Your Accounting Can Be a Key Selling Point with Claudia Herrera

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00:01 
Michael Praeger 
Welcome to the Power of Change, the podcast that delves into the intersection of leadership and technology in the finance world. I’m your host, Michael Prager, the CEO and co founder of AvidXchange. In each episode, I dive into the leadership topics and industry trends with business leaders, partners, and customers who embrace the power of change. Super excited today to have Claudia Herrera, Senior Vice President and CFO of Donahoe Commercial Real Estate and Borger Residential. So, Claudia, you’ve had an incredible career all within real estate, more than 25 years of experience in accounting and leadership roles, and specifically in some of the commercial and residential real estate fields. You’ve had some pivotal moments over your career that have shaped your leadership journey. Maybe share what some of those pivots have been over the course of your journey.  

 
00:53 
Claudia Herrera 
I think part of it has to be internal and part of it has to be external. You know, for me, internally, I’ve always had the kind of a can do attitude, and I’ve coupled that with a really strong work ethic because, you know, the job needs to get done. And so I’m not afraid of hard work. And I try to surround myself with people who believe in kind of that same work ethic. But I think you have to have a willingness to learn and to evolve. And you also have to have the grace to admit that sometimes you’re wrong and that you’ve made an incorrect decision. And you know what? In 25 years of experience and working, I’ve made wrong decisions or I’ve taken wrong actions.

And then, you know, if you’re lucky and you have mentors that along the way, you can look up to and you can confide in and that they can be positively critical of you to help you grow. I think that’s also important. In my opinion. Professional success is not something that should come easy. I think you need to want it, and I think you need to work for it. And then I think you need to take that focus and put it back towards mentoring and growing the next generation of leaders.  

 
02:03 
Michael Praeger 
Well, there’s lots of nuggets there. I took a few of them down, maybe zooming out a little bit. You guys, you know, you’re located in a unique part of the world, being in Washington, D.C. and certainly there’s been some significant kind of challenges that you navigated, you know, going back to, you know, say, 9, 11 to, you know, Covid to now, you know, another new administration and some of the changes that they’re making related to federal workforce. Maybe just talk a little bit about generally and then in Washington D.C. particular, you know, what are some of the challenges facing not only yourselves, but kind of, you know, others in the commercial and residential real estate sectors.  

 
02:38 
Claudia Herrera 
I mean, I think the real estate industry overall, especially on the commercial side, has been challenged significantly during COVID and Post Covid. You know, we’re experiencing, especially in the D.C. area, people are just now starting to get back to work on a more regular basis. And so you can imagine that from a commercial perspective, you’ve got vacancy rates that have increased significantly, you’ve got competition that’s leading to lower rental rates on a per square foot basis. You’ve got an inflationary market that’s leading to rising interest rates, which makes increased borrowing costs a reality. So it’s really more expensive to finance assets or to even reposition existing assets and loans. And managing these challenges with creative solutions is something that we’re having to do on a day to day basis. We’re just having to pivot really all the time.  

And so you can look at that as a challenge that can’t be overcome, but you can also look at it as potentially an opportunity. And I’ll use DCRE as an example, which is Don Ho Commercial Real Estate. When, when the president of DCRE and I took over that division within the Donahoe companies was struggling and were looking at potential NOI negatives and you know, the president and I, we looked at each other like, what are we going to do? Because we don’t see the environment changing significantly going forward, but we still want to have a profitable venture. So, you know, we made some hard decisions. We downsized space, we downsized personnel, we started shifting the contracts that were more meaningful to us in terms of the vendors that were serving us for goods and services.  

And we made critical decisions to eliminate some of them. And those hard decisions were hard when they happened, but they led to our ability to, at least from an overhead perspective, manage what was happening in the environment. We became a division that had a mantra of where can we generate revenue? Where are those rocks that we can turn over? And no rock is too small because every rock adds up and eventually, you know, it’ll become profitable. And the last thing that we did too is I looked to my team and I said, you know, most people consider accounting a cost to a company, right? I look at it as a revenue generator. And I can tell you right now that in the last three years, our department and our reputation for excellent accounting has actually led to new business.  

