How Smart AP Can Save Properties Time and Money

We pull back the curtain on accounts payable with Tammy Miller from PMI, exploring how small errors become big costs and how strong controls protect properties from fraud and late fees. We unpack vendor setup, AI tools, and the daily habits that keep buildings running.

• common AP errors 
• time cost of fixing mistakes
• duplicate payment controls
• late fees as avoidable waste and how to prevent them
• vendor setup, compliance checks, and restricted access
• fraud defenses using positive pay and controlled ACH
• how AP and accounting differ 
• operational impact of accurate payments

You can learn more about PMI in Camp Hill, PA by visiting the website at mgmtpmi.com.

Conversations and insights on property management across the real estate industry, including apartment rentals, student housing, manufactured housing, and commercial properties.

Questions or topic ideas? Contact us at podcast@rentpmi.com

Transcript

Meet Tammy And Her AP Path

Crystal 0:00

Welcome to another episode of Pro Talk Property Management, the podcast where we talk all things behind the scenes of managing real estate. I'm Crystal, your host, and today I'm joined by Property Management Inc. accounts payable manager, Tammy Miller. Tammy, welcome to the podcast.

Tammy 0:17

Thanks for having me. I'm excited.

Crystal 0:19

I'm really looking forward to hearing what you have to say because, like most people, I hate paying bills. I don't like it at work, at home. I just delay it to the last possible moment because I just don't want to do it. And here you are making a career out of paying other people's bills, and you've been doing it for nearly 30 years with PMI. So my questions for you are how did you get into accounts payable and why would you do that to yourself?

Tammy 0:44

I absolutely love paying bills. I like paying my own bills, I like paying other people's bills, I would even pay my friends' bills if they would give me the money and their bills, I would do it. I've just always liked paying bills. But actually, accounting is my third job at PMI. I was in the residential and then the homeowners, and now I'm in accounting, and I feel like this job I was born to do. I love it.

Crystal 1:07

What other you said you started in different areas before getting into accounting. What other areas were there?

Tammy 1:13

Well, I did residential. I didn't rent apartments, but and I never went to the apartments, but I did take uh make appointments for the managers over the phone.

Crystal 1:28

I collected the rent and put the rent into our system and so then they found out that you really like doing collection or were good at doing collections and paying other people's bills. So like, well maybe we'll just put her over here.

Tammy 1:40

Is that kind of how it Yeah, there was an interruption there because I also went to homeowner association, but that was kind of collecting the rent, accounts receivable. I didn't like that as much as I like accounts payable, because accounts receivable sometimes is harder because you have to call people or send them letters and remind them they have to pay their bills. Where in my side I just pay the bills.

Common AP Errors And Vendor Misapplies

Crystal 2:06

Yeah, and that's why I really enjoy doing these podcasts because you have such a different perspective on property management than I do. I would never enjoy receiving bills, c collecting bills, or paying them. Nothing to do with that. Sounds like something I would want to do every day. But hearing your story makes me really appreciate how many different paths there are into the property management industry. And with all your experience, you seem like the best guest to be here for today's topic, which is what accounts payable mistakes cost properties time and money? And that question has a lot of layers to it. So I want to break it down and start by asking what are the most common AP mistakes you see in property operations?

Tammy 2:48

Actually, the most mistakes don't come from us, it's the people that receive the checks. Like there could be a vendor that receives a check and they apply it wrong, and if they apply it wrong, it can be a couple months before we even find out that they applied it wrong. So then we have to go back and have them fix it. If it's something that we did, we have several people before the person that enters it, enters it in the system as well as they can, and then it goes to another person that is involved in that property, they look at it, they make any changes that need made, then it goes to it could go to somebody else after that before it goes to accounting, but it always ends up in accounting, and then accounting looks at it, and then it's approved to be paid. So we catch a lot of errors before it happens. There are some that get the whole way through. If somebody enters an account number and they're missing a number, and that check goes out, like say it's to Comcast, well, Comcast doesn't know how to apply it. So sometimes on that same check there'll be other Comcast bills and they'll just apply it to another one. Or they'll have to hold on to that check, call us, we have to figure out what they're who it was supposed to be for. But I would say 90% of the time they just apply it to a different account. So then there we are again, where it can be months before we find that mistake. But we do have a lot of checks before it goes out.

