While mistakes are an inevitable part of life, no business owner likes to admit to making them. But, in the spirit of transparency and sharing what we’ve learned, we’re going to do something a little differently in this post than what we usually do on our blog.
We’re going to discuss a recent mistake we made here at RL Property Management – and share how that mistake ultimately helped strengthen our company, our processes and the services we provide to our clients.
The Back Story
Admittedly, it’s uncomfortable talking about a mistake or vulnerability, especially because we pride ourselves on getting the details right for our customers and tenants, but we believe it’s important to share some of what happens behind the scenes – both good and bad.
Here’s the situation that unfolded and how it led us to refining our client onboarding process:
At RL Property Management, we manage nearly 600 units in Central Ohio. To successfully function as a property management company operating at scale, we’ve established some processes and procedures over time. Those processes have served us well, but recently we fumbled during a relatively routine procedure and made a mistake. Here’s what happened.
A new client had signed on with us, and this particular client had multiple properties. Each of those properties had multiple units, and we were hired to manage all of those rental units.
Part of our set-up when onboarding any new client is for property owners to provide initial funding. This funding is intended to cover things like the existing security deposits for current residents as well as create an initial maintenance fund reserve in case any incidental expenses occur between rent payments.
When we begin a new relationship with a property owner, we sum up all of the funds we need to receive from them in order to initiate their account and begin managing the property on their behalf, and then we request those funds from the owner.
Where Things Went Wrong
In this particular scenario, the property owner mailed us a check as requested. We received it and then we processed it through our accounting software. The problem, however, was that we allocated all of those funds to just one of the owner’s properties, instead of splitting it up and spreading it across the multiple properties that this owner had given us to manage.
Because many of our new clients have us managing just a single property for them but this owner had multiple, our standard process for onboarding needed to be slightly adjusted – and it wasn’t. This caused an error because our employee who received and applied the funds didn’t catch that this property owner had multiple properties with us and mistakenly applied all of those funds to just one of the properties.
The result is that one property had too much money in its account, and the other properties didn’t have any money in their accounts. When the owner received their first monthly statement from our company, they raised a red flag.
Implementing a Fix
Ultimately the issue itself was relatively minor and could easily be corrected retroactively. We updated the accounting, so the funds were correctly allocated to the appropriate properties. We then updated and reissued the statement, so the property owner had an accurate set of financials moving forward.
What we learned from this mistake, however, is that we need slightly different processes for onboarding a client who has just one property with us versus a client who hires us to manage multiple properties. By adding an extra step in our checklist for clients who have multiple properties, we can avoid confusion and missteps down the road.
Accounting is an important part of our responsibilities at RL Property Management, and we take it very seriously. We act as a fiduciary for our clients, and it’s essential that we get all the details correct. So, while we wish we hadn’t made the mistake, it prompted us to further refine our systems and processes so that next time an issue comes up, we won’t make the same mistake.
