One of the most important functions of our business is management of the recurring revenue payments to ensure accuracy and avoid non-payment to our clients.  This asset management function is often overlooked, since it’s nearly impossible for a busy management or accounting team to stay on top of collecting and reviewing each report in detail and to work with the Service Providers to rectify issues.  While RealtyCom has always managed the payment process for our clients, we’ve recently expanded upon our revenue management program. In the short time we’ve offered these services, we have recovered nearly $1M in unpaid revenue on contracts our client’s inherited or that were negotiated prior to their engaging RealtyCom. So, we asked our VP of Accounting, Catherine Ratté, to explain common issues that lead to client’s being underpaid and the detail types of issues her department rectifies daily –

  1. Could you give us a broad overview of how RealtyCom manages so many payments, and the process your team takes to collect and audit payments?

Collection and auditing of revenue payments is increasingly complex due to each Service Provider having different payment terms, revenue share scales (fixed/flat/variable), missed reporting or information, and changing points of contact.

RealtyCom currently manages over 286,000 units under our Revenue Share Management program, so to ensure accurate processing of payments we utilize a sophisticated Salesforce database that tracks 150+ data points within your agreements with the Service Providers.  This allows us to quickly access reports and identify revenue share due dates, subscription trends to individual services, as well as variances in payments.

We have a team of four who ensure all checks and reports are collected on time from the Service Providers, arriving either on a monthly or quarterly basis. We then audit the payments/reporting and confirm they are calculated per the terms of the agreement, that the owner entity is correct, and the Average Revenue Per Unit (ARPU) is reasonable for the market.

Once our audit is complete, the payment information, subscriber counts, and any issues discovered during the auditing process are populated into Salesforce. We track all open issues and late payments.  This work is then detailed in a quarterly variance report and sent to our client.  The variance report highlights budget vs. actual revenue and any issues that may arise over the quarter and explanations of significant variances.

  1. What are the most common mistakes you observe when reconciling reports and payments? 
  • We find that of the 5,600 Service Provider payments that we review annually, almost 40% have errors;
  • The most common issue with the Service Providers is a lack of clear reporting or no reporting provided at all which creates a whole host of issues;
  • Systemically late payments or missed payments are common;
  • Incorrect number of services included in revenue share payment (for example only paying on Television service when Internet and Phone service should be paid services as well);
  • Miscalculating subscription based on total number of units within the property which could lead to underpayments;
  • Incorrect or no completion of assignment paperwork during the acquisition process which leads to the revenue share payments being suspended or sent to the previous owner;
  • Service Providers aren’t sent TCO notices and then never provide all or the balance of upfront fees due to the owner;
  • Other issues are entity and IRS mismatches, which can lead to requests for SS4 forms and withholding of revenue payments.

We discover and resolve many issues surrounding the lack of notification or documentation when a property sells or is acquired – which can really delay revenue payments for months and even loss in revenue share due to non-compliance.  Many providers require contract amendments now in order to successfully transfer the payments to the new owner so that’s something we address a lot with our clients.

  1. RealtyCom has introduced several services throughout our history, including Revenue Auditing of contracts we have not negotiated and our Revenue Management program. Could you explain the difference between these services?

In my 8 years at RealtyCom, I’ve seen so many payment errors – either not being issued from the date a property is acquired, assumptions of revenue share payments not being completed, and payments not being calculated by the terms of the agreement.  We thought, if we’re experiencing these kinds of issues with the payments we manage – then our clients must be dealing with all sorts of other underpayment issues?

That’s why we introduced our Revenue Management program, which provides peace of mind to our clients and we can leverage our relationships with the Service Providers to remedy issues more quickly. This also allows us to report revenue variances to our client quarterly, even for those agreements we did not negotiate initially.

Our Revenue Auditing program is slightly different, as we audit payments periodically to ensure there are no errors in payments our clients receive directly from the Service Providers. That has revealed nearly $1M in underpayments to our clients. We are quickly able to leverage our partnerships with the Service Providers to obtain reporting and audit to confirm our client has been paid correctly. We also take it a step further to confirm the checks were sent to the right address and made payable to the correct entity (and not being sent to the old owner) and that they have cleared the correct account.  We really believe we have the most sophisticated system that exists to manage these recurring payments and issues that arise, and we pride ourselves on discovering hidden revenue for our clients.