Crystal 4:27

So you spend a lot of time investigating these uh errors or potential errors, because they may not be an error, you just kind of flag something.

Time Costs: Fixing Versus Paying

Tammy 4:34

Yeah, most of the time, by the time they get to us, we just cut the check, and then there are before we mail them out, we can't really look at every single one because we're cutting sometimes between five and seven hundred checks a week. So we can't look at all of them, but we will look at some of them, and if something stands out, like there'll be a list of accounts that we're paying, and one of them, one of the account numbers has one less number or one extra number. We know to look that one up and fix it because it stands out. But if they just change and have the number wrong, we don't even catch that until it's too late. But you know, it gets fixed.

Crystal 5:19

Aaron Ross Powell What amount of time do you say you spend on investigating issues versus just paying bills?

Tammy 5:28

Paying bills is easy and quick. We just it can take maybe between posting and cutting checks, maybe uh two hours at the most. But uh when there's a problem with a check, then that can take four hours for one problem to get it fixed. So there's a lot of a lot more time fixing problems than cutting the checks and getting them all out. So it's it it is very frustrating when there is a mistake that isn't caught before it goes out. But like I said, most of the time it is caught before it goes.

Crystal 6:08

And when you find these errors, are are you and your team responsible for fixing them or do you send them back to like who received the original invoice?

When To Fix Internally Or Route Back

Tammy 6:19

That's a good question. Actually, sometimes we will fix it so that it can get out quicker. Like if it's a due date of, you know, we cut the check on the 15th and the due date's the 20th. If we send it back to the person that made the error for them to fix it, then it has to go through the whole process again of them fixing it, the people that approve it could be two to three people, and it won't get cut until the next week, which is seven days later. So we will fix it and cut it. But if it's a one that doesn't matter if it gets paid that day, we will send it back to them just so they know. We want them to see what they did so that they remember next time they won't do that again, or they'll look at it closer next time.

Software Safeguards And Early AI

Crystal 7:10

And is there any software or hardware that you're using to help you find these like red flags? Like anything pops up and says, Hey, this isn't right, or is it just your vies doing all of this?

Tammy 7:22

Yeah, our software does have catches. We can't pay a bill twice if it's entered correctly. Our software catches if we're paying this vendor, this invoice number, the software will come up and say, this has already been paid. So then the person entering has to stop, look into it, and see if it actually was paid already, and then we know not to pay it. But if they enter the invoice number once in the one time, the one time, then the second time they use the account number, the system doesn't see that it's the same thing. So it has to be entered exactly. But we do actually we're starting, and I don't know a whole lot about it, but we are starting paying bills through AI. So some of the bills that we have are paid before the person that's entering the information, it's already set up in there. Like there could be the vendor, the invoice number, the account number, whatever, and then we just have to check what AI put in there and then change if there's any changes and what uh from what I hear, AI learns as it goes. So if they the first time, first couple times they paid the bill this way or or entered it this way, and we keep changing it, they learn that okay, next time they want us to do this.

Crystal 8:59

So I'm excited that that's that may save you a bunch of time.

Tammy 9:04

It really will. There I mean there's errors until they know until it gets to know exactly what we want, but it's it's working out pretty well so far.

Crystal 9:15

And you said before that you really enjoy paying bills. Do you like investigating these errors or catching an error, like a gotcha moment?

Tammy 9:22

Well, no, I don't like enjoy having to tell somebody that they did this wrong because they get mad at themselves, and you know, it's something it's just normal. It's we're human, things happen. I make mistakes too. I don't like to admit it, but I do. Yeah.

Crystal 9:39

I I have to be honest, I've gotten a few of those emails that uh something was wrong that I did, or a catch, like, you know, we we paid this already.

Late Fees And Vendor Relations

Tammy 9:47

Well, I can't expect everybody to be just like me and love paying bills. Well go. But I do track people down. I will I'll have we have a one of the bills that we pay monthly. A lot of people have a credit card, and then we have to make sure that that gets paid on time. And if I don't have it by a certain date, I gotta send emails out asking people. And sometimes I have to send them several emails and then copy their managers on them. So it's getting better, but you know, there's there's a lot of that.

