A mid-size real estate firm in Miami, Florida. The company manages over $300 million of real estate, over 4500 apartments and have been appointed receivers on over 15 properties.
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.
- 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
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
- The Indian team was processing the entire monthly accounts receivable receipts from India within two months of commencement of process. This was 4 weeks ahead of schedule
- The team in India maintains a daily tracking and weekly issue sheet to resolve discrepancies and create transparency in the process. This has also helped in processing rent receipts on a daily basis
- Apart for the cost savings, the entire management of AR function is now the responsibility of Indian end, thereby freeing up significant management time at US end
- Due to the success of the AR process, the client has transitioned most of the property accounting activities to India. The AR team has also now been expanded to cover AR responsibilities of newly acquired properties