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AP Automation Success Stories for Home Owners Association

Webinar Transcription

Moderator: Hello everyone. And thank you for joining us for today’s webinar on AP automation for HOAs. Today we’re gonna be interviewing two of our customers, and talk about how they’ve automated their process.

I’m gonna quickly review the Q&A. So we will be taking questions during the webinar, and we can answer them throughout the webinar, but we definitely we’ll have a live Q&A session at the end. So if you have a question, just type it in that little chat box, and then we will address it when the time has come. And just so you know, we will be recording today’s webinar and sending out a copy of the recording and the PowerPoint slides tomorrow. So keep your eyes open for that. And now I’m gonna to turn it over to your host for today, Leon.

Leon: Hi folks. My name is Leon Davila. I wanna give you a little bit of background on myself. I really kind of started off my career really at 18, as a bank teller while I was going to school. And from there, just kind of went up the chain in banking really. I went from operations and finally to treasury management where, you know, I probably spent somewhere around 12, 13 years or so in treasury management. And for those of you who might not realize it, what we do’s really a part of treasury management. So it really was a perfect fit for me to jump over to just specialize in AP automation.

I have Tracy Timonere on the phone. She’s from Gates Hudson Community Management. Tracy, do you wanna give a little bit of background on yourself?

Tracy: Sure, thanks Leon. Hi everybody. Gates Hudson Community Management is a associate management company in the Washington, DC area. We’ve got about 250 condo co-ops and HOAs in our portfolio. I have been with the company for about 12 years now. I started out on-site managing condos, and now I’m doing employee training out of our corporate office. So that was really my role with getting the Payable Lockbox set up in our system. I am an administrator for the system, and I also handle employee training and making sure our users are comfortable with the system…

Jessica: Hi everyone, I’m Jessica Simpson with [inaudible 00:02:35] IMC Resort Services. I’ve been in the accounting world for about 10 years doing this, but I’ve been with IMC for a year. When they brought me on they were looking into this, and I’ve kind of became an the admin into it. I get the property managers comfortable, board, new users, and everything.

Leon: Great. Thank you. You know, so before we start it let’s kind of touch on AP automation and what it is. So if you look at a typical AP process in HOA management, you know, as we all know it’s pretty manual. It’s shockingly manual. Invoices typically come in, there’s typically somebody maybe at a front desk that’s running, grabbing the mail. They typically are opening all the mail manually, spreading it all open, scanning it, or at least organizing it for typically maybe a manager or an AP person to then look at it and code it. Super manual process, probably takes a bit of their morning to do that. From there, you know, they typically will stamp it, maybe like a date stamp. From there it typically will hit maybe, like I said, like a manager or AP person’s desk where they write the GL codes in. And from there it starts kind of through the approval process. And this, again, it’s manual. Just typically a stack of papers, and they’re going from one desk to the other for approvals.

And from there it gets checked against budget, checks are written. Typically the second, third step it’s being data keyed into an accounting system. And that’s pretty much, you know…then maybe an invoice will go out for a final approval, sometimes for a board member. And we see all kinds of things. Sometimes that’s FedEx, sometimes it’s, you know, during a manager major meeting. I’ve heard where people actually drop off a stack of checks and leave it in front of somebody’s door, which…please don’t do that. That’s pretty scary to hear that. And then one of the probably the biggest fears from a lot of people is research after the fact. You know, if you have to pull up any invoices or audits, it can be pretty especially painful.

So what changes once, you know, you look at a system like us, really all these steps are eliminated except for the coding and the approval process. So that’s the core of approvals and the core of AP.

So how does Payable Lockbox work? There’s four main pieces to it. The first piece is a lockbox. So many of you are probably familiar with the receivables lockbox to process all your HOA dues, and it’s pretty much kind of the polar opposite of that. So we have a P.O. box for paper invoices, an email address specifically for AP invoices, there’s a manual upload. And there’s even an option for fax, although that’s kind of a dying technology. In this example, you know, we’re gonna run and grab the mail for you. Just like a typical lockbox, we scan it, put it into PDF format, and then we have a team of the people who do data extraction. So all the data entry that you’re typically keying into your accounting system, all those same fields, all the same data we’re extracting for you, and that’s actually part of the approval process. As you’ll see the image of the invoice to the right, and to the left of it you’ll see the data that we’ve extracted.

