In an exceptionally competitive industry, property managers certainly have their work cut out for them. In addition to managing properties in an inflationary environment and trying to grow their portfolios, property managers also need to keep residents and employees happy. On top of this, they also need to overcome labor challenges and win the war for talent.
(Need help hiring and retaining workers? Check out our free guide, Attracting and Retaining Talent to Grow Your Property Management Company.)
Like every other business, property managers have to manage their finances and get as much control over their cash as possible. After all, money is the lifeblood of any business. When cash dries up, property management companies can struggle to keep their doors open.
With so many competing priorities, it’s not uncommon for property managers to overlook the importance of accounting, which leads to a host of negative outcomes.
Keep reading to learn about 10 accounting for property management mistakes and how financial planning and accounting technology, also known as FP&A software, can make all the difference in the world.
Accounting for property management: Mistakes to avoid
1. Using paper invoices
Some property management companies still use paper invoices to bill vendors. Not only is this approach costly, error-prone, and time-consuming, but it’s also bad for the environment. By investing in accounting software, you can digitize invoices easily, solving this problem in just a few clicks.
2. Forgetting to return security deposits on time
In many cases, property managers that forget to repay security deposits on time can face fines, penalties, and legal fees. With FP&A software in place, it’s possible to automate this process, ensuring that residents receive payments automatically after certain requirements are met.
3. Collecting paper checks
Though property management companies can certainly collect paper checks, this approach is an inefficient one in today’s digital age. Not only does it take time to receive, store, and process each check, but staff can also misplace payments. There are costs associated with using checks, too. Once again, software can help here by giving residents the ability to submit payments electronically.
4. Paying HOA fees late
If you don’t pay homeowners association (HOA) fees on time, your business may be exposed to risks, fines, and even legal action. You can use accounting software to set up recurring payments for an automated solution to this problem.
5. Paying bills twice
When you’re writing checks to pay your bills, you simply don’t have the real-time visibility into cash outflows required to ensure you don’t make any double payments. FP&A software can save the day here, too, by enabling you to keep tabs on all the checks you write, eliminating the chance you pay a bill twice and don’t realize it for months.
6. Failing to have a standalone bank account
Many business owners have the tendency to use their own bank account for both business and personal expenses. Not only does this approach make it harder to track your business’s profitability, but it can also lead to additional problems—up to and including potential legal trouble.
7. Forgetting to conduct internal audits
Though conducting an internal audit of your finances each year may not be your top priority, it can help you get more control over your financial situation. Of course, audits are much easier to facilitate when all of your accounting information is digitized and accessible through one platform.
8. Failing to reconcile your books each month
Property management businesses run on cash flow. If cash is tight, it becomes that much more difficult to stay in business. Unfortunately, there are only so many hours in the day—to the point that many property managers forget to reconcile books at the end of the month. This can lead to all sorts of problems as small errors spiral into large ones. Luckily, FP&A software can help here, too, by making the account reconciliation process much smoother.
9. Maintaining books by hand
If your staff is still maintaining books by hand, they’re likely spending lots of time on these manual tasks. Accounting software can easily take care of this work, while also reducing errors and giving staff the data they need in just a few clicks.
10. Overpaying an accountant
To solve all of these problems, some property managers opt to enlist the services of a professional accountant. Though that certainly helps, accountants aren’t cheap, and they’re not always as responsive as you’d like them to be. Instead of hiring a CPA, you may be better off investing in purpose-built accounting software for property management. That way, you’ll get a much bigger bang for your buck on any accounting expenditures.
Invest in FP&A software and grow your business!
Property management companies are in the business of managing properties—not managing company books. By investing in the right accounting software, you can transform your operations, getting more control over your financial situation because of it. With the right tools in place, accounting becomes a breeze, and you can focus more on growing your business.
Ready to see the promise of purpose-built FP&A software and how it can help your property management business get to the next level? Request a demo today.