Property Management Case Study 2

Firm

A Firm with over 100 years of collective experience in residential & commercial real estate development, investment and management services. Over the period they have developed 165 properties in 5 different cities of Eastern and Western US. Having investment proposals from top banks of western US with budget of more than 1 billion dollars.

Needs

Firm needs affordable management solution to streamline unmanaged accounting and maintenance activities
arise due to reduced staffing in tough economic situation.

Challenges

Mismanagement of Inventory Warehouse: Firm is having In-House maintenance supply warehouse for all the properties to provide timely and quality products for maintenance. There was very limited work order management and maintenance staff work tracking. This increased the firm’s repair expenses like HVAC repair, plumbing repair, and unit readiness expenses substantially. The lack of good Inventory management practices also build up unnecessary stock of items which leads to increased storage expenses and scrapping of long unused material.

Accuracy & Completeness of Accounting/ Financials: There was a lack in timely processing of vendor & utility bills, due to which firm was paying unnecessary interest & penalties. Firm was losing grip in negotiating with vendors for competitive rates in spite of large business volume. Firm had not adopted any proper month end closing procedure for transparency of financials among business partners. Confidence of business partners was shaking and they had started raising doubts on accuracy of data processing and completeness of financials. Quality of processing data was not very impressive, due to limited load distribution among staff.

Accounting Software Limitation: Firm was using DOS based software for accounting and inventory management, which was having limitations while processing data entry. The capability of producing financial reports and digesting large volume of data was too very limited in the software. It was one of the reasons that accounting staff was not able to produce timely output.

Solution

Appfolio Accounting Software: We have suggested change in accounting software from DOS based to Appfolio Property management software. Appfolio is a new generation property management cum accounting software that is web-based, has a leasing n accounting module and is easy to use.

Expertise & Economical Staffing: We have provided affordable staffing model consisting 2 property accountants and 1 financial analytics to meet initial requirement of firm. Property accountants were able to easily transmitted data from previous accounting software to Appfolio. They streamlined processing of data entry by establishing clear data input timelines. Their proactive role in asking for and following up on data with client’s accounting staff played a critical role in the process.

Centralization of Data: Previously the data was segregated and entered in two-three different places- excel, old accounting software and payroll was in QuickBooks. This led to avoidable delays and additional time in reconciling data in all three places. One of the first activities was to consolidate/centralize these disparate data sources into one single source- Appfolio.

Establishing Clear Operating Procedures: One of the key pain points for the senior management was haphazard and delayed month end closing in the pre-outsourcing set-up. This was arising due to several reasons, with the key ones being- overloading of finance controller in mundane accounting tasks, unorganized data storage, no well laid out month end procedure and lack of clear deadlines. A lot of the process knowledge was tacit knowledge available only with the finance controller. The Financial analyst and the Team leader held extensive discussions with finance controller and the senior management to map their reporting requirements, document the tacit process knowledge and map the procedure and associated timelines. The closing process was further subdivided into AP, AR, and Bank and General Ledger sections.

Creating Management Dashboards: “A picture says more than 1000 words.” Following this idiom, the financial analyst created visual dashboards representing key financial and operating information like vacancy %, collection factors, Rents collected, NOI, expense factor and critical ratios like DSCR, Debt to Equity etc. These reports were created at multiple levels- property level, entity level and even partner/investor level.

Enhancing Inventory and Work Order Management: After the above activities started yielding results. They then added another accountant for Inventory management, work order management and maintenance technician’s time tracking. As earlier, the accountant started by creating procedures for tracking inbound and outbound inventory. He also diligently tracked work order statuses and updating/closing the work orders based on feedback from the field. The prompt creation of new work orders based on property manager’s requests led to fast resolution of tenant complaints. Tenant satisfaction has been increased after successfully implementing above measures resulting in significant reduction in unit’s vacancy levels.

Results
  • Timely Monthly Financials with month closed by 6th of the month and final financials out by 8th. Client received words of appreciation from bankers and investors for timely submission of reports
  • Management Dashboards improved the quality and clarity of financial information available with senior management and investors
  • Well established and documented accounting procedure with completely centralized processing in Appfolio, has made updated and accurate information available at all requisite levels
  • 30% Reduction in maintenance supply material and labor expenses through work order tracking, maintenance technician time tracking and other associated initiatives, resulting in dollar savings of more than $200,000 annually.
  • 40% savings in accounting costs after the first one year of complete utilization of Indian accounting team

If you are interesting in knowing more about how outsourcing can help your organization, please email us at sales@outsourcinghubindia.com or call us at 1-646-367-8976. We can also provide a cost-benefit analysis customized for your organization.