The second piece is the actual approval process. So think of your approval process today where it’s manual, and again, you have stacks of paper typically going from the desk to desk. We’re just doing that. We’re copying that same process, we’re just putting it on a screen. And what’s nice about that is if you think about in today’s world, if you’re operating in a manual fashion when that invoice leaves your desk, if it hasn’t been keyed into your accounting system, it’s kinda lost out in whoever’s desk it’s sitting at. So there’s always a potential for things to get lost. The automation process in our system is completely flexible, each HOA can have a totally customized approval process. And the approval process itself can be modified to where it’s conditional-based. And those conditions can be triggered by dollar amount, account number, vendor, GL code, or a manual button, or a combination of those things. So literally whatever you guys are doing today as an approval process for each one of your HOAs, we can copy that same process. And the nice thing is that now you have an audit trail that’s timestamping everything that’s happening. So not only is that of protection for you as a management company, but it’s also protection for your boards as well.

Third piece is the payment piece. So from here, we actually have a brand new customized disbursement system called AvidPay for HOA. So in this system, as soon as we get the green light to make a payment, the payment goes to a team of people on AvidXchange’s payment network. And from there if we don’t already know how the vendor wants to get paid, we reach out to them and try to find out how they wanna get paid. They have three options. Checks are default, they can get AvidPay Direct, which is ACH, or they can get a commercial card payment.

So basically, if we can’t get a hold of the vendor that day, then they get a check. The checks are drawn off of your HOA’s account, we digitize signatures. All that is done at our dual controls. So the check will get printed that night, put in the mail, and processed, you know, through the Post Office the next morning. If the vendor wanna get their payments quicker, they can opt into an e-payment. And from there, if they wanna opt-in, we basically get their information and send a payment out electronically, so it’s much faster. And think of this really kind of as a payment concierge. The vendors can actually modify what they want. They can take cards if they want. They can say, “Hey, I want to take cards from zero to $1,000. From ACH, from a 1,000 to 3,000. Anything higher than that, send us a check,” or any combination of those things. So we customize this to the suit your vendor’s needs.

The fourth piece is integration. So the integration with most of the accounting systems, and really anything you find in HOA, there’s a pretty high likelihood that we have an automated integration, and probably have had one for a long time. Most of the integrations are ran through an API. Think of API as kind of a secure connection between both of our systems, where it’s exchanging data bilaterally. So on the front end we pull in your vendor list chart of accounts for each HOA set up on the system. And we’re also pulling in some miscellaneous data like your vendor’s insurance, bank balances, things like that. Pulling in every single day. So what that means for you is, you’re not having to maintain two different systems. Our system will kind of pay back your accounting system, and really kinda act as if it’s part of it. You know, for instance, if you get a new vendor for an HOA, you put it into your accounting system, and that’ll automatically sync up with our system. Then the other side of the integration is us pushing data out to the accounting system. And again, this is happening automatically every single day, without you having to press a button. It’s completely automatic.

So we can do accrual or cash based accounting at the association level. So in an accrual setting, you’re gonna choose a step in the approval process that when it’s approved, we push the invoice into the accounting system and it sits there as an open item. Then when a payment’s made, we push a payment data into the accounting system to close that item out. If you’re setup for cash, then we’ll just simply push the invoice and payment data into the accounting system at the same time. So brief kind of quick overview of how that system works.

And again, this is kinda pointing out the different methods that we can receive invoices. Really, you know, it kinda covers anyway that an invoice can come in to you. So postal, email, fax, or a manual upload. Think of those channels as big funnels and anyway those invoices make it in there. They come to us, we process it, and provide it to you the next morning.

All right. So question number one, “What operational challenges were you facing with paper-based AP process?” And I’ll hand this off to Tracy.

Tracy: I mean our challenge is probably going to be familiar to everybody in this call. It was really just time. We were spending days every week processing paper. Our accounting department was spending two days a week just printing and sending checks out. And we also have a number of our community staff look on site managers. They were processing the invoices there on site, but then needed to get them up to our office. So it was taking them, you know, an hour a day, an hour a week to drive from their property up to our main office to drop off the paper. Or the manager had to get out to the site to pick up the paper. And it was just a lot of wasted time on administrative tasks. Our administrative team at our main office was spending two hours a day just opening mail. So we really wanted to redirect our people’s time into something more productive, and outsource the administrative side of this.

Leon: Perfect. Jessica, do you have anything to add to that?

Jessica: No. I mean, that’s pretty much the same situation we were having here. I mean, our actual payables would take about almost two weeks, so we were cycling through the two weeks. We would start the 1st, finish on the 11th or 12th just to start the next one on the 15th. It was just a continuous cycle of always doing it, and just so much time wasted with having board members come into sign checks. That was always a problem too, just because you know the schedules didn’t always match up. So this works great, where they can login once they get their little email saying, “Hey, you have an invoice to approve.”

