One of the many habits broken by of the pandemic was the monthly ritual of mailing off a rent check every month.
Because there wasn’t anyone at the leasing office to receive those checks, scan them and deposit them, renters and property management companies alike had to shift to automated clearing house (ACH), credit and debit payments — fast. And that shift doesn’t show signs of reversing any time soon.
“We haven’t seen a change in that mix; we don’t see people going back to physical checks,” Entrata Chief Financial Officer Mark Hansen told PYMNTS.
Focusing on the Top Line
Payments are fundamental to Entrata, a provider of property management software.
Hansen joined the firm in July 2021 after leading and being a key part in managing the initial public offering (IPO) process for several companies, managing several private and public equity funding rounds, and handling integrations for multiple acquisitions. At Entrata, he is tasked with helping the company greatly increase its market share.
Interviewed for the PYMNTS series “A Day in the Life of a Digital-First CFO,” Hansen noted that in the time since he joined the company, the macroeconomic environment has changed. A year ago, valuations were reaching all-time highs and inflation was only just beginning to show signs of increasing.
“It’s definitely changed how we think about the business,” Hansen said. “I think first and foremost it makes us focus a lot on the top line — like are we hitting our top-line metrics — because in order to continue to invest in the business, you want to make sure you’re hitting those metrics.”
Staying in Investment Mode
The company has also increased its focus on pricing. Entrata hadn’t raised prices very frequently, so now it’s looking at pricing and packaging and making sure that it’s responding to inflation.
These macroeconomic conditions have also led companies to take a hard look at their hiring plans. Entrata is still hiring across the board as it looks to scale the business, but it’s being thoughtful about it and investing in the right areas.
As a software company, Entrata’s biggest cost on its income statement is around wages and benefits.
“We’re obviously not immune to that — we’re obviously out there hiring in this environment; we have employees — so that’s something that we have to be thoughtful about, that we kind of bake into the plan and adjust as necessary,” Hansen said.
At the same time, Entrata has some level of inflation protection because it makes money off payment processing. Rents in the U.S. are up 15% to 17% year over year, and much more than that in some markets, and that provides some inflation protection for those who process payments for a fee.
Focusing on Scaling Properly
Among the customers Entrata serves — primarily property managers with 750 or more units— the company has seen rents being paid on time or at least consistent with how they were paid pre-COVID.
Beyond rents, the company’s software package automates processes for property managers on both the front end and the back end, helping get leads, work leads, onboard new residents and handle accounts payable, general ledger and financial reporting.
It also includes a portal for tenants that allows them to request maintenance and pay the rent via ACH, credit card, debit card or electronic money order.
The total addressable market of property managers needing software to provide these services is big, and today, as it was a year ago, Entrata is focused on growth.
Hansen said the company’s growth boils down to getting the right team members and having the right processes and the right systems.
“So, we’re spending most of our time thinking about scaling properly: Are we getting the right people hired? Are we purchasing the right systems with the right processes? That’s really something that our executive team obsesses over.”
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