the reasons that property management firms are paying suppliers electronically.
What to look for in an electronic payment solution
Without the right technology, these full benefits of paying suppliers electronically may remain out of the reach of property management firms. That’s why it’s critical that property management firms look for an end-to-end integrated accounts payable solution with the following attributes:
1. Straight-through processing. Paying suppliers doesn’t have to be so hard. Look for a solution with payment delivery and automation tools such as autonomous invoice approval, human-assisted exceptions resolution, robotic process automation, and supplier services.
2. One file/one integration to manage all AP. The last thing a property management firm needs is more systems to toggle between and more statements to reconcile.
3. Integration with most ERPs and accounting systems for payment initiation and reconciliation. A single file uploaded to the cloud should be all it takes to pay suppliers.
4. Fully outsourced AP management. Offload the burden of enabling and supporting suppliers onto the shoulders of an electronic payment solutions provider.
5. Full range of payment issuing capabilities. A one-size-fits-all approach to paying suppliers is sure to fail. Look for a partner that can support any need, including situation, including dual issuing Visa/Mastercard and bank connectivity.
6. Intelligent payment decisioning. Leading electronic payment solutions analyze each situation to select the best payment method, whether it’s ACH, card or check.
A solution with these capabilities will provide a property management firm with full integration, systematic reconciliation, unique card conversion, and maximized cash-back rebates and rewards.
Learn more about the acquisition of IPS by Edenred Corporate Spending Innovations (CSI).