KriyaGo - Blog #financial data

Real Estate Back Office Accounting: Top Mistakes to Avoid

Fri, 18 Feb 2022 15:00:00 -0500

Most real estate agencies rely on their back offices for day-to-day accounting. The list of tasks covers a wide range of verticals, from vendor payments to employee reimbursements.

As a result, the back office requires considerable resources and hours to do its job efficiently.

However, most real estate’s back office accounting is in a mess. The department is riddled with inefficient processes and workflows that take a toll on productivity.

Therefore, you need to be aware of the top back office accounting mistakes that can haunt your agency. Below, you will find the most applicable mistakes that modern real estate back offices make.

Relying on Manual Data Entry

Back office accounting in any industry involves dealing with a lot of data. Unfortunately, real estate agencies are still using paper processes or spreadsheets for the process.

As a result, they have to deal with huge volumes of manual data entry that take a painstakingly long time.

In addition, manual data entry leads to errors. Research shows the probability of human error is 18% to 40% while recording data into a simple spreadsheet.

For complex data spreadsheets, the probability jumps to 100%.

It is not easy to rule out manual data entry so easily. However, brokers should make an effort to automate as much of the process as possible.

For example, integrating your existing tools can be an excellent way to automate data entry. You can capture invoices from your property management tool and have the data recorded in your accounting software automatically.

The process saves time and improves data accuracy. Additionally, you can look forward to a boost in productivity.

Not Giving Up Manual Accounting Processes

This is a continuation of the mistake we discussed above. 63% of businesses today still work with spreadsheets and manual accounting processes.

Needless to say, the consequences are more than the risk of human errors. The list of dangers includes wastage of time, money, and resources.

In addition, it increases the potential for fraud and invites financial risks. Moreover, you can expect your audits to get more complex and expensive.

Worst of all, you will experience a massive challenge to scale your manual accounting processes. As a result, it may even restrict your business growth.

The need of the hour is to digitize your accounting processes. Choose the right tools that align with your needs and help you achieve your business objectives.

Then you can enjoy a hands-off approach for back office accounting tasks like matching invoices or bank reconciliations.

Accounting at the End of the Month

Most real estate agencies will wait till the end of the month to complete accounting. Most probably your back office staff will spend the last day of the month reconciling expenses and matching books.

This approach may get the job done but is not ideal if you want to operate efficiently.

Waiting till the end of the month to do your back office accounting lowers your financial visibility. You cannot be sure of your cash flow or where your money is going.

Therefore, you cannot make accurate financial predictions and risk losing out to the competition.

As a result, you should aim for real-time accounting. Record your debits or credits as they happen so that you have complete visibility into your financial position.

You can also use a wide array of tools like a spend management solution to facilitate real-time accounting.

Not Analyzing your Financial Data

As noted earlier, real estate back office accounting manages a huge volume of financial data. The information may include vendor payments, SaaS expenses, wages, cost of services, and more.

However, most businesses don’t utilize or make the most of this data. They don’t use it for financial analyses to cut costs or maximize value from their procurement.

As a result, they miss out on wonderful opportunities to improve profitability or their bottom line.

Therefore, analyze your accounting data periodically to sport patterns and trends. You can then assimilate your findings to generate vital insights.

Many accounting or spend management tools come with advanced analytics. They provide readymade insights for you to leverage. You can also customize your solution to track specific data and make more informed financial decisions.

The returns are guaranteed, as data-driven businesses are 3-times more likely to experience improvements in decision-making.

Not Making Timely Payments

The real estate industry works with a wide range of stakeholders. Construction companies, security agencies, software vendors, material suppliers – the list is almost endless.

Undoubtedly, your stakeholders impact the performance of your business and productivity. For example, strained relationships with a supplier might affect your supply chain and delay your time to market.

In this regard, most real estate back offices struggle with payment processing. The staff often has too much to handle and not enough resources to work efficiently.

As a result, late payments are common in real estate. Most agencies fail to pay their suppliers or vendors on time, risking the business relationship.

Therefore, make an effort to make timely payments and aim for real-time payment processing. You can rely on a digital solution to automate the process and boost productivity.

Working with Poor Talent

Back office accounting comes as an afterthought to many brokers. As a result, they don’t hire the right talent for their daily bookkeeping.

They want to save costs and work with a skeleton staff to just get the job done.

Needless to say, such an approach means more risks for your business. You can never be sure of the accuracy of your financial records and reports.

In addition, you will miss out on the skills of an expert accountant that hampers your accounting processes.

Therefore, never compromise on skills and experience.

