Real estate development is a risky business. Conceiving the plan for the project, calculating variables, closing the deals and managing stakeholders and clientele are all resource intensive and time consuming aspects of this business and this only covers the day to day operations. Achieving business growth and profit is a whole different matter. Effective operational control and project execution are among the basic pre-requisites of success in this multi-layered industry.
One of those layers is a well planned, well designed and effectively managed accounting system. To ensure that the company’s strategy has a future oriented view, the accounting must be integrated with all the important management functions. This way every step that is taken is in line with a thorough understanding of the financial status and growth projections. The marketplace can be a highly volatile place for commercial real estate firms. Therefore, real estate accounting becomes an indispensable part of their basic survival let alone success. It is important to be able evaluate strategic alternatives for finance and accounting solutions to enable cost control, reduction of capital expenditure and to improve the standard of service level agreement with the clientele.
Every real estate agent, investor or property developer needs a quality real estate accountant on his or her side. Often times the relationship between the real estate accountant and the client becomes much stronger than between the agent and the client. It has a tendency to take on a more personal overtone due to the fact that clients feel more comfortable confiding in the accountant about their personal financials whether it is to do with tax break or loans. Real estate accountant understand the art of investing in real estate because of their grasp on the tax implications and tax deductions allowable to property developers.
It is crucial that real estate accountants focus on furthering their specialised knowledge. Their specialisation enables them to get the appropriate deductions. Since real estate and property development encompass numerous sources of income and expenses, it requires careful tracking. Rent, utility, taxes, maintenance and many such transactions must be considered before the final profit is calculated. A truly good real estate accountant can save you a lot of money, making them one of the most important members of your team.
There is an overall industry wide shift in the corporate real estate strategy especially regarding accounting and finance-based functions. The value of real estate accounting and its true impact on real estate decision has risen to a significant degree. This trend could prove to be a catalyst for further changes the way the property business is done and also the dynamic shift between accounting and management functions.