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Top 4 Inefficiencies in Commercial Property Tax

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You want your commercial property tax process to run as smoothly and efficiently as possible. Especially when you’re managing properties in numerous jurisdictions, any snag along the way can result in wasted time, expensive penalties, and headaches all around. What prevents property tax processes from running like clockwork? Let’s take a look at the top four inefficiencies in commercial property tax, and what you can do to circumvent them.

#1: Snail Mail is Unreliable

Even in the best of times, traditional paper mail is obviously slower than electronic delivery. But beyond the simple (yet significant) issue of efficiency, snail mail also leaves room for error and additional delays.

 

According to a 2014 audit report from USPS, around 4% of mail is undeliverable each year. And this year in particular, pandemic-related funding cuts and organizational changes have slowed mail delivery even further. The New York Times’ ongoing project to track first-class mail delivery shows that mail delays are the worst they’ve been all year, increasing again after some improvement in August.

 

For individuals, a couple of pieces of delayed mail might not be a big deal. But for commercial property owners who are dealing with tens of thousands of notices, it all starts to add up. At PTX Tech, we often hear about notices being sent to the wrong addresses altogether, especially after property is purchased or companies are acquired. And it’s challenging to tell what’s missing until the deadlines have passed and you’re slapped with late fees, interest, and penalties. In fact, one of our clients estimates that between 20-30% of their mail arrives late!

#2: Data Entry Takes Time

If you’re receiving paper notices, there’s a good chance that someone is manually entering that data on your end, and let’s face it: even the fastest typist can only move so quickly. A quick Google search claims that a competitive data entry speed is 10,000 keystrokes per hour, which translates to about 167 keystrokes per minute (kpm).

 

But one data automation company pegs the real-world speed at just 78 kpm for invoice entry. Why the huge discrepancy? Because when you’re dealing with invoices, not every second of your analyst’s time is actually spent typing. There’s time spent opening the notice, arranging it, reading the values, moving their cursor from field to field, and on and on.

 

So let’s do the math. At PTX Tech, our clients average around 10,000 parcels apiece. Even if you generously assume that it will only take an analyst 2 minutes to enter the data for each individual notice, that would translate to 8 weeks of full-time work for one analyst to enter the data for each notice! And that’s not even accounting for assessment notices or jurisdictions that send more than one bill.

#3: There’s No Getting Around Human Error

Anytime you have a human being handling data entry, there are going to be errors. In fact, a 451 Research report found that (perhaps unsurprisingly) human error is the leading cause of poor data quality—yet 81.5% of organizations believe that their data quality is better than it actually is!

 

When you’re dealing with commercial property tax bills, that assumption can become costly very quickly. And even though OCR (Optical Character Recognition) scanners help, they aren’t perfect—plus they still require human teams to validate and double-check their results. When it comes to property tax notices, you also have to factor in that bills and assessments are formatted differently from jurisdiction to jurisdiction. Which means that your data may wind up inconsistent even if your analyst enters each notice with perfect accuracy.

#4: Data Entry Review is Expensive

There’s a rule of thumb for validating data entry called the 1-10-100 rule. It holds that it costs your company $1 to check each individual data entry; it costs $10 to fix any mistakes; and if a mistake goes undetected altogether, it costs $100. This is the “hidden” exponential cost of manual data entry—and you can see how quickly that cost adds up. At the end of the day, entering and verifying data manually takes time away from value-add tasks for everyone: clerks, analysts, and managers alike.

Getting to the Root of Inefficiencies

All four of these inefficiencies have a common denominator: PAPER. It’s no surprise that businesses are increasingly shifting from paper to digital. (Read our recent blog post about the parallels between property tax and AP department automation.) But it’s been difficult to shift property tax to digital operations because most local governments still deliver notices via mail. Most jurisdictions still deliver notices and bills via mail, and that’s unlikely to change anytime soon.

 

While you can’t push localities to shift to digital delivery, what you can do is bridge the gap between their data and yours. Before your commercial property tax assessment or bill is dropped in the mail, it’s entered into a computer, run through a system, printed, and stamped. All of that data is stored digitally (even if it isn’t delivered that way), and PTX Tech has built relationships with localities to get that data directly from assessors and collectors.

 

From there, we use our technology to pull out your parcels, standardize them so that your data is formatted consistently across jurisdictions, and deliver it to you through a secure online portal.

That major source of inefficiency—paper—is eliminated. All you have to do is upload a data table to your existing tax software. You don’t have to rely on USPS to get your values and bills on time, and you can avoid the pitfalls of manual data entry and verification. The result? There’s no room for human error, which leaves you and your team free to spend time on value-add activities.

 

Watch our 1-minute video about TaxFeed to see what it can do for your property tax team!

 

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Tags: Property Tax Tips, Tax Technology & Data

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