Real estate is a complicated industry, with complicated accounting needs. From international payments and purchases, to collecting rents and paying contractors for construction and renovations, the accounting needs of a modern real estate business demand powerful technological solutions.
But for these businesses, adopting state-of-the-art accounting software isn’t just about streamlining efficiency and cutting costs (though that’s also a major benefit). It’s also a way to enhance overall operational capabilities, grow, and scale their businesses.
Just ask the team at PadSplit, an affordable housing marketplace, who leveraged Plooto’s AP/AR automation software to improve their payments process, helping them reach critical scale that would have been impossible had they stuck with traditional methods.
Here are just some of the ways that accounting automation can help real estate companies take charge of their finances and grow their businesses:
Multi-office real estate companies handle hundreds, if not thousands of transactions every day. Those transactions can be huge, like the purchase or sale of a property, or they can be small, like collecting rental payments, or paying the landscaper at a property. Because of this, keeping track of incoming and outgoing payments can be challenging.
By automating accounts payable and receivable functions, these companies can process payments much faster, which is crucial with such a high-volume of payments coming in and going out every day. This is even more important when it comes to international real estate businesses who also must manage cross-border payments across different time zones and currencies.
The economies of time, labor, and hard costs like postage that can come from automating AP and AR functions are significant for businesses in the real estate space, and in an industry that is highly competitive, with very fine profit margins, any activity that cuts costs and enables incoming payments to process faster is a powerful tool.
Financial control and scalability
For any business that deals with a high volume of daily transactions, cash flow management is absolutely crucial, and real estate companies are no exception. They need to know where their money is, where it’s going, and when more is coming in to make sure that their resources are appropriately distributed to meet their payment obligations.
With the complexity and high values of transactions that real estate companies conduct, having visibility and control over cash management is one of the single most important things to operational efficiency.
At any point in time, an international real estate company could have millions of dollars in payments going out and coming in. Being able to reconcile all those payments, and track precisely where that money is, is vital to their ability to forecast and plan. It also affords them the ability to act quickly when an opportunity for a new property or investment comes up, without having to spend extra time pouring over transaction records to determine if they have the assets to jump on a deal.
In a highly competitive industry, this is invaluable to their ability to scale and grow their businesses, and it wouldn’t be possible without automated AP/AR technology, and the control it offers them over their cash flow management.
Accounts payable and receivable functions that still rely on manual processes and paper transactions are inherently more vulnerable to fraud, and costly errors. Modern AP/AR automation software comes equipped with robust security measures to protect both the money being transferred, as well as the personal information of those making or receiving payments.
Advanced accounting software is a powerful way to ensure that every transaction, big or small, is protected, and will arrive at its destination on time. In an industry where reputation is crucial, one breach of security or processing error could cost the company millions in deals in the future – a risk that no business can take.
Reporting, compliance, and auditing
Because of the complex nature of the real estate business, having complete control and visibility over finances, and the ability to track and produce up-to-date reports instantly is important for real estate firm accountants.
As major financial entities, real estate businesses are also subject to a range of compliance and regulatory obligations which have strict financial reporting standards. Having the ability to constantly track and automatically reconcile accounts through automation software is a powerful way for companies to reduce the overall time and expense of meeting their regulatory requirements.
Automated AP/AR software also serves to reduce accounting mistakes from the entire process, because it eliminates manual data entry steps that are prone to human error. Automatic reconciliation offers finance teams peace of mind, while creating a much simpler, faster, and more efficient financial reporting process.
Because it’s easy to access accurate financial data, this technology also streamlines tax and auditing processes, which can get incredibly complicated for real estate companies, especially those that own multiple properties across different states, or even countries.
Happy customers, and partners
At the end of the day, a real estate company needs to be able to maintain relationships with a wide range of external stakeholders, including tenants, vendors, buyers, and sellers of properties.
Whether it’s a large transaction like the purchase of a property, or a small payment like rent from a single tenant – the ease, speed, and security of the payment is important to the payee. To the tenant paying their rent, a processing error could put their housing situation at risk. For a buyer or seller making a potentially multi-million-dollar transaction, they need to know that the real estate firm they’re working with is capable of handling transactions of that size.
To maintain and grow revenue, real estate companies depend on positive interactions that lead to longstanding relationships. Oftentimes, new business is referred by word of mouth from existing clients. With the incredibly high volume of payments going in and out of a real estate company each day, there is simply no room for error that could damage reputation. AP/AR automation technology is an essential tool for helping these businesses streamline their operations, grow their business, and maintain positive, fruitful relationships with their partners.
Ready to automate your company’s accounting? Try a 30-day free trial of Plooto today.