Annual report pursuant to Section 13 and 15(d)

Funds Held for Others

Funds Held for Others
12 Months Ended
Dec. 31, 2012
Funds Held for Others

9. Funds Held for Others

In connection with our payment processing services, we collect tenant funds and subsequently remit these tenant funds to our customers after varying holding periods. These funds are settled through our Originating Depository Financial Institution (“ODFI”) custodial account at a major bank. The ODFI custodial account balances were $34.4 million and $18.1 million at December 31, 2012 and 2011, respectively. The ODFI custodial account balances are included in our consolidated balance sheets as restricted cash. The corresponding liability for these custodial balances is reflected as customer deposits. In connection with the timing of our payment processing services, we are exposed to credit risk in the event of nonperformance by other parties, such as returned checks. We utilize credit analysis and other controls to manage the credit risk exposure. We have not experienced any credit losses to date. Any expected losses are included in our accounts receivable allowances on our consolidated balance sheet.


In January 2007, we established a wholly owned subsidiary, RealPage Payment Processing Services, Inc. (“RPPS”), a bankruptcy-remote, special-purpose entity, and transferred the ODFI custodial accounts and all ACH transaction processing responsibilities to RPPS. We provide processing and administrative services to RPPS through a services agreement.

The obligations of RPPS under the ODFI custodial account agreement are guaranteed by us.

In connection with our resident insurance products, we collect premiums from policy holders and subsequently remit the premium, net of our commission, to the underwriter. We maintain separate accounts for these transactions. We had $0.8 million and $0.9 million in restricted cash for the periods ended December 31, 2012 and 2011, respectively, and $0.7 million and $0.8 million in customer deposits related to these insurance products for periods ended December 31, 2012 and 2011, respectively.