Streamlining the AP Process: How to Distinguish Between Outsourcing and Automation

The Challenge of AP Processing in CRE

Accounts payable (AP) is a critical but time-consuming function in CRE. Processing and coding invoices manually is tedious, prone to errors, and an overall drain on productivity. Employees find themselves bogged down by the endless loop of repetitive tasks, leaving little (or no) time to focus on more high-value work.   

At scale, the inefficiencies of manual AP processes can quickly snowball. Minutes spent processing invoices quickly turn into hours as volume increases, costing firms tens of thousands of dollars every year.

To address this, companies are increasingly exploring ways to offload the AP burden, and two primary approaches stand out: outsourcing and automation through AI. Both have their benefits and drawbacks, but their effectiveness depends heavily on a company’s specific needs, and it’s critical to understand which will work best for your specific situation and how to tell the two offerings apart. 

The Emergence of AI in AP

How Can AI Improve AP?

AI-powered automation for AP processing uses machine learning to ingest invoices, extract data, and assign general ledger (GL) codes with minimal human intervention. It continuously learns both from a company’s existing historical data and any adjustments, corrections, or changes made by the AP team, so it adapts to each company’s unique workflows over time. 

The goal of AI in AP processing isn’t to remove the need for human intervention–it’s to augment it. Once AI is implemented, AP teams eliminate manual coding from their daily list of tasks, and instead focus solely on reviews and approvals, freeing up hours of time every week to take on more rewarding, strategic initiatives.  

The Pros of AI in AP

It’s difficult to overstate the benefits of adding AI to the AP process, but here are a few that stand out in particular:  

• Time Savings: Automating invoice data entry and coding drastically reduces processing times, freeing employees to focus on higher-value tasks.  
• Increased Accuracy: AI minimizes human errors in coding and data entry, improving financial accuracy and reducing the risk of costly mistakes.  
• Scalability: AI handles large invoice volumes effortlessly, ensuring that your AP system grows with your business (without the need to hire).  
• Cost-Effectiveness: Automation eliminates recurring outsourcing fees, providing long-term efficiency gains with a predictable upfront investment.  
• Control and Flexibility: Unlike outsourcing, automation keeps AP workflows in-house, allowing companies to maintain control and make real-time adjustments to processes.  
• Seamless Integration: AI solutions for CRE integrate with platforms like Yardi and Bottomline, enhancing their capabilities and streamlining workflows.  

The Cons of AI in AP

However, while AI automation is a powerful tool, it is not without challenges. These considerations may impact its adoption:  

• Initial Implementation: Integrating AI into existing systems requires an upfront investment of time and resources, which can be daunting for some companies.  
• Learning Curve: Teams may need training to effectively use AI systems, though this is often a one-time effort.  
• Dependence on Data: AI relies on historical invoice data to learn patterns. For companies with incomplete or unorganized data, this can delay optimal performance.  

Also to consider is the fact that teams may be initially untrusting of any AI tool. The fear of redundancy often goes hand and hand in any conversation about automation. Again, however, it’s important to remember that these tools aren’t job replacement tools: they’re task improvement tools.

When You Should Choose AI

AI is ideal for CRE companies that: 

• Process large volumes of invoices with diverse requirements.  
• Want to reduce manual effort while maintaining control over their AP workflows.  
• Need a scalable, adaptable solution that improves over time.  
• Want to safeguard against turnover. 

As we already mentioned, AI is great when it comes to growth. It’s an especially important investment to consider if a firm is expecting large scale expansion in the near future. Hiring and/or outsourcing can also work to manage growth, but the onboarding and training necessary to get new employees and contractors up to speed can result in huge time loss in moments when time is essential. 

And that’s not even accounting for the possibility of turnover. Perhaps one of AI’s greatest features is the fact that it will never quit, call in sick, or retire. Once it learns, it simply works, so you’re never left unable to pay a bill due to a staffing crisis. 

Companies Offering Automated AP Solutions

With AI being such a hot-button topic, it’s no surprise that several companies have worked to create automation solutions for AP processing. Here are a few standouts:  

• PredictAP: The only solution dedicated exclusively to AI-powered invoice processing for the real estate industry, delivering tailored automation for CRE portfolios.  
• Basware: Offers AI-driven automation to streamline invoice processing, payment handling, and spend management across industries.
• Stampli: Focuses on enhancing AP workflows with AI to improve invoice visibility and collaboration.  

Outsourcing in AP

How Can Outsourcing Improve the AP Process?

Outsourcing AP involves delegating jobs to a third-party team, often (but not necessarily always) offshore. Whereas AI utilizes technology to augment a team’s capability, this solution relies on an external team to execute specific tasks within the company’s accounting process, allowing in-house teams to focus on other responsibilities.  

The Pros of Outsourcing AP Tasks

For companies with simple and straightforward AP needs, outsourcing can offer some unique advantages. These include:  

• Reduced In-House Workload: By shifting repetitive tasks to an external team, companies can lighten the burden on internal employees, allowing them to focus on more strategic and rewarding initiatives.  
• Expertise on Demand: Outsourcing providers often bring a standardized approach to AP processes, which can benefit companies with limited in-house expertise.  

The Cons of Outsourcing AP

However, despite its benefits, outsourcing comes with several drawbacks, especially for CRE companies with complex, growing, or evolving AP needs:  

• Lack of Flexibility: Outsourced teams follow predefined processes, which may not accommodate unique scenarios or future growth. Adjustments require significant time and documentation.  
• Training and Supervision Requirements: Any changes to AP workflows require retraining the external team, delaying implementation and adding overhead costs.  
• Data Security Concerns: Sharing sensitive financial data with external teams increases the risk of breaches or unauthorized access.  
• Higher Long-Term Costs: Recurring service fees can add up over time, often exceeding the upfront costs of automation.  
• Loss of Control: With outsourcing, businesses sacrifice direct oversight of their AP processes, which can lead to reduced agility in responding to changes.  

When and Why You Should Choose Outsourcing

Outsourcing is best suited for CRE companies with:  

• Extremely straightforward and consistent AP workflows.  
• Low invoice volumes and minimal variations in processing requirements.  

If the overall goal is to simply offload straightforward, repetitive tasks from your team’s desks, then outsourcing can be a great option. It frees up time, allowing in-house employees to focus on more valuable work. However, for outsourcing to work, it’s important to remember that any changes to standard processes and volumes will most likely require retraining and extensive documentation. It’s recommended that at least one in-house employee be dedicated to any updates. 

Ultimately, the Choice is Yours

Both outsourcing and AI automation offer relief from the challenges of manual AP processing, but their suitability depends on your company’s specific needs. Outsourcing provides a simple, hands-off approach for companies with uniform, low-complexity AP workflows. However, for CRE businesses seeking long-term efficiency, accuracy, and scalability, AI-powered automation is almost always the better choice.  

With AI, companies can retain control over their workflows, reduce costs, and scale their operations effortlessly—all while empowering employees to focus on tasks that truly drive value. As the CRE industry evolves, automation is poised to lead the way in transforming how AP is managed.