The E&S Ring Managment electronic payments adoption team (l to r) Kevin Hott, manager of information technology; Ryan Schnobrich, controller; LyLy Ruiz, manager of business information systems.
Credit: E&S Ring Managment
In 2005, Culver City, Calif.-based E&S Ring Management was like a lot of regional apartment operators and fee managers: still struggling with rent collections and payment management using the tried-and-true method of paper check collection and manual deposits. Advances in electronic signature technology were only just opening the doors to an electronically optimized collections platform, and portfolio-wide adoption of electronic payments over the past several years has helped E&S Ring to grow their business by 20 percent without adding staff. The company has even been able to add a financial analyst where rows of filing cabinets used to occupy valuable office space. E&S and Oakland, Calif.-based multifamily electronic payments provider PropertyBridge will release a case study on the firm’s migration to an electronic platform next week. Prior to the release, E&S Ring controller Ryan Schnobrich checked in with Multifamily Executive senior editor Chris Wood for this exclusive interview.
MFE: Tell us a little bit about E&S Ring and where you were prior to adopting electronic payments?
SCHNOBRICH: It’s our 50th anniversary this year. We started as a small family business focused on upscale garden apartment communities in Southern California. Most of our properties are in Marina Del Rey, Brentwood, Los Angeles, and San Jose. We first started researching electronic payment processing in 2006, and back then, our processes were pretty old school: Every weekday, there was a courier that went around to all of the properties and picked up all the deposits and brought them to the corporate office. We’d verify all the deposit tickets, enter everything into the computer and check it for accuracy, and then Fed-Ex the deposits to the bank. It was a controlled process, but involved a lot of duplicative work and effort. On-site staff would fill out all of this paperwork, it would then be entered into the computers, and then it would be reviewed again for accuracy. It felt like we were wasting time.
MFE: What originally attracted you to the electronic payment arena?
SCHNOBRICH: There was definitely a cool factor. We were really excited when electronic signature legislation was passed and remote desktop payments became more feasible. Our residents would drop a check in the lockbox 10 minutes after the office closes so they can get one more day of float. The next day, maybe the property staff gets to it, maybe they don’t. Maybe they miss the courier cut-off, so it's three days before the check gets to corporate, where we do our thing, so there are tons of opportunities where time could be wasted and money wasn't getting into the bank because we were manually moving all these pieces of paper through the system. So we chose to work with PropertyBridge because we found it was the only provider that could give us every part of the equation that we were personally looking for. We really needed a payments platform and not just one-off functionality. The banks will do check scanning, there are guys that will do credit cards, but we were really attracted to a solution that could do all of it, while having one place to go to and one relationship to manage. When you are dealing with money, it is always good to have one partner.
MFE: What was the adoption and rollout process like?
SCHNOBRICH: We knew that we were not going to be able to make incremental changes to our manual process. We were at a point where we needed to do an organ transplant of our entire accounts receivable system and immediately plug in the new system and turn it on, basically on the same day and as seamlessly as possible. It involved an extreme amount of time and effort to pre-think through every variable. We tested every type of work flow in a beta environment and documented it out. We created policies and procedures and internal controls. Bank reconciliation was a big deal.
MFE: Did your residents buy in to the new system?
SCHNOBRICH: Strangely, it was the back-end adoption that was most difficult. I think the residents were very open-minded, and most of them were accustomed to paying bills over the Internet, which was really our end goal. There was definitely a group that was welcoming of the change to a mindset of electronic rent payment. But you do have to focus on communication: You have to let them know that you will be scanning any checks, and they are going to deposit immediately. There’s no more float, so if a check is not going to clear when it is presented to property management, it is going to become a problem for both of us.
MFE: What tips do you have for someone migrating from paper checks to electronic payments?
SCHNOBRICH: One would be to sign up as many people as possible on recurring ACH in advance of migrating to Property Bridge. That definitely helped the transistion as a first step of electronic processing that people were able to become comfortable with. We were able to get 11 percent of the resident base on recurring ACH, which is a wonderful relationship and trust level to be able to reach into a resident’s bank account and take the rent out on the first of the month.
MFE: So what are some of the bottom-line results and savings you are enjoying?
SCHNOBRICH: Our property-to-property collections now range from 88 percent to 99 percent being collected by the sixth of the month. By the 10th of the month, the portfolio average is pushing 97 percent collected. That is getting money into the bank amazingly fast. We adopted the system just before the economy went down, and it also enabled us to operate with lower levels of operating capital. It was really a blessing to have migrated before the economy started to slip. Also, our whole accounts receivable function is operating much quicker now. On the corporate side, we’ve grown about 20 percent units under management from 2005 to this past year without having to add additional corporate personnel, simply by seizing technological efficiencies like electronic rent payment. There used to be banks and banks of filing cabinets, and our last filing cabinet is being shipped away to storage this month. What a massive change in direction this was for us!
MFE: What have you done with all of that extra space?
SCHNOBRICH: We recently hired a financial analyst; we are focusing more on business intelligence now and on higher-end asset reporting. It has elevated our whole game to be able to capture all of this data at the absolute point of entry into the system. We’ve built layers upon layers of auditing and accountability into the system, and we know our data is solid enough for extremely sophisticated business reporting. It has brought us to a whole new level.
Editor's Note: Click here to go to PropertyBridge's E-Payments Industry Center to download the complete E&S Ring Case Study and find other helpful automated payments resources and tools available for property managers.