Driving additional profitability into mergers in the student housing sector: success story

Acquisitions and mergers are driving the student housing market, with the sector witnessing frenzied activity over the past two years.  It certainly looks set to continue with growth and associated investment activity forecast well into the future.

Key challenges

However, growth in the form of mergers presents its own challenges which can frequently deliver additional costs at a time when the investor is invariably looking to maximize the profitability.  An example of this can be seen in the experience of one of our clients, a top player in the industry, which encountered a new set of finance and accounting challenges as a direct result of a merger.

• Once the dust settled, they discovered there were several sets of accounting policies in use at different sites and locations.
• There was no easy way to access consolidated data that included reports from every location.
• The sheer volume of the data, resulting from the management of student housing properties with thousands of beds, led to errors and inefficiency.
• The client was also concerned about rising instance of overpayments, errors in cash management and the exposure to compliance risks.

In the face of these issues, the client felt the need to overhaul the accounting processes. Realizing they needed assistance to fulfill their goal of achieving cost savings and gaining greater control on their finance processes, they turned to QX.

How QX helped to overcome the challenges

Working closely with the client, QX formed a clear understanding of their business processes and finance requirements. In order to meet their goals, QX implemented an end-to-end finance and accounting service which enabled the client to make substantial cost savings on their current operating budget. The solution and services included:

• The Head of F&A for the project in QX worked closely with the FC, FD and CFO in the client’s organization to set up standard policies and reporting for all the sites and locations.
• Working closely with the client, the team at QX created a master template and navigated a phase-wise implementation, enabling investors, board members and other senior stakeholders to get a complete overview of the Group Budget.
• To deal more efficiently with the large volume of transactions, we redesigned and streamlined the intercompany recharges processes and simplified cash management by reducing the number of bank accounts from 60 to 5.
• Injecting best practices helped reduce the cost of accounting by 50% while increasing accuracy.
• QX designed and developed of customized Purchase Order (PO) system to digitize the purchase process, which helped reduce errors in cash management and solved the problem of overpayments.
• QX also assisted in third-party contract negotiations and account investigations and provided liaison and assistance for internal and external accounts audits.

How our services delivered benefits to the client

Not only was our client able to generate significant cost savings and gain a greater control over the finance functions, but also benefited from detailed reporting and insights that facilitated smarter strategic decisions. Some of the key benefits we delivered during the first few years:

• Simplified cash management process and savings in excess of $90,500.
• Identified discrepancies in tax charges and helped to save over $40,000.
• Determined revenue generation opportunities worth $40,000 by assisting the client in a third-party contract and accounts reviews.
• Facilitated better strategic decisions through monthly financial reports on profitability, cost reduction and revenue improvements for decision makers.
• Designed account operating model by listing all business activities for effective segregation of duties.

Helping student housing companies become more profitable 

We serve approximately 15% of the total privately owned student housing businesses in the UK. Our property accountants adhere to best practices, introduce process excellence, and drive initiatives for strategic use of technology, enabling student housing providers to cut operating costs while delivering timely and accurate accounting services.

Looking for professional and reliable finance & accounting services for your business? Please call our student housing expert Ravi Kurani on 646 693 9695.

Originally published Sep 05, 2017 12:09:48, updated Jul 24 2024

Topics: Student Housing