In the commercial real estate sector, managing accounts payable efficiently is crucial for maintaining profitability and operational effectiveness. Traditional AP processes often involve manual data entry, leading to errors, delays, and increased costs. To address these challenges, companies are turning to AI-powered solutions to streamline invoice processing and enhance compliance.

Read on to learn more about how AI technology can enhance best practices and improve the AP process for your CRE firm.

Understanding Accounts Payable Challenges

CRE firms deal with a high volume of invoices across various properties and vendors. For example:

• Property management teams routinely process invoices for landscaping, janitorial services, HVAC maintenance, security, and utilities at each location.
• Capital improvement projects generate a steady stream of invoices from contractors, architects, engineers, and equipment suppliers.
• Tenant reimbursements and pass-through expenses require detailed invoicing for services like repairs or common area maintenance (CAM).
• Vendor diversity means firms often work with hundreds of different service providers across multiple geographic markets, each with their own billing cycle and invoice format.
• Recurring monthly expenses—such as electricity, water, internet, elevator maintenance, and property taxes—add to the volume.
• Unexpected repairs or emergency services create unplanned invoices that must be processed quickly to maintain tenant satisfaction and operational continuity.

All of this makes invoice volume not only high, but variable and complex. Manual processing of these invoices can result in:

• Time-consuming data entry: Entering invoice details manually is labor-intensive and prone to errors.
• Delayed approvals: Slow processing can lead to late payments, affecting vendor relationships.
• Inconsistent coding: Without standardized processes, coding can vary, leading to compliance issues.

These challenges underscore the need for automated solutions that can handle the complexity and volume of CRE AP tasks. For example, Block Real Estate Services dealt with complex invoice coding across numerous properties. With AI-powered automation, Block reduced manual invoice processing time by 70%, allowing their teams to focus on more strategic tasks like vendor management and financial planning

Key Benefits of AI-Powered Processing:

• Rapid processing: Invoices are fully coded within seconds, accelerating the approval cycle.
• Reduced manual work: AI eliminates the need for manual data entry, freeing up staff for higher-value tasks. 
• Enhanced compliance: Standardized coding ensures adherence to company policies and regulatory requirements. 

By adopting AI solutions, CRE firms can transform their AP operations, achieving greater efficiency and control without sacrificing accuracy. 

Best Practices for Optimizing AP in Commercial Real Estate

To maximize the benefits of AI-powered AP solutions, consider the following recommended best practices:

1. Centralize AP Functions - Consolidating AP processes across properties can lead to more consistent coding and streamlined operations. 

2. Standardize Coding Practices - Develop and enforce standardized coding guidelines to ensure consistency. 

3. Integrate with Existing Systems - Ensure that your AI solution integrates seamlessly with current AP automation tools like Yardi Payscan or Nexus Payables. 

4. Train Staff on New Technologies - Provide comprehensive training to AP staff on using AI tools effectively. Understanding the capabilities and limitations of technology ensures better adoption and utilization.

5. Monitor and Review Performance - Regularly assess the performance of your AP processes. Use analytics to identify bottlenecks and areas for improvement.

Case Study: Enhancing AP Efficiency with PredictAP

A notable example of successful implementation is BrightSpire Capital, a real estate investment firm. By adopting PredictAP, they achieved significant time savings and improved productivity.

“PredictAP has given me many hours back in my workday to prioritize responsibilities and has greatly impacted my productivity levels, as I am no longer manually keying in invoice data,” Benjamin Miga, Head of Treasury at BrightSpire, shared in a case study.

While AI-powered financial technology platforms have seen increased adoption in the last few years, Miga noted that not all solutions deliver. “After implementing two or three AI tools, PredictAP has been the most effective right after implementation, which has made an immediate impact, without taking a few months to ramp up,” Miga said.

Future Outlook: Scaling AP Operations with AI

As CRE firms expand, the volume and complexity of AP tasks will increase. AI solutions are scalable, adapting to growing demands without the need for proportional increases in staffing. This scalability ensures that AP operations remain efficient and compliant, supporting the firm's growth objectives.

Optimizing accounts payable in commercial real estate is essential for operational efficiency and financial control. By implementing AI-powered solutions and adhering to best practices, firms can overcome traditional AP challenges, enhance compliance, and position themselves for scalable growth.