Accurate association accounting is key to your growing management company. Error-free accounts payable (AP) and accounts receivable (AR) can make or break your business. Spotting ways to boost accounting performance while saving time and money is crucial to reaching economies of scale profits.
Accounting software has been available almost as long as there have been computers. In the past, software centered on fundamental functions, including general ledger, payroll, AP, and AR. Today, accounting software performs those functions while also tracking cash flows, recording financial transactions, paying invoices, generating board reports, and more.
According to Fortune Business Insights, more organizations than ever are embracing tech-centric strategies. Automation and cloud-based software are vital to boost accounting accuracy and provide cost-savings and flexibility for company expansion. Accounts payable and accounts receivable are the two main areas that can benefit from cloud-based software applications.
Many association management businesses struggle with keeping vendors on top of their IOUs. AP workers can become easily overwhelmed with mundane work and other challenges that slow down the process. If your team manually inputs data into a legacy software system, it most likely faces:
- Sloppy data entry — Manually entering invoice data into an accounting program could leave your company vulnerable to mistakes. Even small errors could cost your company thousands of dollars. Using automated software that will sync bank data and autofill vendor information in your records, your AP team can eliminate confusion and minimize errors.
- Losing track of your invoices — Paper invoices can be easily misfiled or misplaced. If the missing invoices go undiscovered, your company must explain to your vendors why their payment is late. Association accounting software can automatically generate reports that list unpaid invoices at the end of your current accounting period.
- Differing processing methods — Streamlining your AP system can be a real challenge without a consistent procedure. Even with processing guidelines in place, your employees may interpret them differently. This is fine for a small accounting department. However, as your company grows, it needs methods to maintain AP consistency throughout your portfolio.
- Inconsistent invoicing — Vendors and suppliers submit invoices in varying ways — paper, email, text, etc. This inconsistency can create efficiency problems, slowing down your accounting team. An automated system can handle many invoice types and streamline your AP process.
- Following-up manually — Manual follow-ups for invoice approvals or resubmissions can be frustrating. Automated software can help you set follow-up approval reminders within your company and allows vendors to set up dedicated online portals to check on payment status.
- Time-consuming record search — Rifling through old invoices and account records can be time consuming. Automated accounting software with invoice imaging allows your accountant team to bring up old AP records with a few clicks.
- Increased invoice cost — The cost per invoice rises the longer it takes to be processed. Labor makes up a large portion of an invoice’s costs; however, mistakes like missed deadlines and duplicate payments can result in late fees and lost money. Automation and recurring AP payments reduce labor costs and protect your company and clients from late fees and duplicate payments.
A reliable income stream is the bedrock of any thriving company. However, accounts receivable can be a chronic pain point for association management company CEOs, owners, and leaders. Late payments and accounting inefficiencies can hamper businesses looking to expand. Frequent pain points to be aware of and improve include:
- Inaccurate customer data — Ensuring customer account accuracy is vital to an effective AR process. Outdated homeowner contact information, data entry errors, and lost updates can take hours to correct. Customer accounts should be centralized, tracked, and audited consistently for any anomalies that can hold up fee payments.
- Payment disputes — Errors or miscommunication can result in payment disputes. Unraveling these issues costs your company valuable time and money, especially if you do not have an effective centralized method to communicate with homeowners. Your AR processes should be automated as much as possible to reduce the manual entry errors that lead to payment disputes.
- Storage deficiencies — Your growing company does not have the time or space to maintain physical client files. Even if a legacy system digitally stores your AR data, it may not safeguard it. Cloud-based association software has storage solutions that centralize your association files and scale to your needs. It also allows for disaster recovery back-ups.
- Inefficient payment processes — To be productive, your company’s fee and assessment processes must be streamlined and accurate. Extra time and expense are needed to track down late payments. Manual processing can cause errors and redundancies and can tank your productivity. One way to improve AR fee billing is by automating as much as possible and providing a dedicated online portal for residents. This permits your staff to transfer some of the work to homeowners while giving them a sense of autonomy.
- Multiple payment methods — Accepting limited payment methods can slow down your cash flow if homeowners find them inconvenient. Conversely, accepting payment forms like ACH, credit cards, bill pay, and checks may reduce delinquencies. Despite this, they may slow down AR processes if your system cannot handle them. Choose accounting software that can process multiple payments and track different payment methods through a single consolidated receivables file available each day.
By selecting a centralized, multi-faceted software solution, you can maintain accurate AP and AR records. Deliver a seamless user experience to your boards and homeowners and empower your association management company to scale profitably.