Big Challenges of Property Management: Accounting Edition
U mad, bros?
When it comes to property management, every phase of the cycle has its own unique challenges. This month, we’re going to ‘go deep’ on a few of the most challenging areas of our business, talk about what our greatest challenges are, and how we’re currently trying to address them. Today, we’re talking about the biggest problems faced by our Accounting Department.
How It’s Supposed to Go
Accounting is divided into two areas:
• Accounts Payable enters and pays on invoices from our contractors, and also pays out rent proceeds to our owners.
• Accounts Receivable enters and processes payments coming in, mostly for rent, but also for various fees that we charge to owners, tenants, and rarely contractors.
Both of these areas, however, have to go through fairly similar processes in order to do their jobs, and the process goes like this:
• Find a relevant scanned document on our company’s system.
• Read carefully through it to make sure that everything is in order, legible, and makes sense.
• If necessary, extract separate documents from a scan containing multiple different documents.
• Save each document to its appropriate location using the appropriate naming convention. (That might seem like a small thing, but when a misnamed document can mean thousands of dollars can’t be accounted for, it’s a big deal!)
• Alert the person being paid/billed that they are being paid/billed. Answer any questions and address any concerns they have about the payment/billing in question.
The Challenge: People Don’t Read
Simple, right? Sure…nah. Accounting, to someone who has never been in Accounting, might seem like its biggest problems should be math-related (If you listen carefully, you can hear the sound of the Accounting folks laughing their butts off in the distance). But the real big challenge is right there in that last bullet point of the five above: addressing concerns that people have about getting billed. In particular, no one ever seems to think that we should be able to ask them to pay the fees that we ask them to pay.
Royal Rose Properties is a very by-the-book company. We dot all of our ‘i’s and cross all of our ‘t’s. We would never charge someone — owner, vendor or tenant — a fee that we don’t tell them about up front. Our lease is exceedingly clear on exactly what fees we charge and when. Furthermore, we say outright that “all late fees will be considered unpaid rent,” and we describe exactly what happens when you have unpaid rent. No one should be surprised when we charge them a fee, because it’s all there, in writing.
Now, don’t get us wrong — Royal Rose Properties understands that we live in a world where legal text is literally designed to be glossed over. If you read every set of End User License Agreement clauses that you agree to, you are either a far better person than any of us, or you need help. But we also tend to think that a document that is given to you by your landlord which is created to describe exactly what your rights and responsibilities are if you want to keep a roof over your head should be a bit more important to you than the words that come before “I Agree” on a website.
What We Do About It
The Accounting Department considers it part of their job to prevent people from ending up getting ‘referred’ to the Collections and Evictions Department. That means that they consider it part of their job to be able to explain to our less-reasonable callers precisely why they’re being charged and what will happen if they don’t pay. Of course, that doesn’t always make people happy — in fact, it rarely does — but with any luck it does make them realize that they don’t really have a good way out of the situation other than to pay up or quite literally risk the consequences.
Hey, no one said property management was a nice business — and this is Detroit. Ultimately, to horribly mangle Huck Finn, you pays your money…or you takes your chances.