How to Effectively Strengthen Your Real Estate Back Office
The workplace landscape is changing, with a global pandemic only hastening this change. A remote workforce, in some form, will be around long after the pandemic is over, and that makes the transfer of knowledge within an organization much more difficult. Business operations and financial processes have often been developed and refined over decades, with much of that knowledge never formally documented. Instead, it relied on a learn-as-you-do approach or via detailed personal interactions. Now is the time to reassess your business operations and financial processes, formally document standard operating procedures, and unlock that institutional knowledge. The ability to transfer knowledge plays a vital role in an organization’s ongoing successes.
Real estate companies are rightfully focused on asset management, however, the same attention is needed in the back office. Here are several back-office challenges that you should address:
Rely on paper-based procedures – Sign paper leases, mail monthly rent statements, collect paper checks, receive paper invoices, approve paper invoices, write paper checks, file and store paper records.
Comply with local security deposit regulations – Renter-friendly regulation has made it difficult to move cash from the security deposit escrow account to the operating account and then to the tenant within the required timeline.
Communicate between departments – Information too often moves slowly from the leasing office or capital assets team to the accounting team, causing delays in monthly reporting.
Rely on a physical office – This can make it difficult or impossible to access applications, locally save electronic files and access paper files remotely. Collaboration among remote colleagues can be challenging.
Optimize a general ledger system – Not having an in-house general ledger expert can lead to not using all available modules or features, including leasing with the ability to begin with a prospective tenant, accounts payable and storing invoices, and maintaining multiple sets of books needed for various reporting purposes.
Maximize other processes – These can include acquisitions, payroll, human resources, asset management, travel and entertainment, financial close and reporting.
Through formally documenting the organization’s business operations and financial processes, you can preserve the practices that have made the organization successful for decades. In addition, your trusted real estate business advisor can help identify practices that could be refined or replaced:
- Recommend applications to increase electronic rent collections.
- Improve or implement systems to reduce manual, paper-based procedures in A/P and A/R.
- Provide cash management techniques to ensure timely return of tenant security deposits.
- Improve internal controls over critical applications, vendor acceptance, and rent collections
- Connect the leasing office to the accounts receivable team through the general ledger system, enhancing the segregation of duties.
- Maximize reporting tools of the general ledger system to provide custom reports for specific users.
- Enhance cybersecurity controls to help prevent a digital attack.
- Use tools, such as VPN access and mobile transaction approvals, to support a remote workforce.
With a rapidly changing workforce, you need comprehensive, documented procedures and controls. The payoff will be a more robust plan for employee training, a remote workforce, management succession, innovation, risk management and cost containment.
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