Accounting is a critical part of the real estate business as it involves tracking and maintenance of the financial health of any property business. Like every other industry, real estate is not exempted from hardships and stress. Many complexities vary from tracking accounts to struggles with taxation and profit and loss allocations. You can resolve them with accounting software for project management.
Property managers and accounting teams often face several roadblocks with multiple clients, constant dealings with income, assets, and operating costs, and high-volume transactions. Accounting mistakes and inconsistencies can cost you huge. They can have devastating consequences, including ethics violations, potential legal problems, and unhappy clients.
The real estate industry faces several accounting challenges. This blog has discussed some common accounting problems that property owners, property managers, and other professionals face. Below are some of the common accounting challenges in real estate that you must be aware of:
Poor Record Maintenance
Keeping financial records is always a priority in a real estate business. Still, many realtors fail to prioritize the storage and maintenance of records, which is vital for the future success of any business. Though record storage and organization are time-consuming, keeping the details will pay you well.
Solution By REDA – REDA can help you resolve all the problems associated with record storage and maintenance through Enterprise Accounting powered by Accounting Seed Inc. Salesforce native and integrated enterprise accounting service tailored for Real Estate and Property Management processes. REDA performs accounting implementation according to the client's requirements.
Inefficiencies and Time Wasted
Manual data entry of the records or switching between two systems is a tedious task and consumes too much of your time. It is probably the most common challenge associated with property management. It further trickles down into other business aspects and causes teams to have less time to focus on important initiatives like business growth, client satisfaction, and others, all of which can further lead to employee burnout.
Solution By REDA- REDA offers paperless solutions comprising Salesforce Native template-based document generation. We also provide an e-signature solution powered by S-Docs. One can easily generate documents and share agreements for electronic signatures. REDA automates communication and data workflows based on different stages of the design process, allowing unlimited documents and signature envelopes, resulting in 100% paperless operations.
Inconsistent and Erroneous Data
The problem we often experience in association with accounting management is inconsistent and inaccurate data. This could be due to entering information manually from multiple spreadsheets or paper sources, leading to human error and increasing the risk of an audit. Additionally, data errors can cause property owners/managers to make the wrong decision when making a budget. It could be a consequence that can negatively impact financials for the whole year.
Solution By REDA – Several automated tools within REDA property management software can help you solve this and ensure accuracy. The automated accounts payables system in REDA scans and processes all your invoices automatically, leaving you just to review them. When all your documents and records are stored digitally and updated automatically, you can catch mistakes before time and mitigate risk and human error. Storing important information online is more secure than paper files, as they are normally encrypted and access to limited users only.
Tracking Rental Payments
Tracking already paid rent payments is a difficult task. Recognizing the cash paid in advance for rent depends on the accounting method that a property owner uses. It is necessary to understand how to account for advance rent payments and keep the method constant. Different accounting methods, like a cash-based method for some and accrual accounting for others, may cause a mess, leading to challenges with the IRS.
Solution By REDA – REDA offers seamlessly connected accounting workflow automation. Rent Charges, Recurring Changes, One Time Charges, Late Fees, Month to Month Charges, Termination Charges, etc., all will be automated. REDA offers automated rent step-up accounting based on rent step-up rules for multi-year leases. One can achieve 90% accounting process automation using REDA. Discover insights, find recommendations, predict outcomes, and act quickly on an AI-powered analytics platform. If there are any rent dues or you need any rent-received reports, you can easily access them from our best software for rental property management.
No Insight into Financial Health
Having insight into the financial health of your organization can be the biggest challenge, especially if you have disparate systems. Lack of a cohesive view of your finances because financial data is stored in different places may make things difficult for you and may not give you a complete picture. When your finances are confusing, or there is a loophole in finance management, your company owner may not trust you or be dissatisfied, leading to business loss. Moreover, with outdated accounting solutions, you cannot create specific reports, making it difficult to make the right decisions for the real estate firm.
Solution By REDA – Instead of using multiple accounting solutions to manage your finances, REDA offers a single solution that allows you to have different workflows on a single platform, from accounting to reporting, maintenance, and violations. When all your finances are integrated and business processes are unified in a single digital system, it will save you time and money. Also, you can easily gain visibility into your finances.
A Quick Wrap-up!
By implementing REDAsoftware with a strong accounting foundation, you can optimize your accounting processes, easily make financial reports, save time and create a space for business growth. REDA includes flexible reporting and accounting tools. It also allows several bank integrations to let you seamlessly manage all your finances. To learn more about our accounting vertical, feel free to connect with us!