Crystal 10:22

So but depending on the day, you're someone's best friend or their worst nightmare.

Tammy 10:26

Exactly. Where I'll walk in somebody's office and they're like, what I do now? That happens to me all the time.

Crystal 10:35

So while we're continuing to talk about errors, I'm gonna ask you, what was the biggest error you've ever come across? Something that was the most time consuming or maybe took months to unfold. Has there ever been anything like that?

Tammy 10:46

Yes, I'll say about two years ago we had a problem with one of our vendors. All of our checks were being applied to the wrong account. I'm not we never did find out whose fault it was. Not that it matters whose fault it was, but it was a lot of work to get it fixed. So now I get so nervous that that's gonna happen to me again, but it hasn't.

Crystal 11:09

Yeah, because that sounds very frustrating.

Tammy 11:11

Yes.

Crystal 11:12

That leads me to want to talk about properties specifically, like apartment rentals, and what mistakes do you see are typically the most expensive for properties?

Tammy 11:22

I would say late fees. Sometimes we don't know, we we don't receive the bill, or somehow it sits on somebody's desk for too long. But if we have to pay a late fee on a bill, that's frustrating to me too. And it's not always our fault. You know, we just even when we mail checks, sometimes the vendors aren't receiving their checks, just like we aren't receiving our invoices. We do have an email address now that most of our vendors are set up that they can email us, but some of them are small offices and they just still mail out their invoices. And if we don't get them, we can't pay them. But we can't prove that we didn't get them, so we have to pay a late fee. Some vendors are okay with reversing the late fee if it's not often, but others are a stickler that if they don't have this check by the 13th of the month, they're gonna we're gonna have to pay a late fee. So late fees I hate, but that's part of life.

Crystal 12:25

Right, it's just wasted money. Yeah, exactly. Yeah. That makes me think more about vendor relationships. And do you know have vendors increased pricing because of late payments or receiving wrong invoices or wrong checks?

Tammy 12:40

I'm gonna say not for us. Most of our vendors, if they don't receive a check, they'll actually call and say, Hey, you guys are really good about paying your bills on time, but we haven't received the check for this invoice number, whatever. I'll look it up and I'll see it's not in our system, so we must not have received it. So then they'll send resend me the bill directly, and then I'll make sure that it gets paid. Or I'll say, Well, this is ch was paid with check number, whatever, then I'll go in and look and see if that check cleared our bank, and if it didn't, I put a stop payment and send a new check, and they're always really good about they understand that it happens.

Crystal 13:25

So that's really nice that that we can work with.

Tammy 13:28

We have really good vendors.

Crystal 13:30

Are there any AP errors that can come with setting up vendors incorrectly on the accounting side?

Tammy 13:38

We're set up pretty well to not have that happen. We have used to be me that set up all vendors, and we had to have their insurance and their W9 if that's required. Or if we're just making a purchase, we have to have the remit address and we get everything we would get everything before we would even think about paying the bill. Now we actually have a department called Contracts that anybody that does work at a property before they step foot on the property, contracts gets them, gets their all their information, sets them up in the system, make sure we have everything that we need before they do the work, and that helps a lot. There's not me and not many people, there's only like four of us that are set up to even set up vendor codes, so nobody could accidentally pay a bill to somebody that shouldn't be paid.

Crystal 14:37

Okay. So someone that is like here to fix the furnace can't go through our system and pay a bill.

Tammy 14:43

Yes, yes or put in a vendor code. Well, even even if a property hires somebody and they didn't go through us, that bill's not going to get paid. Okay. Because they we have to have all of their information before we can put them in the system for them to get paid.

Crystal 14:59

That makes sense.

Tammy 15:00

Yeah, we're we're pretty safe about that.

Crystal 15:02

So we're not paying bills to people that so you don't have people like me going in there into your system and just putting a bunch of numbers, getting everything wrong, and then creating hours of time for you and your teams.

Tammy 15:15

Yes. Oh goodness.

Crystal 15:19

So continuing on with like errors, let's talk about fraud. Fraud is a big deal. Fraud and scams.

