Case Study: Back-Log and Clean-Ups of Accounts of Property Management Company
Challenges:
- OHI faced some challenges in completing the project, such as:
- Multiple Payments for Single Transactions: Payments were recorded multiple times for a single transaction, leading to inaccurate financial reports and difficulty in tracking transactions.
- Incorrect Income GL Mapping: Misclassification of income streams due to incorrect mapping of Income General Ledgers (GLs) compromised financial statement accuracy.
- Unreconciled Mortgage and Escrow Balances: Failure to reconcile mortgage and escrow balances created inaccuracies in financial statements, affecting financial decision-making.
- Unreconciled Tenant Balances: Tenant Accounts Receivable (AR), Prepayments, and Security Deposits were not reconciled, leading to inaccuracies and potential tenant disputes.
- Incomplete Bank and Credit Card Reconciliations: Many bank and credit card transactions remained open and uncleared, obscuring actual cash positions.
- Unpaid Vendor Invoices: Extended unpaid periods for vendor invoices led to a backlog, affecting vendor relationships and risking late fees and supply chain disruptions.
- Misposted Fixed Asset Transactions: Fixed asset transactions were incorrectly posted directly to the Property Management company instead of individual properties, complicating asset management.
- Payroll Liabilities: Payroll expenses were managed by the property management company without proper liability accounting towards properties, affecting cash flow and GL reconciliation.
Solutions:
Multiple Payments for a Single Transaction:
Implement a thorough review of payment processes and categorized transactions based on AP’s, CC and JE’s. Enhance reconciliation procedures to detect and correct any
discrepancies promptly.
Incorrect Mapping of Income GLs:
Conduct a comprehensive review of the GL mapping and ensure alignment with the correct revenue streams. And created some necessary GLs to organize income/dues from the tenants.
Unreconciled Mortgage and Escrow Balances:
Establish a dedicated reconciliation process for mortgage and escrow accounts. Asked for the necessary mortgage statements and create the spreadsheet to record and reconcile the balances and deductions.
Unreconciled Tenant’s AR, Prepayment, and Security Deposits:
Reviewed all the GLs and find out the manual transactions as a primary reason for the unreconciled balances and thereafter removed/reclassified those manual transaction and directed not to make any manual posting.
Unclear Bank and Credit Card Reconciliation:
Reviewed each uncleared transaction and find out the reasons and take corrective measures. e.g. Checks processed to vendors/tenants are expired, checks received from tenants are not deposited into banks
Unpaid Vendor Invoices:
Identified the invoices from Vendor ageing and figure out the reasons for the non- payment, thereafter, established a vendor management spreadsheet to track and prioritize
unpaid invoices.
Direct Posting of Fixed Assets Transactions:
Firstly, identified those Fixed Asset transactions which were posted in PMC and reclassified them to the respective properties. Furthermore, implement a process to book fixed asset transactions only in the properties and to make a proper record for the supplies.
Payroll Challenges:
Reviewed the payroll expenses property-wise and then created their liabilities towards the property management company. Later, started creating Inter-company billing for the payroll charges.
Results
1)
Now we are tackling All the AP’s, Utilities, Vendor management, reconciliations.
2)
Organized the communication process with the property managers.
3)
We are now helping the client on cash management and balancing inter-company liability.
4)
Created SOP’s for the processes so that all of us remain on the same page.
If you are interested in knowing more about how OHI can help your organization, please email us at 
info@outsourcinghubindia.com/
sales@outsourcinghubindia.com or call us at 
+1-646-367-8976 (US) /
+44 20360 83041 (UK) /
91-11-26475715 (India). We can also provide a cost-benefit analysis customized for your organization.
