Today’s tight job market, the current housing crisis and concerns about the impending softening of the multifamily market are prompting property owners to look for ways to control the cost of non-revenue producing functions.
RealPage Inc.’s SmartSource accounting solution is one option for achieving both greater back office efficiency and financial savings and stability for companies looking to minimize the impact of those challenges.
The multifamily industry has a long history of outsourcing property management, utility billing and tax preparation to third-party providers and more and more companies are adding accounting to that list.
SmartSource was created about six years ago at the request of a customer with a sizeable portfolio of commercial and multifamily properties who was having challenges with the fluctuating size of that portfolio.
Today, SmartSource users range from owners of three or four properties to people who have in excess of a hundred properties, RealPage Industry Principal Annette VanDuren explained in a recent interview.
RealPage is primarily known as a provider of comprehensive property management software solutions for the multifamily, student, affordable, commercial, single-family and vacation rental housing industries. Via its SaaS platform, the 21-year-old company’s on-demand software enables easy system integration and streamlines online property management. SmartSource is a service layer on top of that and is available exclusively to RealPage customers, she said.
“Some companies use us as an extender of their staff, so they don’t have to hire a replacement if somebody leaves or if they grow and take on new management or purchase new properties. Instead of trying to hire people, they may choose to outsource to SmartSource Accounting.
“Or, they can choose to replace their accounting department and outsource the entire program and we certainly have instances of both,” said VanDuren.
RealPage understands that its customers are completely capable of producing accurate and timely financials, so it’s more a matter of deciding what’s the best way of spending company time and quite a few of those customers are saying they need to get out from under the day-in and day-out mundane tasks so they can get on with growing their business.
“So, we’re doing pretty much everything their accounting and A/P people would do—handling the books, paying their bills for them monthly, what you would expect them to do with an in-house team.
“It’s really more a matter of where people are sitting than what they are doing,” VanDuren explained.
SmartSource customers generally fall into one of three groups, she said.
One is property owners that have human capital challenges, who are having trouble finding and hiring people with the right skill set for the right amount of money, if they can find them at all in this tight job market, with accountants in especially short supply, she said.
Some people are having to compromise on their wish list in terms of skills and, typically, they’re having to pay more than they’d hoped to get the accountant and the staff that they need.
“Plus, it’s taking significantly longer to get those positions filled,” she said.
Another category includes people with fluctuations in capacity in terms of their portfolios, gaining or losing management contracts or adding or disposing of assets.
“Right now, there’s a lot of people paying some crazy amounts of money for properties and an owner may not anticipate selling properties, but sometimes the price is too good to turn down,” VanDuren said.
“All of a sudden, you’ve got a situation where you’re over- or under-staffed by a third of an accountant and you really just can’t increase or decrease staff in one-third increments. You have to hire people in full-time equivalents, so then your back-office expenditure gets too high and doesn’t align with the size of your portfolio and you’re out of whack and you’re not getting the returns that you want,” she explained.
With the current low unemployment rate, it can be very difficult to find an accountant with multifamily experience and, if a company is in a market with a high cost of living, it could be a expensive hire and the trend among millennials to change jobs more frequently exacerbates employers hiring challenges.
Illness, vacations, paid leaves of absence also can lead to additional temporary labor costs, which become a thing of the past when a company outsources to RealPage.
The third group of people that are looking at outsourcing their accounting chores are those who are concerned about the possible softening of the multifamily market and looking to make sure they can control expenses for non-revenue producing functions.
Results of a recent study by global strategic consultant Hackett Group indicate that outsourcing some business procedures delivers 25 percent to 50 percent savings of baseline cost levels across most back-office processes.
SmartSource Accounting relieves companies of the burden of hiring, training and maintaining a back-office staff and the furniture, cubicles, computers and office space they require, allowing them to focus on new business development, optimizing revenue and enabling strategies to drive property value, VanDuren explained.
And, because SmartSource service is priced per property per month, customers only pay for what they need, “so you know that your accounting expenditure aligns precisely with the size of your portfolio,” she said.
If a customer already has RealPage software and decides to outsource its accounting work to SmartSource, the solution can go live within 30 days. If a customer is new to RealPage and is buying software and services together, the set-up and training process takes several weeks and the SmartSource Accounting team is ready to go live at the same time as the software is live.
RealPage works with several universities that are producing a strong pipeline of property management accountants to recruit and maintain talent.
“What we’re looking to do is getting kids out of school and mentoring them,” she said, adding that a big benefit of being a part of the SmartSource team is the fact that, because there’s a big pool of accountants, those former students develop a deep knowledge of the RealPage accounting system and have opportunities to grow their skills and careers and eventually take on supervisory positions and get to the point where they’re mentoring others.
“We routinely say customers call the shots and we execute their decisions. We try to create an experience that’s very much a partnership, so they feel confident that they can call and talk to their accountant whenever they need to and have somebody who’s really partnering with them,” she explained.
The most challenging aspect of SmartSource Accounting’s creation was deciding how to package and price it and make it work for a whole variety of customers, whether they own and/or manage five properties or 50 properties or more, said VanDuren, who has been part of the SmartSource team for the past three years.
“It took us a bit of time to learn all that. We hired people from the industry with lots and lots of experience who already were very good at exceptional accounting skills and also putting processes in place to make a really good department run.
“However, to figure out the pricing and everything else to make it work for the industry, regardless of your size, that took a bit of time,” she said.
The most rewarding part of growing SmartSource Accounting into a popular service that has seen an average of 47 percent growth in business in the past six months alone, has been customer satisfaction with the product.
At RealPage’s RealWorld Conference 2019 in Orlando, Fla., in July, it was rewarding, she said, to hear customers say, “Wow, this is one of the best decisions I’ve ever made.”
“It’s nice to see that we made a difference in them getting to the next level in their business and It’s really fun partnering with people and seeing a lot of different business models and a lot of different people be successful.
“We work very hard at making sure we have a lot of controls built in and a lot of processes and procedures built in so we’re quite confident that our customers are getting exceptional results. That’s a huge cornerstone of our foundation,” she said.
Author Peggy Shaw