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The below article will help you navigate the minefield of considerations in converting property management systems. There are a number of factors to consider when deciding whether to change property management systems (PMS). Some of these might be overcoming shortfalls with existing solutions or accessing the latest technology to future proof your business and not fall behind the competition. This article is not intended to help you with that decision (that will be the subject of a separate article) rather, it is to help you navigate the various pitfalls that could cause the change in systems to go wrong.

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PMS are central to any property management business and as businesses do not change systems regularly, or have the necessary skills to make it happen smoothly, it is important to engage a suitably qualified and experienced consultant.

Today, cloud technology is making the implementation process faster and more affordable than ever before. This is even more prevalent if choosing a cloud software provider, such as cirrus8, which can convert data from most other PMS.

Proper due diligence should be done to ensure the proposed system meets your requirements. This should include speaking to other users of the system.

Listed below are some of the considerations any good consultant will consider and advise you on when converting systems.

1. When is the ideal time to change systems
The neatest solution is to have a go-live date of 1 July. Depending on the size of the portfolio this often means planning the conversion in May to complete a smooth transition. The beginning of the financial year means that year to date figures or current financial year transactions do not need to be ported across. Having said that though, this is the busiest time of the year for Property Managers with budget preparations, year end reporting and variable outgoing reconciliations. Adding any extra workload onto Property Managers including training does not always go down well. Any other quieter month could feasibly be chosen as a go-live date.

2. Will staff be able to easily adapt
An important consideration is the management of change within the organisation. Changing to a cloud based system like cirrus8, may mean changing procedures as well – e.g. saving tenant invoices and lease documents online rather than printing and filing. Key staff need to be brought into the decision to change early on to get their buy in. They need to be shown the benefits to them and not see the change as being just another burden placed upon them.

3. Level of training and support with the new system
Any new system will only operate as well as users are able to use its capabilities. Training is essential and should not be minimised to save costs. It is best to agree a fixed cost for the training and to ensure this covers the training after go-live right through to the first month end.

4. How is information going to be migrated
This is an important consideration. The various options are to enter the information manually onto the new system (not viable for large portfolios), import the information in or use a conversion program. Proprietors should have a clear understanding of the quality of the information in the old system, so they can decide whether a cleanse of the data is necessary.

5. To do the migration internally or outsource it
Handling the migration internally can have the perception of saving money, however this often backfires. This decision often places another burden on an existing staff who may already be struggling with a full workload. Deadlines are seldom met when doing it internally. This then adds to the cost of the conversion and can lead to an extended period of running two systems in parallel. The other option is to outsource the conversion to suitably qualified and experienced consultants who will ensure the project is delivered on time and within budget.

6. Whether to run two systems in parallel for a period
Running two systems in parallel approximately trebles the workload during this period. The reason for this is not only the double processing of information but the time consuming task of maintaining the two systems in sync. This is an outdated mode of conversion and really only recommended when there is a lack of confidence in the new system to make a clean changeover, or, the proprietor is extremely conservative (not a bad thing) This is the most expensive method of conversion and requires the greatest human resources to undertake.

7. Will historical information be able to be migrated across to the new system
Historical information often contains a lot of old and irrelevant information that will never be used. Migrating to a new system often brings an opportunity for a fresh start by having accurate data which is not corrupted by possible erroneous information. Bringing all historical information across to a new system also makes the database that much bigger and unmanageable.

You should consider your legal obligations to owners for retaining financial information. There is a school of thought that by providing owners with financial information on a monthly basis you are absolving yourself of retaining tax information for 5 years.

Given that you would like to maintain access to historical information, you can ask your current provider to provide read-only access to the data or utilise the conversion services of cirrus8 to convert information across to your new system.

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Below is a short checklist of important points to get right for a smooth conversion.

Checklist for the conversion

  • Upfront training and practice on a test system
  • Transfer closing bank balances
  • Bring on tenant arrears balances
  • Bring on unpaid supplier invoices
  • Prepare an opening bank reconciliation that agrees with the old system bank reconciliation
  • Prepare tenant charges from the new system
  • Is a cleanse of the data required?

Things to be aware of

  • BAS (GST) reporting to owners in the first reporting period
  • Auditors being comfortable with the integrity of the change in systems
  • Treatment of management fees on receipts
  • How to deal with tenant prepayments during change over
  • How to bring across year to date income and expenses if transition date is anything other than 1 July
  • Change management of staff
  • Ensure you have a strong project manager who has considerable experience in implementing new PMS
  • Whether to run two systems in parallel

About the Author:
Raymond Bechard is a Chartered Accountant and Chartered Management Accountant who has been developing property management and trust accounting solutions for the commercial property industry for over 15 years.

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