Tammy 15:25

It is a big deal. And what I just explained to you is is a why we only have so many people that can set us up in the system. Like, we don't have Tom Smith in IT able to set up a vendor code and pay somebody without us having all the information. But mostly, so we don't really have any fraud on that side, on the invoice side. On the bank side, the banks call us and send us stuff every day saying, be careful, there's a lot of fraud out there. We've actually had people steal checks from the mail. And I'm not sure how they get them, but they steal a check and somehow they I don't want to know how they do it, but they wash it somehow and change the name on it. And we actually have our account set up with fraud protection. So at the end of every day, I send a report to our bank telling them what checks I cut, who they were who they were made out to, the check number, the amount, and the date. And if anybody goes to a bank with a check that we made out to Verizon for $400, if they take that check and go to the bank and have it made out to John Smith for $4,000, the bank doesn't cash it. They contact us and say, Hey, is this a problem or should we pay it? And then I look it up and verify it is wrong, and I tell them, do not pay. Um so our checks are well protected. Now ACH that is new. About a year ago, we did have somebody pulling money out of our bank accounts, but we caught it in time that we got the money back from the bank. Now we have our ACH actually protected the same way. If an ACH goes through that I did not approve or it wasn't approved by I think there's three of us that can approve them. If it wasn't approved by us, then we can just tell the bank yes or no, and then they don't put it through. So we're well protected, but we've gone through a lot to get here. And we have to pay for these services, but it's worth it. I mean, even if we save one check, it's it's worth it.

Crystal 18:08

So you have all this protection and these checks and balances and security set up between the company, the organization, and the bank to really benefit the property owners, the residents, the tenants, property managers, everybody involved in this industry, you're protecting through all these checks and balances. Most people working in the industry that aren't in accounting wouldn't know that you do have all these checks and balances set up.

Tammy 18:35

Yeah. I know sometimes I want when I catch somebody I want to send an email to everybody in the company and say, This happened. I can't believe this happened. But, you know, now I'm used to it because it just happens. So, but the bank is really good about they warn us all the time, like of new scams, but we're really good at at protecting them.

Filtering Scams And Staff Guardrails

Crystal 19:00

Yeah. Wow. Yeah, it sounds like it. It sounds like it doesn't happen too often. And what's really interesting is when I first asked this question, I was thinking about more like bogus fax invoices, like, oh, you have this fax number, pay this, or you have this web hosting service, pay this.

Tammy 19:16

Did you say fax? Do people still have fax machines? I'm not sure. I know we do, but exactly.

Crystal 19:22

So when an invoice comes in through fax, you pretty much know it just goes right in the garbage. But every once in a while, one gets sent to me. This isn't real. And when I asked the question, that's what I was thinking of. And you're talking about, you know, washing checks and these bigger picture things, I think a lot of people aren't really thinking that you do.

Tammy 19:40

Yeah, yeah.

Crystal 19:41

I mean, who knew you were juggling so many different things in all of this security while also investigating errors and paying them?

Tammy 19:49

Yeah, that's why I don't want I don't like these errors because I'm I'm busy with hundreds of thousands of dollars problems versus this $42 was applied wrong, and then I gotta take four hours to get that fixed. I'm dealing with this other stuff.

Crystal 20:05

Yeah, these bigger picture issues to help people out more that aren't as familiar with these frauds and things, what could they look for to help out the entire organization?

Tammy 20:17

I think we're pretty well protected, so I'm not sure. I mean, if somebody gets an invoice and they know they didn't hire this person or they didn't buy this thing, they don't they more or less don't even it doesn't even get to me. So, you know, they're kind of protecting us before it even gets to me, so they know stuff that I don't. There was for a while a fraud thing going through where they would call a property and say, Would you like us to order you your toner? And they if it's a new person at the property, they didn't know that we don't order this toner, but now we're pretty well that's been years and years since we've had that problem. So I think when somebody gets hired, they're told, hey, if somebody calls about toner, just hang up.

Crystal 21:13

So the general staff is really protecting and adding a layer of that security before you even get involved or see anything.

Tammy 21:20

Yeah, and there's a lot that may be happening that I don't even know about because it hasn't gotten to me.

