While many associate salesmanship, marketing, industry knowledge and good communication skills with property management, accounting is the last thing that comes to mind. However, property management accounting is a significant part of the day to day running of a property management firm. Overseeing the day to day account operations of commercial or residential property building involves a diverse set of resource intensive operations such as preparing monthly and quarterlies for each property, accurately managing ledger entries, balancing cash transactions, accounts receivable and payable for respective properties and the responsibility for bank reconciliations.
What many do not understand or appreciate rather, is the fact that bank reconciliations are among the recommended best practices for any property management company. Meticulously going through bank statements for irregularities, unknown bank charges, service charges or incorrect deductions is one of the most essential functions that a property management accountant performs. This seemingly mundane function in fact ensures accurate bank balance accuracy. This means that the company’s financial decisions will be based on a true account reading and not prone to fundamental errors. It is also an efficient way to keep track of payments and save a lot of time and money in the long-term through basic vigilance.
There are also other supporting functions that the property accountant needs to perform such as issuing tenant statements, reviewing asset balance sheets and income statements, verifications of revenue and expenses via monthly financial reports and maintain a portfolio of third party owners of the property. Property management accounting is essential for other lateral functions such as setting up and updating budgets and doing forecasts and predictions and analyse any discrepancy or deviation from the budget. Maintenance of immaculate records for annual or half-yearly audits is also a significant aspect of property accounting.
Lateral strategic functions such as property focused financial reports based on general ledgers, balance sheets, profit and loss statements and cash flow reports are also an integral part of property management accounting. Easy to read, up to date financial reports, budget statements and growth projections can be used as powerful tools to gain a deep and insightful understanding of the property market dynamics.
In conclusion, it is safe to say that property management accounting is a truly indispensable part of property management and real estate success. Many may dismiss it as a routine, back office function but it is unwise to undermine its real significance. It serves as a backbone and as a skeletal framework upon which the financial well-being and growth of property superstructure is built.