I’ve had clients refer me and our company because Our accounting is so good and because our operations are so tight and we’ve been able to turn their books around and how we do their processing and their reporting, and so they’ve recommended us to others and we’ve gained new business that way.  

 
05:46 
Michael Praeger 
Wow, that’s really well said. I love it. You know, kind of turning what’s traditionally, you know, thought of as accounting or back office function that’s an expense. Right. And actually turn it into not only a revenue producing asset in function for the business, but also kind of a profit center for the business. Right. And driving new revenue. Well, let’s switch gears a little bit and maybe talk about the role of technology in how you’ve kind of transformed your business.  

 
06:11 
Claudia Herrera 
I think with the current market, technologies such as AI really are going to help you pivot on a dime, so to speak. You’ve got shifting market demands, you’ve got regulatory restrictions impacting the industry. You’ve got market conditions which are increasing your cost of capital, your financing, your interest rates. You know, we’re using AI, we’re using technology, we’re using all of those things to leverage learning and to be able to analyze and predict customer needs to enhance the overall customer experience. We want to provide digital platforms and virtual experiences that every consumer now considers a basic. Right. And a basic necessity before they’ll even consider your product as something that they want to deal with. The other thing, what we’re doing is we’re leveraging technology to evaluate market trends. Right. Because pricing strategies are market born, you know.

If demand is high and supply is low.  You’re going to get a higher price. So we’re trying to optimize all of our pricing strategies and adjust as the market conditions do. We’re also using technology to leverage marketing and to leverage how we outsource and reach our clients. You know, we’re also using every single accounting software platform that we have and we’re trying to evaluate and reconfigure those platforms to again, overlay additional technology to be able to give us those immediate data functions and analytics that we need in order to make decisions.

And that includes AvidXchange. You know, because AvidXchange holds the largest expense data for all of our businesses. You process our invoices, you pay our vendors. And the reporting that I get from there with the analytics that I get is also invaluable. And it allows me to make gross macro decisions as to how I’m going to price and negotiate my vendor contracts on a mass scale.  

 
08:16 
Michael Praeger 
One of the questions I had is when you look at some of the key business partners and technology partners that you have, like AvidXchange   and others, how do you think about the role that they have in bringing new technologies like AI and other things into your business and how you depend on us to be a catalyst to do that along with other initiatives that you have?  

 
08:40 
Claudia Herrera 
I think any technology platform that we use has to be focused on enhancing its platform on a consistent basis and has to be focused on availing itself of whatever new technology such as AI to be able to grow. And more importantly, all of our technology platforms have to be able to talk to each other. Because you can have three great platforms, but if none of them talk to each other and it’s creating a manual process behind the scenes to get data to and from, then that is inefficient and honestly doesn’t help me to achieve what I need to achieve. So all of my accounting data, all of my property data, all of my tenant data, all of that resides in one platform.  

And to be able to leverage AI and overlay it within Agora and Agora Insights in the MRI platform will allow me to extract information not only for my owners, but for my property managers, my regionals, my president at the drop of a dime, and allow them to make decisions and move forward in a more productive way.  

 
09:45 
Michael Praeger 
Yeah, I mean one of the things that we’ve tried to lean into and I think you hit it, is the concept of kind of talking to each other in a seamless way. And I think it started with you had multiple different kind of platforms in the kind of older days and there wasn’t as much kind of integration or connectivity between the two platforms in today’s world, I think for most of our customers, and you probably say the same thing, that’s a non starter. There has to be high levels of connectivity and integration between platforms to make the impact to our overall business. You know what you want it to be.  

 
10:19 
Claudia Herrera 
The amount of data that we process on a daily basis across all of our divisions using the AvidXchange   platform and the MRI platform is insane. And so if those two systems didn’t talk to each other back and forth in a seamless way and in a timely way, then my processes are halted and then that’s where manual intervention has to overtake. And honestly I’m trying to do more with less. So if my systems don’t talk to each other, guess what? Then my people have to be involved. And if my people have to be involved, then that’s hours that I’m taking away from them to be able to take on new business and that is not an option for me.  

