By Jay DiResta, vice president, National Cooperative Bank
For many property managers, with both large and small residential and mixed-use building portfolios, one of the most important relationships they maintain is with a financial institution.
Through those relationships, banks provide cash management services that help collect monthly maintenance fees and provide systems that support a management company’s ability to compile monthly financial statements for a property.
These services are critical for property managers and have to be consistently accurate and efficient to ensure firms meet their monthly reporting deadlines.
Any additional time savings these systems and services can provide to management companies is of the utmost value.
National Cooperative Bank provides these services for its co-op and condo clients and is able to offer them special insight and a high level of service that only comes with its 30 years of dedication to serving cooperatives and housing communities in New York.
The bank is therefore a resource for valuable information about these services and can outline the main components of any cash management service, which all speak to how crucial speed, efficiency and accuracy are in successful management of the services on behalf of property managers.
As a vice president in NCB’s New York office, I know what a great advantage NCB has over other providers offering similar services. The bank has more than 30 years of experience in the co-op and condo market in New York and understands how co-ops and condos work and can work with each management company to find a solution to fit their needs.
So with NCB’s decades of knowledge, let’s take a closer look at how cash management systems work the best.
First of all, it is important to realize that there are several key services that provide the backbone of any cash management offering.
These include the ability to accept a check payment via a lockbox, credit card payment over the internet, auto debit over the internet, ability to transfer funds quickly over the internet and providing activity reporting for any and all transactions moving inside and outside of the bank.
To maximize the value of these services its key that a bank is able to provide confirmation of these transactions electronically and as quickly as is possible.
Software and technological advances are a big factor in this area as well.
As property management accounting software has become more advanced, many software companies have created interfaces that allow management companies to automate the reconciliation of transactions.
This automation can include daily payment receipts, outgoing check clearing and other miscellaneous deposits.
It is really important for a management company work closely with a financial institution that understands the value of this automation. That financial institution should also be able to integrate with as many accounting systems as possible.
Although changing accounting systems is never on the top of a management company’s list of “to dos” it is good to know you have options in the future.
Despite advances in software and technology, the human touch shouldn’t be overlooked either.
Even though many of the services provided by institutions today rely heavily on technology there is still a large human component to it. Daily customer support is critical, experts agree.
“There are still quite a few items that are handled by our accounting staff; especially during the first 10 days of the month,” said Dan Dermer, president of Dermer Management, a New York City-based real estate management firm.
“The accounting staff handles daily check returns from residents, research of deposits in transit and review of monthly statements from multiple institutions. Buildings can have reserve accounts with several banks to insure funds are kept within FDIC limits.”
With browser, operating system and firewall upgrades now a common concern for all management companies, it’s important to have a team that can ensure any downtime is minimized.
This hands-on oversight by staff becomes even more important when considering automation, which can often skew toward removing the human element.
As Mr. Dermer pointed out, however, automated systems cannot handle all of the tasks assigned to Dermer Management’s accounting staff, particularly at all points during the course of the month.
Dermer Management, like other firms, realizes that it is important to have a balance between the two — automation and the human element.
In fact, if the two are working hand in hand, simultaneously, value for the property manager can be maximized.
“Any time my staff can save by reducing these manual tasks, it improves the quality of our financial reporting,” Alex Kuffel, president of Pride Property Management, a New York-based property management firm, pointed out.
“For instance, the ability to obtain bank statements for all of my buildings with one click.”
While most banks offer some form of these services, having them fully integrated into a platform designed specifically for property management companies that includes lending capabilities will be to a management company’s advantage.
Again, it all goes back to the four components outlined earlier. Cash management services must be fast, efficient and accurate in the work that they perform.
And, although automation is a valuable tool, the services must the importance of human oversight and participation.
When all of these areas are successful, property managers can rest assured that monthly maintenance fees will be collected and handled properly and that they’ll have the ability to compile monthly financial statement for any given property.