Property Management Case Study 10

Needs

Accounts receivable function of an accounting department forms the backbone of a company. It has a direct impact on the cash flow of the organization. As such for Real Estate and Property Management companies processing monthly rents of tenants is a must and an important activity.

The client has a large portfolio (5400 units) of properties and had an issue of accountants moving in and out of the company, which was proving to be a headache for the owners as timely processing of rents were often delayed. To get off the burden of regular hiring, reduce costs and improve timely processing of accounts receivable activities, the client decided to use a hybrid solution where a team of accountants were engaged from OHI and a couple of Senior Accountant in US were retained to manage and oversee the process.

Challenges and Existing Issues

• Accurate and on time processing of month rent roll
• Delayed collection efforts of overdue rents due to incomplete AR aging reports
• Timely and correct processing of Section 8 vouchers
• Inconsistent Charging of Late fees on delayed rent payments leading to revenue loss
• Keeping track of utility consumption and processing bill back to tenants
• Constant corrections to tenant ledger due to inaccurate processing of rent rolls/rent receipting

Solution

The first step in the entire process was to understand and document the existing process. Detailed interviews were done with client personnel, at the start of the engagement based on which the entire process was documented. Process Gaps and strengths in existing procedures were identified. A team of two Accounts Receivable Specialists were allotted to this process. Specifically,

• Rent Roll – Processing of rent roll was set-up for 1st of every month, payments were tracked for each tenant to identify any delinquencies
• Section 8 Vouchers – A review process was set in place for Section 8 properties to process receipt vouchers efficiently and accurately. In addition, regular follow-up was done with Property Managers for any changes in Section 8 receipt i.e. in case of tenant move-in, move-out and renewal in contract
• Delinquencies – Setting up late fee charges for tenants with irregular payments
• Utility Bill Back – Utility bills were analyzed and allotted to tenant based on pre-defined formula
• Analyze Tenant Ledger – New move-ins and move-outs were analyzed for proper and correct recording of charges