3 Primary Functions of Relocation Companies

Relocation Management Companies are in the logistics management business, and play a critical role in supplier management, technology, and accounting.

Relocation Management Companies (RMCs) are the intermediary between a corporate client and the multiple suppliers that provide specific services to relocating employees. A full-service RMC offers corporate clients three primary capabilities: supplier management; a technology platform that connects all participants; and funds management and accounting.

1. Supplier Management

This involves locating and engaging qualified suppliers of every service that might be needed in a relocation, such as real estate agents, household goods companies, and temporary lodging operators. These services must be available in all locations that a client may be relocating its employees. Importantly, the RMC must negotiate competitive rates for these services to provide a cost-effective program for the corporate client, while balancing that cost management with excellent service.

In evaluating RMCs, it’s important to understand how a RMC manages its supplier network, since this a key driver of both service quality and cost effectiveness. Learning as much as possible about the model the RMC uses can help differentiate one RMC from another.

2. Technology Platform

The RMC’s technology platform is becoming increasingly important to clients. Internet technology is driving significant improvements in the way that services are authorized, managed, and evaluated. The most advanced technology platforms provide a secure environment for handling personal information, use a single point of data entry, expedite communication among all participants, integrate with clients’ systems, and provide information needed to continually monitor and assess program performance.

Key questions to ask regarding RMC technology are:

Does the employee portal provided by the RMC allow the transferring employee to actually manage their move (make decisions, communicate with suppliers and the RMC, process expenses, review accurate budget information, etc.) or is it a static tool that only allows the employee to view information?

For the corporate client, what tools does the RMC provide to help you manage your relocation program? Are cost and employee satisfaction dashboards provided with real time data? Can you easily authorize moves online? What type of budgeting and reporting is available? Can you view individual employee files, including notes? Can exception requests be handled online?

3. Funds Management and Accounting

RMCs handle a great deal of money on behalf of their corporate clients, especially when real estate transactions are involved. The RMC is the financial conduit between the corporate client and each of the suppliers and the relocating employee.

Accounting for relocation expenses is an essential requirement. Data must be timely, accurate, and compliant with U.S. State and Federal tax laws, as well as laws in other countries for international moves, while meeting the client’s reporting requirements. Relocation expenses have a direct impact on employee compensation. The RMC must not only provide an accurate accounting of all the money spent, as it is being spent, but also provide the W-2 and other tax information for year-end reporting.

If you are not providing your own funding, be sure to know the source of the RMC’s funds and their borrowing power. Ask about internal auditing functions to ensure that the proper checks and balances are in place for accurate accounting and management of funds. Be certain to understand how and when the RMC will bill for funds needed for your relocation program. Investigate how the RMC can interact with your company for electronic funds exchange to make the financial end of your relocation program more efficient.

If you are issuing a RFP for relocation services, understanding the three primary functions of an RMC can help you identify key strengths and weaknesses and lead to a good final selection.