Leon: Perfect. What about cost? Did you guys ever do any analysis on cost as far as storing? I don’t know if you guys were storing paper before, but were you storing? And you might not know because you’re somewhat newer. But that tends to be a big challenge.

Tracy: Yeah, we do have a storage facility near our office. But most of our invoices were getting scanned into our accounting system, which is what’s still happening now. So that wasn’t a significant change for us.

Leon: Okay. All right, so question number two, “What made you decide AP automation was the right move?” And I’ll hand this over to Tracy?

Tracy: Okay. We evaluated a handful of payable providers, and when we talked with their references, and as we talk with other people in the industry in our area, it became very clear that this was the direction we needed to move in. Community Association Management isn’t always the most technology-forward industry, but we knew we really needed to, you know, move forward with the way we were doing this. You know, paper. And I hear you mentioning faxes, you know, that’s not the way the world is moving now. So yeah, we had some really great references. And when we saw how much time this could save us, that’s really what this came down to. That’s how we choose to go with the product.

Leon: Tameka?

Tameka: Yeah, I really agree with that, Tracy. The time that you save using this system, and just the ability to… Everything it offers, from the research to how quick they are with their support, it’s really a great thing. It’s just phenomenal. [inaudible 00:15:10] I love it. Our boards love it, our property managers. We can tweak it to however we want, you know, because every association is different. So it’s worked out great overall. It’s a very great time-saving software, I love it.

Tracy: Leon, can I add on to that?

Leon: Yeah, sure.

Tracy: The other thing that we were really excited for was the payment process, and the options that AvidPay brought to us. We had of course, been sending all of our payments by paper checks. But having the ability to do the electronic payments and the virtual credit card payment, that was a big thing for us. The vendors who choose to use those options are getting their payments significantly faster, you know, which make us look good to them.

Leon: Also keeps them out of your offices, right? Creating a fire…

Tracy: Exactly.

Leon: …for AP?

Tracy: Right.

Leon: Perfect, thank you. Question number three, “What are the main benefits you’ve experienced after automating your AP process?” Tracy?

Tracy: Yeah, well we’ve certainly gained a lot of time back, which was really our biggest goal. But my favorite thing about this process, and other managers come and ask me about all the time, is the tracking part of it. From the minute the invoice hits our system, we can see every single thing that happens to it. So if an invoice is sitting in someone’s queue for too long, we can nudge them. You know, remind them to go in and approve it. If there’s an invoice that, you know, didn’t get paid for some reason, a vendor’s calling us up, I can go in and look at anybody’s invoice. And then on the payment side as well, we’ve got some pretty great tracking to be able to tell the vendor where their payment is. Whether it’s paper check or electronic payments. So having that data, and I’m a data nerd so I love things like that, that’s been really fun for us.

Leon: Awesome. Jessica?

Jessica: Everything Tracy said, but another thing that really worked well for us is the integration portion of the back-end for this. You can push the images of the invoices with the payable itself. So when our financial department is working on financials and they have to go to a paper invoice, they don’t have to anymore. They can pull up a copy of the actual invoice itself, and see it in the system without having to leave their desk and go to a filing cabinet to look for it.

Leon: Great. Yeah, and some of the other things that I tend to really focus on, is the fact that it works from any kind of device that has internet connection. So smartphone, tablet. So when your managers are on site, and if there’s a board member that’s having a bad day, you know, they wanna ask some questions or really hard questions like, you know, “What are all the electricity bills for the past five years?” Normally that’s a nightmare, but with the system you can actually create the report ad hoc, email it out to the whole board while you’re sitting there. So you’re never, you know, defenseless as us. You know?

Jessica: Mm-hmm.

Leon: As a manager.

Probably another thing I like to touch on a lot too, is the marketing aspect behind this. You know, this industry tends to be plagued, at least in the past, with fraud. And really not surprisingly so, because fraud in HOA management really kinda comes at ya in every direction. You have the same type of fraud any other business can experience, where it’s external, when someone’s just attacking you. But it can be internal like every other business. But then your own client could try to defraud you, you know, there’s been a lot of fraud that happens from board members. And so you really need to protect yourself as a company. Your reputation is your life in this industry. And so something big that I always focus on is you have an unlimited amount of feats with the system, so use that to your advantage. Market the fact that your AP is totally transparent, and that every board member, whether they’re printing invoices or not, can have a user ID. That might have just view access, they can see what’s going on 24/7, and that adds a lot of value, you know, when it comes to keeping your portfolio intact, or getting new clients.

