The most crucial step in outsourcing back-office is finding a reliable partner to collaborate with. With the right firm helping you, you can focus on the more dynamic side of the business. Meanwhile, these companies will handle the day-to-day workload.
‘Back-Office’ Vs. ‘Front-Office’
Even if it has no physical presence, every business has a 'front-office' and a 'back office.' These terms are allotted by referring to the roles of the teams or departments. For example, in a real estate business, the teams that work to acquire new clients and implement new campaigns are the 'front office.'
On the other hand, departments like accounting that crunch numbers and produce statistics to be used by the front office teams are the 'back office.' This group is not part of the core real estate jobs like mergers and acquisitions but is vital. A company's back office shoulders the central business operations and is labor-intensive.
Importance of Back Office Accounting
These workers provide essential functions to the company. Many vital processes like hiring, payments, and data filing are often their responsibility. But despite this, the back office does not rake in as much income as the main business.
Why Outsource Back Office Processes
As a result, businesses in the real estate industry are leasing their labor-heavy, administrative side to third parties. These firms are experts in handling all sorts of property management roles. Functions like rent collection, complaint resolution, and home inspections, which would have weighed down the core business, are handled efficiently. They control even those tedious customer services like end-of-year CAM reconciliation and lease abstractions. As an industry worth $26 billion, the benefits of the outsourcing business are many. Here are a few notable ones
1. More Dynamic Workforce with Focus on Core Business
Disadvantages of a Back Office in Real Estate Businesses
The truth of the matter is this- back-office work is tedious and often draining. Not only are processes like document issue resolutions and accounting high volume work, but they are also repetitive. This factor means that a financing worker will input the same data about the same worker's salary month after month during payday.
The result of such monotonous work is an uninspired workflow. Such conditions lead to stagnation in innovation and can stall the growth of the business.
How Outsourcing Can Help
Outsourcing these process-oriented tasks to a third party can be the solution for you; if you feel that your back office is running too many losses, you can choose to focus only on your core 'front office' businesses. Without the hassle of hours of analysis and data entry, you are now free to be more dynamic in your strategies. Knowing that all your HR and accounting tasks are in charge of a reliable firm can help you innovate your business. It will give you more time to focus on those core areas that make the most income. You can finally get to implementing dynamic strategies to your core business without worrying about answering complaints or crunching data.
2. Cost Saving Method
Sure, the sum of hiring a third-party management company may seem excessive to you initially. After all, you have been used to having a dedicated back office to fulfill all these tasks. But even so, take a minute and think. Outsourcing back-office processes to a high-rated consultation and service firm is going to benefit you in the long run.
Saving on In-House Expenses
For one, you do not have to pay monthly rent for the office space anymore. That saving in itself is a neat sum if calculated as an annual fee. Besides this, expenditures like data charges, energy bills, food/inventory expenses, and repair charges are in the hands of the outsourcing company. There is even a cut down on minor details like paying parking fees for employee-reserved spaces. You also save from not having to train new hires.
Redirecting Savings
Instead, the money saved from these can be redirected into your core business. The amount can get you better equipment in your front office. It can even help you train your core team in more innovative skills. The sharp cut in in-house expenditure also adds bulk to your business's annual budget. As a result, you now have the capital to your property business into the newer ground.
Saving on Cost of Software
One of the main reasons you are looking to outsource tasks like HR and inventory management is that you cannot afford to revitalize this part of the business. Software that can enhance the productivity of a back-office can be expensive. But with the back-office process outsourcing, your partner can grant you access to high-grade software that can improve your company's reputation.
Tools in software like Leverton and MRI help enhance the quality of your back office services. Even for experienced back offices, common area maintenance reconciliation and lease abstraction are complex. They are notoriously tricky to negotiate. Chances are, most of the bad reviews on your business arise from the mismanagement of these two tasks.
Benefits of a Business Collaboration/Partnership
But the technology provided by your collaborating partner can do away with all this fuss. The data provided by management technology software like MRI is accurate and easy to read. It is sure to satisfy your client and improve the overall quality of your services. Such a third-party service is particularly beneficial for small to medium businesses. Larger companies have bigger budgets. They can quickly get access to management software that would usually be out of the reach of small businesses.
Benefits for Small/Medium Businesses
A collaboration with a reliable firm gives small businesses an efficient back office. But in addition, they can also make use of software usually reserved for larger enterprises. Outsourcing from places with lower property rent for lesser labor charges can also increase the profit margins of these businesses by a considerable margin.
3. Chance to Digitize Existing Data
A primary reason so many back offices fail to reach their goal is that they are often stuck using old technology. In such cases, the workforce cannot keep up with the competition that uses more advanced software. As a result, the business suffers losses.
Back office process outsourcing gives your business a chance to convert all your data into a digital format. The outsourcing company does more than input your data into a newer system. They also convert them into readable text, get rid of irrelevant junk, and update those areas that need refreshing. As a result, your entire business gets revamping as the system gets updated from the base up.