7 Ways Property Managers Can Streamline Back-Office Operations
With an economic downturn looming, technology and innovation could be the key to attracting and retaining tenants in a buyers’ and renters’ market.
With an economic downturn looming, the market is poised to shift in favor of buyers and renters. To navigate the changing commercial real estate market, your residential property management company must embrace technology and efficiently manage its costs and working capital. That starts with streamlining back-office operations.
The Demand for Digitization
COVID-19, combined with a demographic shift, has increased the demand for everyday digital tools. An increasingly large share of tenants are young people—and they expect:
- Information in a single location, not through mail, phone calls or multiple logins.
- Electronic and mobile documents, such as leasing applications, renewals and cancellations.
- Modern payment methods, including electronic, mobile and real-time payments and refunds.
Common Challenges Across Property Management Companies
Meeting these requests may be difficult for management companies, which operate in silos created by a decades-long history of organic growth and acquisitions-related expansion. The resulting piecemeal legacy platforms, antiquated processes and “we’ve always done it that way” mentality makes it difficult to introduce innovative digital solutions.
- Time-consuming paper processes increase costs and the risk of fraud
Many management companies use paper for everything from leasing applications to vendor invoices. These manual processes require more staff members and consume time and money that could be spent developing innovative solutions. They also put companies at a higher risk for internal and external fraud.
- Relationships and accounts at multiple banks can trigger higher bank fees.
Oftentimes your management company uses separate accounts outside of their primary bank. Those accounts multiply, as do bank fees, when you consider accounts receivable, accounts payable and payroll.
- Poorly implemented technology can cause process inefficiencies.
Without the necessary customization, modules and integration, newly implemented systems may cause more problems. Because the technology may not be properly utilized, the business may question its investment and avoid future ones.
- Incomplete forecasting and reporting can increase the risk of falling behind competitors.
Manually compiled, incomplete inputs are less reliable, making your true cash requirements and funds available for investments unclear. This dearth of data analysis-based insights on things like tenant behavior put you at a disadvantage.
- Advocating for solutions is more difficult without a treasury team or formal key performance indicators (KPIs).
Companies that lack a designated treasury team often lack KPIs, not only across treasury, but also accounts payable and receivable teams. Without a dedicated treasury team, building the business case for an end-to-end solution can be difficult.
Streamlining Operations to Create Efficiencies
Your company may be hesitant to change. However, if you don’t upgrade your back office, your front office and growth could suffer.
These seven actions can help you solve internal concerns, so your company has more time and capital.
- Reduce paper payments.
Provide residents with digital payments options, such as an online portal that accepts rent by credit card or a mobile payment app. These options should be reasonably priced or free, so tenants will quickly adopt them.
Then, expand to vendors. Work with your bank to develop a strategy to reduce costs, access rebates and improve working capital and days payable outstanding.
- Digitize and automate processes.
From application to move out, you should run every part of the leasing lifecycle digitally. This includes providing statements via online portal, sending automatic status updates via email or app, and enabling secure digital signatures to execute agreements.
With automated digital processes, staff members will spend less time printing, mailing and calling tenants, and have more time to provide end-to-end solutions. Your staff will also be able to fulfill all its duties remotely, which can improve business resiliency.
- Make cash visible at the click of a button.
Use APIs to ensure connectivity with your bank. This allows you to automate to daily—or more frequent—collection. Then, evaluate your banking relationships and consolidate them where possible. To further automate your cash positioning, use multibank reporting from your primary cash management partner.
- Expand and embrace your technology.
Select an end-to-end solution from a commonly used ERP system, or automate your interface across different platforms so your staff doesn’t have to log into multiple systems. To ensure future connectivity can be quickly and easily established, build a cloud-enabled data storage and exchange concept.
- Build out forecasting, accounting and reporting.
Once you have efficient cash visibility, you can connect all relevant internal input sources, including rent collections, property-related disbursements and corporate payments. This comprehensive cash forecasting process will help you understand imminent and midterm funding needs.
- Leverage data analysis.
With the establishment of digital payments, automated processes and interconnected systems and the resulting data, you can conduct a robust analysis. With the findings, you can improve cash forecasting, as well as departments and staff using KPI- and data-based incentives.
- Build and solidify your treasury team’s role.
The team should be separate from accounting and controls. This way, it can focus on strategic innovation, not just day-to-day operations. The team should examine current processes and technology issues, considering both receiving and disbursing funds.
A New Way of Doing Business
Embracing technology and innovation to attract and keep tenants can help your company survive this crisis and future uncertainty. Examine your organization from end to end and work with your bank, if necessary. In doing so, you can not only develop a short-term solution, but a better, more sustainable way of doing business.