And so next question number four, “What was AvidXchange’s implementation process like for you?” How about start with Jessica this time.

Jessica: I came in after the initial implementation of AvidXchange, but it flowed very nicely. Moving in the properties into Strongroom and getting everything set up and integrated and adjusted to how we wanted it to appear, and how we wanted everything to post was relatively painless. It was for me, because as Tracy said, “I’m a data nerd.” I am a nerd, so I appreciated how they were willing to understand how my brain was working and how the company wanted everything to flow for the association.

Leon: Great. Maybe you know, since you didn’t really go through implementation, maybe you can touch on support. I think that’s a very important question as well.

Jessica: You guys have some of the best support teams that I have ever dealt with. I can’t stress enough how great they are, and how just they know what you’re trying to say when you explain an idea of how you want it to work. I don’t know.

Leon: Oh, that’s great.

Jessica: It’s not too great.

Leon: Thank you. Thank you, for that. That’s always a huge complement. We love to hear that. And Tracy?

Tracy: Well, let me take you back. I will answer your question about implementation, but let me take you back on what Jessica just said about the support team, and them knowing what it is that you’re trying to explain. I found that to be exactly the way she described. They are incredible. I mean response time is amazing, and again, giving us the right answer to what we’re asking. In my office, pretty much when we’re talking about any of our third party software providers, you will hear everybody saying, “Why can’t their support team be more like AvidXchange?” I mean, that’s just a constant now.

But to get to your implementation question, it was hard. I mean you know, it wasn’t hard, it was time consuming. I’m not gonna lie about that. But the implementation itself flowed very quickly. The team that we were working with at Strongroom at the time, laid it out for us, you know, exactly what the process was going to be. “We’re gonna do this, it’ll take X number of days. And then the next step will be this, and it will be X number of days.”

So in our office, we assigned four people to kind of lead that implementation process. And I think you do need at least a couple people dedicated to this, to get it setup. But we worked very closely with the Strongroom team, but we didn’t have any problems with the setup. And I was actually really shocked at how well my employees took to the system. Again, I do employee training, and it was really a testament to the developers here as to how intuitive the system is. Some of our employees are not the most tech-savvy, and everybody has been able to jump in and start approving invoices. That went much easier than I thought it would be.

Leon: That’s great. Great to hear. Yeah, you know, probably the biggest hurdle that we typically see is really just change. It’s not easy when you’ve been holding paper in your hand, and all of a sudden it’s on the screen. You know, like it’s a big difference. You know? And so that’s really kind of the biggest hurdle as a company that you’ll probably face, is just, you know, change is difficult for people, even if it’s a positive change. And you know, so you have to kind of manage through that. Thanks guys, for that.

Number five, “So what does your AP process look like now?” Tracy?

Tracy: Our actual workflow really didn’t change much at all. Strongroom was able to accommodate exactly what we were doing before. That being said, the process has sped up considerably. We have essentially a three-step workflow. Person one is told to go in and clear their queue on Mondays and Wednesdays at a minimum. The second person in the workflow is told to come in and clear their queue on Tuesdays and Thursdays at a minimum. And our invoices get released for payment every afternoon.

So again, we’re telling everybody go in at least twice a week. However, many of our users go in daily. They just wanna clear their queue out every day, which is great for us and it’s great for the vendors because the payments get to them quicker. Our accounting department, you know, still does oversees somethings, but they’re focusing on bigger picture things. The payables product has really allowed them to spend their time elsewhere.

Leon: Great, great. Jessica?

Jessica: Yeah, I completely agree with that last part about how the accounting department can completely focus their time on other things. Like I said, whereas before it used to take two weeks. We still have one person who does reserve checks in-house, and instead of it taking her a week, it takes her two days. And that’s for over 60 properties. And it’s been a huge time saver. Our property managers are in there daily, our board members are just as active as our property managers. So our process an invoice can go in, for example this morning…we already have some in the queue [inaudible 00:26:01] for payment authorization. It’s flowing very, very well.

Leon: Great. I love to hear that. All right, let’s see. Any questions from the audience?

Moderator: Hi, everyone. Now is a great time to start submitting those questions that you have for either Leon or either of our panelists. So again, if you have a question you should just chat it in that little question box on your screen, and then we will be answering them. In the meantime, Leon, while we wait for those questions to come in, I’m gonna go ahead and launch a poll. So please take a minute and answer this, this will help us follow up with you after the webinar. If you wanna see a demo of the solution, you can select that. If you just want some additional information on it, then you can select that option. Or if you’re just here to learn, you can select that as well. And so I’m seeing tons of poll responses come through, Leon. And we have our first question, which is from Justin. And he said, “I use a few accounting systems. Would you be able to still work with me?”