Final Thoughts

Back office accounting can be a challenging task to handle. It may be a better decision to outsource your accounting needs to a reliable partner like KriyaGo. We have the best team of bookkeepers and certified accountants to make a difference. Our team will take care of your day-to-day accounting and provide solid guidance to gain a competitive edge. Contact us today to know more.

Top Property Accounting Challenges And How To Solve Them

Thu, 03 Feb 2022 13:00:00 -0500

While marketing is essential to run a real estate business, accounting is another vital area that cannot be neglected. Accounting in real estate is not like other sectors; it's a complex and tedious process that can be easy with the right software, but not all businesses invest in having a functional accounting software.

It's important to keep all the financial data and integrate software to get the best results. Here are five challenges identified in real estate businesses, and if you're facing the same, there are ways to overcome them. 

Top 6 Property Accounting Challenges

Hiccups in software systems are inevitable, but it can be frustrating if there is no proper maintenance. With legacy software and a lack of adequate management, keeping the company's financial data can get all the more difficult.

Or it may be due to other underlying problems too. Whatever may be the issue, here are some of the most common property accounting challenges and the ways to solve them:

1. Frequent errors in the Financial Data

The real estate business is not just about building a good portfolio; there's much more to it than just that. You need to keep your financial data secure and accurate at all times. And to keep the data clean and up-to-date, data management should be on-point.

Documenting financial information is extremely important at every stage of the business, but most firms face this challenge due to the lack of the right resources. On the one hand, poor management can lead to erroneous data, and on the other hand, it can hinder the growth and the future scope of the business.

Going for good property management software to ensure data is error-free and managed well can reduce the burden and frustration of dealing with things. 

2. Complex transactions

Accounting in a business is itself one of the most crucial yet the most difficult parts of a business. Managing huge transactions and documenting them is important to grow your firm. And when your property portfolio builds, managing transactions is essential.

Make your accounting processes easy and less complex by going with a better system or by outsourcing it. It lowers the cost and increases efficiency. You get to manage your business smoothly without having to deal with common errors. 

3. Poor expense classification

Categorizing expenses can be a huge task without experienced resources and the right software. In real estate, classifying expenses is one of the most crucial aspects of running the business. It can only happen when there is transparency in the processes and better management.

But most firms find it extremely challenging to do this, especially when the accounting standards change time and again; it gets a lot more difficult to categorize them as needed. Having a dedicated set of experienced teams can help you manage better while cutting down costs. 

4. No back-office support

You may already have an accounting department in your firm or have a third party do it for you, but it can cost you more in the long run if you don't have the right support. One of the most common property accounting challenges can be overcome with the right software and support team to manage all your back office accounting.

And you can do that by outsourcing which will help you save a lot too, as you need not spend more on resources, equipment, training, and others to manage your back office accounting. It also helps boost revenue by working your portfolios better.

And what's better than optimizing your business process at minimal costs, right? Training your resources can cost a lot more and take more time which may not be ideal if you have a budget constraint. So, it's always better to look for an alternative than hiring resources and dealing with the same challenges again. 

5. Lack of proper integration

Integrating software is a great way to enhance the performance of the operations, but what if integrating only leads to incorrect data and zero transparency? It's one of the main challenges faced by real estate firms that hampers the day-to-day processes.

Software integration should be seamless and help streamline the business process so go for the right solution providers who can make your job easy and ensure all your financial records are safe and error-free. KriyaGo can help you with software integration to manage your financial data easily. Talk to us to know more about it. 

6. Losing data due to poor backup management

We cannot stress the importance of having a backup for your documents here. No, not the paper-based physical backups; it's the cloud-based digital backups to keep all your data in one place that’s needed for your business.

Sure, you can save a physical backup but ensure it's done along with the cloud backup for added safety. There will be large transactions and other important data, so as and when you start building your portfolio, it's vital to have a backup to fall back on in case you lose any valuable data. It’s also a good practice to have a back up of backups to ensure you never lose any data even if your back up fails though the chances are very rare.

Let KriyaGo Solve All Your Accounting Problems!

Finding it hard to manage your accounting activities? KriyaGo can help you handle it easily. We have a dedicated team of experts who can run a quick audit on your company's accounting software and help you understand the gaps. 

We specialize in back-office accounting, lease abstraction, lease audits, and more. We also provide integration services where you get all features in a single platform to help you manage your financial data in one single place. We help you integrate with Yardi, Procore, and others to help you manage your business efficiently. 

If you think your systems need a revamp or you need more features to be added to your existing software, get in touch with us today!

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