Reporting Boundaries: AP Vs Accounting

Crystal 21:25

They've that's fantastic. That's great news. Yes. So now I kind of want to take this podcast into a different direction. Uh we talked about errors and fraud and vendors, but now I want to talk about the reporting that goes into it. The month end, those kinds of things. Do late invoices affect financial accuracy and reporting at all?

Tammy 21:50

I'm not sure. That's kind of an accounting question. I'm sure that they figure something out on their end. I just get the bill paid. That's their problem.

Crystal 22:00

So, for people that are unaware, what is the difference between accounts payable and accounting? That's a good question.

Tammy 22:08

I don't want to do what they do, and they don't want to do what I do. But for me, it's money. For them, it's numbers. When I look at an invoice, I look at to make sure we're paying the right person, we're paying the right amount, and we're mailing the check to the right place. When an accountant looks at the invoice, they're looking at making sure it's coded correctly. It's working with the budget that they have set up for that property. So they look at different things than I look at. And for me, what I'm looking at is important to me. What they're looking at is important to them. So there is a difference. We're still kind of the same. We want to get these bills paid, and we but they want to make sure that it gets paid out of this budgeting amount, and I don't care what budget amount it comes out of. I just want to pay it on time. So there is a difference.

Culture, Myths, And AP’s Real Impact

Crystal 23:04

As I mentioned many times, I'm very unfamiliar with accounting. So I wanted to ask you, is there anything that I should be asking about accounts payable that could benefit a listener or somebody that just wants to save money on their property?

Tammy 23:18

Always Pay your bills on time. And we're not all nerds. We have fun too back there. But you know, we like it back there quiet. But we do have fun once in a while.

Crystal 23:50

I'm glad that you said that.

Tammy 23:52

Because you didn't believe it. It's true. I'll send an email out whenever we're having fun back there so everybody can come see us. They can be witnesses going on. Look, they're eating cake, accounts eat cake and have parties? Yes, sweetie.

Crystal 24:11

Oh, that's great. I want to sum up everything we talked about today by asking one final question, which is how much does the quality of an accounting team impact a property's overall success? Or property management? Because I I phrase that question about individual property, but we could talk about property management as an organization too.

Tammy 24:31

A lot of people think that property management is just renting properties. Now that we talked today, I'm hoping a lot of people see there's more than just renting properties. There's a lot to it, and if it doesn't all get done, you can't rent an apart an apartment. So I'm glad that we got to talk today and get that out there for people that think, oh, all we're doing is renting apartments. We're not. There's a lot of stuff going on behind the scenes that you don't know about.

Closing Notes And Listener Questions

Crystal 25:00

Right. I mean, today we talked about catching fraud, we talked about security checks and balances, how property managers managers could save money on what they're doing. Paying things on time is a big one. And checks and balances. And from everything we've heard today, accounts payable may seem like a behind-the-scenes function, but it can really make or break a property's efficiency. You have to keep these lights on. You want to keep them rented. You want to have happy tenants. All of that goes into everything. And Tammy, thank you so much for being a guest and sharing this today.

Tammy 25:32

Thank you. I'm glad to get that out there. That mainly the main thing I want everybody to get out of this is accountings aren't all nerds.

Crystal 25:42

So that's that's the big point today. They're not nerds. They know what they're doing, but they have fun. Yeah.

Tammy 25:49

But no, I I like everybody to know that it's not just renting apartments, so it's good to get the good to talk about it.

Crystal 25:57

Right. And that's really why I wanted to have you on the podcast or somebody from Accounts Payable on here to really talk about these issues because I don't think anybody really talks about this. Nobody's like, oh, what's going on in accounting today? I don't I don't think I've ever had that thought once before this podcast.

Tammy 26:15

Well, I bet from now on, at least I know you'll have your build-in on time.

Crystal 26:19

Yes.

Tammy 26:21

Well, thank you for having me.

Crystal 26:22

Oh, thank you so much. You can learn more about PMI and Camp Hill by visiting the website at mgmtpmi.com. And if you'd like to leave any questions for Tammy, we could have her back on and do a deeper discussion into AP and fraud. You can send those questions to podcast at rentpmi.com. And until next time, thanks for listening.