Real Estate Accounting – Why Outsourcing
In the present business scenario, cost-cutting is being given due emphasis by companies or firms globally. Real estate industry not an exception in this regard. Real estate accounting as such is a specialized task that is very important but often time-consuming.
Outsourcing real estate accounting helps real estate companies in not only saving cost but also in enhancing the financial reporting and operations of the organization.
When to outsource real estate accounting for your firm
Outsourcing real estate accounting helps real estate firms in focusing on their core business of real estate rather than on their back office accounting.
In addition, outsourcing real estate accounting of your firm is viable under the following circumstances such as-
- The in-house accounting operations are being performed by a single accountant who may at times remain absent due health issues; or in case where the accountant leaves the firm without any prior notice hampering the flow of accounting functions of the organization
- Where there are certain issues due to lack of coordination and facilitation of annual audit and tax returns
- The accounting staff may have limited knowledge and experience of real estate accounting and legislative requirements
- The present in-house accounting staff may feel pressurized in taking on real estate accounting duties in addition dealing with all kinds of financial knickknacks and in maintaining a clean balance sheet
Some of the key accounting functions/tasks that can be outsourced include-
- Accounting Transaction Processing
- Cash Management Services
- Real Estate Financial Reporting
- Tenant Accounting Services
- Real Estate Payroll Processing
- Accounts Payable
- Accounts Receivable
- Insurance, Mortgage, Escrow Reconciliations
- Budget Preparation, Financial Analysis and Cash flow forecasting
- Audit Support
- General and Month End Accounting Activities
How can one select the right real estate accounting firm?
Selecting the right real estate accounting company for outsourcing is a challenging task as it involves a thorough investigation and research. It involves gathering information regarding the reputation of the firm that can be done by going through referrals and online reviews.
The other selection processes or procedures that should be taken into account include-
- Selecting experienced accountants with real estate industry knowledge or specialization
- To hire the services of that real estate accounting firm, which has a team of financial experts from reputed finance institutions who are well experienced in working with different types of real estate accounting tools/software such as QuickBooks, Yardi, Appfolio, Timberline, MRI, RealPage OneSite etc
- The concerned real estate accounting firms are offering cost-effective services helping your real estate firm in saving a huge amount of money on operational costs and in assuring security and business continuity
- Experience should also be the criteria to look at, while outsourcing. The employees should have the knowledge related to insurance certificates, recognition rules, revenue lien waivers, contracts etc
Apart from these, the outsourcing company should have on its rolls Certified Public Accountants or CPAs who had served as audit partners and CFOs having expertise in understanding the global real estate industry to the core.