Leon: Yeah, and that’s not uncommon. A lot of people, you know, and for different reasons. Sometimes you might have an accounting system that you’re using for your client base, and then maybe you’re using your QuickBooks or another accounting system for your corporate books. So it’s not uncommon, you know, when you start using a system like this, the first kind of natural question is, you know, “I should use this for my own company.” You know, “Why am I doing it manually and not doing it for my customers? I’m automating it.” So definitely can do that. And then there’s the other cases where you might go to some M&A. You know? So you might acquire another management company, they might be on a different accounting system. And so another reason why you’d want to have a system that can accommodate multiple accounting systems.

Moderator: Thanks Leon. And it looks like 64% of the people on the line have voted. So I’m gonna leave it up for another 20 seconds or so, and let everybody make their selection. And we do have another question, and it’s from Ashley. And she said, “What is the pricing model like? Is it transaction-based or a monthly fee?

Leon: Yeah, it’s kind of little bit of a hybrid of both. The way we operate, a lot of times we work very closely with most of your HOA-focused banks, and so you’ll see the billing really looks a lot like banking fees as well, and not in a negative way. But you have small maintenance fees, but that really isn’t gonna be the big part of your bill. Mostly what you’re paying for are transactions. Invoices coming in, and how they come in, and then payments going out, and how the payments go out.

Moderator: Thanks Leon. The next question is from Jerry. And I actually think it might be interesting to get one of our panelists to answer this question. And the question is, “How do the auditors handle not seeing hard copy invoices, along with checks not being signed by two board members?”

Leon: Oh yeah, that’s a good question. Jessica, you wanna grab that one?

Jessica: Sure. I have a perfect example. We had an auditor actually in here who had dealt with a company who had this initially, and they were a little skeptical when they came in, but I was able to actually walk them through and show them. Being able to pull able to pull up the images with the reports, and break it up based on the time frames that they want. They actually like it because, like we all said before it is transparent. It’s all right there, everything ties in. If the boards are approving it, then there is no debate as to whether we were okay to pay for it. So I’ve had no complaints from the auditors, they request it all the time actually.

Leon: I love to hear that. Tracy, do you have any experiences with audits?

Tracy: Yeah, like Jessica said, the auditors being able to give them “read-only” access to login to the system. From their own office or from their home on the couch. That is definitely a perk for them. Otherwise they were coming here to our office, spending a week in our conference room going through piles of paper. So I think everybody is glad to be done with that. We work with probably seven or eight different auditing companies depending on the association. And out of all those we only had one auditor who had really any problems or questions at all, and we were able to work with her and talk her through it and come to a solution there.

A couple of our auditors did ask for AvidPays…I can’t think of what the document is now, but there’s essentially…

Leon: Oh, the…

Tracy: …a security document that talks about they’re internal controls.

Leon: Yeah, that’s an SSAE16 SOC 1 Type 2 certification. And so just I guess to answer that question, if you come across it and they need a copy or it, we can always provide that for you. Just email the support.

Tracy: So yeah, that’s what we did. We provided the auditor with that information, and they were perfectly content after that.

Leon: Great.

Moderator: Thank you. It looks like that’s all the questions from the audience. Although I’m watching just in case one more comes through. But Leon, Tracy, Jessica, thank you so much for joining us today. This has been such an informative webinar. Any closing thoughts?

Tracy: I mean, I definitely recommend the product, obviously I wouldn’t be here talking about it if I didn’t. You know, it’s going to sound like a lot of work when you start talking about how you’re gonna integrate it in with your company. And it will be somewhat time consuming at first, but it was by no means hard. So you know, I don’t wanna scare anybody away. We’ve been using the product for a little over a year now, and thinking back on what we were doing before, I mean it’s night and day.

Jessica: It is. I completely agree with that.

Leon: Perfect. And guys, I would love anybody on the line, I would love to do a demo. Even if you feel like this is something that you’re not really ready to bark on, just get through a demo and at least understand it, see what’s out there. So maybe if it doesn’t make sense now, it’ll make sense in the future and you know it’s available to you. And then also it gives you an insight, you know, there’s a good chance that some of your competitors out there are using us. So it’s good to understand what they’re doing and what they’re kind of using against you, if they are.

Moderator: Okay, thanks everyone for joining. Like I said, this webinar has been recorded, and a copy will be sent out to you tomorrow. So have a great afternoon everyone.

Interested in learning more from an AP Automation expert?
Hosted By:
Leon Davila
HOA Treasury Consultant at AvidXchange