Navigating Hidden Costs: Insights from a Transaction Audit

Transaction Audit and Advisory Case Study

Everyday, the decisions we make about how to operate our businesses can have ripple effects on the financials. A recent transaction audit Pontisa completed for a property management company demonstrated this idea perfectly. This company, which relies on a very manual system for customer transactions, intentionally delayed adjusting renewed lease rates until the first of each month due to the manual nature of prorating the amounts. What seems like a practical move to simplify prorating complexities, however, actually costs the company over $15,000 annually in uncollected rent.

This intentional delay in increasing lease rates sheds light on the balance between operational decisions and their financial repercussions. Now that they have the information, the company faces a question: should they rethink the policy to ease the financial hit, or stick with the status quo to dodge the nuances of manual adjustments? There are other things to consider as well, such as whether delaying the new rent amount benefits their customer-friendly brand. Maybe it’s something they keep as is but with added efforts to help customers view it as an intentional choice to benefit their residents. Now this $15,000 is a decision and a strategy instead of just an inefficient operational decision.

Beyond this specific case, the scenario emphasizes a broader lesson applicable to businesses of all sizes. It underscores the crucial need for organizations to fully grasp the financial intricacies tied to their operations. This is a principle that sits at the heart of our Transaction Audit and Advisory Service.

Being aware of the financial implications of operational decisions is paramount for businesses aiming to streamline processes, trim unnecessary costs, and ensure sustained success in a dynamic landscape.