Real Estate industry had to be one of the most dynamic, volatile and challenging industries possible in the world. Given how complicated and tedious bookkeeping, accounts payable, accounts receivable, reconciliation can turn out for simple businesses, one can only imagine the complexity of real estate accounting.
High Volume of transaction, fluctuations and complications:
Real estate and property management companies generate huge volumes of financial transactions that have to be perfectly tracked recorded and processed. The complex financial data that take its origin from multiple forms and formats must be processed readily for the Real Estate Accounts Payable, Accounts Receivable and other accounting processes to keep the business on track while making sure the business complies with rules and regulations. Now add-in the incogitable market fluctuations, demand and supply swings, perfectly real estate accounting can be an accountant’s nightmare, if not managed properly.
Due to nature and unpredictability and high-volume invoices and transactions, Accounts Payable has always been an Achilles heel for the majority of real estate businesses. If you are a real estate business either you already are experiencing the Accounts Payable Problems or you are about to them face them in days to come. And this blog is for real estate businesses of both categories.
In this blog here, for category 2, we help you understand the common Accounts Payable challenges experienced by the real estate businesses (all before seeking the help of our Accounts Payable experts at Back Office Accountants of course). And for category 1 we help you understand how back-office accountants can help solve these problems to provide the Best Real Estate Accounts Payable Services in the market. Read on:
Real Estate Accounts Payable – Common Problems and Challenges:
1. Manual Invoices: The most mundane and tedious process that accounts for a lot of time and errors in the Accounts Payable process is the manual record keeping of invoice, and we are only speaking of regular businesses. Imagine a real estate and property management business that generates tones of invoice from a wide variety of sources in different kinds of formats at different times – an accounting resource is in for a ride when it comes to invoicing processing. Now imagine if he had to correct an error or go back searching for a misplaced or lost invoice and AP processing may come to a screeching halt.
2. Duplicate Invoices: High volume of manual invoice in real estate and property management results in another major problem i.e. duplicate invoices and payment which can significantly dent the business. Most real estate businesses had to deal with manual invoices that come from a large number of vendors and this vendor is most occasions send multiple invoices for faster payments and given such high volume of transaction duplicate payments do happen in Accounts Payable which is not streamlined and optimized for greater visibility.
3. Manual Tools for Accounts Payable: More than 42% of the real estate businesses in the US is estimated to rely on spreadsheets, paper-based and other manual AP processes to get their high-volume Real Estate Accounts Payable done which is error-prone, time-consuming and also a low-ROI business practice. Working with real estate business our Accounts Payable specialists at Back Office Accountants also found that these spreadsheets and paper-based process also pose auditing and cyber-security problems.
4. Reluctance to Electronic Payments: Believe it or not checks still reign in the real estate and property management business; most of them still rely on them as payment instruments even when their clients prefer electronic payments. The most common problem that arises due to checks for payments is a lack of visibility in payment status for both parties.
5. Compliance Problems: High volume of invoices and money that rides on them makes the real estate sector a prominent subject of financial regulations from various regulators –making audit mandatory. Muddled bookkeeping and accounting process that relies on paper-based processes not only makes auditing difficult but also can be ripe ground for financial discrepancies which are hard to clear-out. So payment processing is not the only end goal, keeping accurate records for Real Estate Accounts Payable is essential for real estate businesses to avoid compliance problems.
6. Strained Buyer-supplier Relationships: Trust and reputation are critical for success in the real estate business. But late payments, duplicate payments, lack of visibility in payment statuses, reluctance to e-payments, inadequate communication – all these problems can potentially strain buyer-supplier relationships when it comes to real estate accounts payable.
All the above problems were commonly faced by real estate accounts payable. Given how dynamic challenging and hyper-competitive the real estate landscape can be, it is not optimal for a business owner to focus on the accounting side. But at the same time, it is critical to have high-optimized real estate accounts payable for better financial and strategic performance. And this is where remote accounting firms like Back-office Accountants can help.
How Back-Office Accountants Can Help Optimize Real Estate Accounts Payable?
Following standard procedures and guideline that are set to pace up the invoice processing, our accounting resources process your manual invoices avoiding double payments while communicating with the vendors to avoid miscommunication. Using advanced tools and software, our Accounts Payable specialists can automate your Accounts Payable process as much as possible to accelerate the entire process with improved accuracy. With expertise on versatile Accounts Payable tools and software like Bill.com, Property ware, Great Plains, Yardi Voyager, R365, MRI (by Intuit Real Estate Solutions) Microsoft Excel (in VLookUp, Pivot) we provide customized and high-performance Real Estate Accounts Payable Services based on your requirements. If you are looking for revamping, we can also help you craft an optimized accounts payable strategy and execute it to perfection making it easy to scale up and be future-ready. For more information on our Real Estate Accounts Payable Services, you can contact us here: https://www.backofficeaccountants.com/