Building Profit with Back-Office Outsourcing
In property management, the digital switchover is creating an interesting trend. Collapsing apartment operations into digital is disrupting talent models, ending traditional workflows and creating new organizational risk. Big changes on the inside are creating even bigger changes on the outside, where markets are moving and deals flying off the shelf.
In the midst of the digital paradigm shift, property owners are running into a big slowdown—keeping the books. Financial and accounting procedures can create drag on the margins when it should improve an owner’s ability to build profit. The question is, how do they run the show without worrying about financial and accounting process slowing them down?
Why owners are switching to back office outsourcing
Apartment owners love creating value, trading assets and improving processes. But accounting and producing financial reports? Not so much. “Owners want to run properties, not keep books. That’s really their highest calling,” said Kim Kowalski, Vice President of SmartSource operations for RealPage.
Back-office outsourcing takes the burden of the books off property owners’ hands and puts them into the experts’, creating additional revenue streams and improving their ability to turn a profit faster. With accounting and financial details taken care of behind-the-scenes, owners gain the freedom to do more deals. In other words, owners are free to do what they want to do.
Stopping turnover in its tracks
Many owners who would never would have dreamed of outsourcing financial and accounting services in the past now find the strategy attractive, if only to save money on constant turnover. The burden of retraining accounting teams who either don’t want to or can’t change to the digital environment is becoming increasingly obvious. And the learning curve for new software packages are so steep that employees who do manage to master the technology become an asset. Trained employees receive competitive pay and more attention from other companies, creating a vulnerable situation for property owners. Turnover is much more likely on a newly-trained team for employees whose skills are in high demand, and there are ample opportunities in the marketplace, and losing just a few members of a small accounting team can cause immediate damage.
While the digital disruption creates smaller, but highly skilled accounting and financial teams, outsourcing the work to third-party services makes sure that the work is taken care of without the turnover.
Saving money made easy
Outsourcing back office services, according to Kowalski, is the key strategy for new businesses. Owners can add dozens of properties to their portfolio without increasing the headcount of the management team at home. “The math becomes very simple,” said Kowalski.
Kowalski noted that owners need to take a step back and evaluate how they spend their energy, money and time. “Accounting is a critical part of multifamily operation,” said Kowalski. “But where you stand—that is, the owner’s distance from this function—often determines where energy and thought is invested. Are owners focused on minute process or big picture?”
SmartSource, a major asset in the industry, gives multifamily owners a full service, back-office management solution. The SmartSource team takes care of accounting, accounts payable, and IT network hosting on a national scale. SmartSource recently launched an evaluation tool that compares its own value to the cost of an in-house accounting department, including square footage, equipment, training, and more.
In short, apartment owners operating numbers through a simple back-office function can improve their process and efficiency overnight. “I think it’s similar to the leap from paying bills online versus writing a check,” said Kowalski. “Once you realize there is actually more control—and flexibility—to paying online, it’s hard to imagine any other way.”
At Apartmentalize 2018 in San Diego, Kim Kowalski from RealPage and Kristin Quinn from Flaherty and Collins will share the ins and outs of outsourcing, how to identify potential value chains in your operation and create growth from simplified operations. Don’t miss their session on “Making Owners Nimble and Building Profit” on Thursday, June 14!