 
11:00 
Michael Praeger 
I know you’ve been, you know, a technology led leader ever since I’ve known you, right? You’ve leaned into technology and how can we use technology to make our business better? How can we make it to make our accounting, you know, finance area actually a profit center, all those type of things. What’s the secret and how do you do that with your teams? I know certainly having the right mindset and be able to provide a vision for them of what the end state can be is critical. But maybe share your secret magic and how you do it with your teams.  

 
11:30 
Claudia Herrera 
I think change is hard for people and when systems are working, even if they’re working slowly, I think people are comfortable. And so when you are trying to upset the Apple cart, you’re going to get changed resistance. And so the most important thing to do is to communicate with them and to let them know why the change is happening, why it’s necessary, what the benefits are to the business and then what the benefits are to them.  

And you know, to give them an opportunity to either provide feedback or to be involved in the implementation has been critical for me because I feel like it’s important to communicate to senior leadership what you’re doing and what your goals and objectives are because they need to be supporting you in those efforts and they need to be, you know, having your back when decisions are being made that maybe not everybody agrees with. And also I think anytime you make change happen, if you don’t follow it up with, you know, guidance on how to implement things, on training in terms of usage and then post implementation follow up, you’re basically setting yourself up for failure.  

 
12:41 
Michael Praeger 
Some real, you know, words of wisdom there maybe just in kind of in wrapping up. Claudia, what are some of the personal routines that you have to help you be the best you can be? I know you’re a super early riser, but maybe just share some of your personal routines.  

 
12:55 
Claudia Herrera 
One of the things I was going to say is I am an early riser. I get to the office by between 5:30 and 6:00 clock in the morning. I don’t do that because I have to. I do it because I want to because I work best in the morning and I try to be the first person in the office which gives me that alone time. You know, once people start filtering into the, to the workplace I feel like the interruptions are constant whether it’s phone, email, people coming into your office. And so I have a to do list. I update my to do list daily. I update my project plans, I catch up on emails, and I go back to those critical items that I flagged that I didn’t get to maybe yesterday or the day before. 

I think also you need to be, as a leader, we’re forced to live at 30,000ft the majority of the time during our day, right. But I think it’s really important to be able to drop down to ground level and understand what’s happening at ground level. And so I also think you need to set standards. If your standards are high and you make it clear that your standards are high and you don’t deviate from them, then the standards will rise. I think you need touch base with your team, let them know what their goals are, what they need to be focusing on. I think you need to redirect them and let them know, you know, where issues are or where great things have happened and commend them for the great work. I think you need to hold yourself accountable and hold your team accountable.  

And then for me, because I could work all the time, right? I could be here, have a cot in my office and be here every day. I think it’s really important to have time away and work life balance and understand that you can’t always be on the job. You have to, you have to shut off the phone, you have to take that cup of coffee and go out onto the patio and just watch the sunset every once in a while and do those things that bring you joy so that you know, when you come back to work, you’re refreshed.  

 
14:47 
Michael Praeger 
Well, that’s, I think that’s a pretty good punctuation point for today’s episode. But, you know, I think some great takeaways a bit on the use of technology and navigating both business and operational challenges. I love the aspects of, you know, thinking about, you know, how you can really just change the mindset. A great example was thinking about everyone thinks of accounting as a cost center back office function. And how do you kind of flip the page and actually make it a strategic revenue producing function for the business? And then just the embracing new technology with a focus on integration, how they actually can talk to each other. And that’s where you really leverage the power of data and technology by having different systems that actually communicate with each other.  

And so with that, I think today was a terrific episode of the Power of Change podcast and super thankful that we had Claudia Herrera here to join us on today’s episode. Thank you, Claudia.  

 
15:44 
Claudia Herrera 
I appreciate you guys having me.  

 
15:46 
Michael Praeger 
Thanks for listening to the Power of change presented by Avid. If you like what you’ve heard, subscribe to our channel and leave a five star review. While you’re waiting for the next episode, head on over to AvidXchange   for our latest research reports and business insights. And if you’re interested in learning more about Accounts Payable automation from AvidXchange  , click the link in our show notes to connect with our experts. Thanks again for listening to the Power of Change. We’ll see you next time.