5 Signs You Should Outsource Your Property Management Accounting

Property Management Outsource Accounting is not like accounting for businesses. Unlike others, it entails handling accounting tasks for both tenants and properties. That’s why it’s one of the most commonly outsourced business tasks.

Most property managers can’t handle these tedious tasks. Not only do they need to take care of business finances, but they also take care of payroll, bookkeeping, and tax preparation, among others. Outsourcing is an excellent solution if your property management company needs a dynamic approach to accounting.

But how do you know when it is the right time to outsource? Read more, and we’ll talk about the five signs you should outsource your accounting.

1. Increasing Complexity of Financial Transactions

As your property management business expands, so does the complexity of your financial transactions. Increasing leases, maintenance invoices, and vendor contracts can become overwhelming. It introduces more financial dealings that you need to track and manage.

As transactions become more complex, the risk of errors increases too! These might lead to significant problems, like financial discrepancies or compliance issues. If mistakes happen too often, it’s time to outsource your accounting operations.

Specialized accounting services use advanced software and systems to handle these complexities. Thus, reducing the risk of errors. They manage complex financial data and ensure accuracy in your books. Automatic rent adjustments and accurate tracking of property depreciation are some of the tasks you can outsource.

These services can help you navigate property taxes, insurance obligations, and tenant billing nuances. It ensures that the financial transaction records are correct and backed up by the applicable legislation.

Moreover, if you spend more time sorting out financial documents and less time managing properties, consider outsourcing your accounting. Doing so can free up your time to focus on strategic growth and tenant relations while leaving the management to the experts. 

Outsourcing accounting streamlines financial operations and strengthens business financial health. Hence, it’s a valuable asset for any growing property management company.

2. Difficulty in Keeping Up with Regulatory Changes

Property management regulations vary from one location to another, and they always change. Keeping up with these frequent regulatory changes can be challenging. You have to stay updated to ensure compliance. If not, it can result in penalties and fines. However, managing multiple properties across different locations can drain your time and resources. This is also a glaring sign to start outsourcing your accounting.

Regulatory compliance in property management is a complex process. It involves intricate laws, guidelines, and policies that require careful navigation and understanding. This is why it’s better to outsource your accounting to experts. They have in-depth knowledge of standard financial practices and specific regulations. They can track changes as they occur, which ensures that your business is always compliant with the laws. Outsourcing guarantees that your financial operations adhere to the different laws and regulations. Without their help, the risk of non-compliance could lead to legal issues, which can harm your business’s reputation and financial stability.

3. Time Spent on Accounting Is Hindering Business Growth

You might be surprised to know how much time you spend on accounting and tax planning. But you have to remember that your time is an invaluable asset to your business. Spending them on accounting can hinder your business’s growth.

Here are some examples of property management accounting tasks:

• managing financial records
• monitoring transactions
• tracking expenses
• budget planning
• rent and fee collection
• generating financial reports

These can make it difficult for you to concentrate on developing new strategies and enhancing tenant services.  It leaves you with little time to interact with tenants or look for new investment prospects. Additionally, the imbalance impedes the expansion of the business. It impacts the quality of service your tenants receive, which may result in discontent and increased tenant turnover rates.

In fact, according to a Starling Bank report, 27% stated that they spend too much time on financial tasks. One in ten (10%) believed it hindered growth, while 21% said they would divert their extra time and efforts to sales.

Outsourcing can make this possible. They can streamline processes and reduce the time spent on accounting tasks. As a result, you can redirect your attention towards growing your business, improving tenant relations, and exploring new markets. These will all ultimately lead to increased profitability and business success.

4. Inconsistencies or Errors in Financial Reports

Financial reports are internal written records that show your company’s financial activities. Hence, it should always be accurate to avoid non-compliance or failed business decisions. If there are frequent inconsistencies or errors in financial reporting, it may be a sign to outsource your accounting.

Errors in financial documents can lead to severe consequences, such as compliance issues or financial losses. It can be challenging for you to make informed decisions about managing and growing your properties.

A study from NCBI reveals that data entry can have an error rate as high as 6.5%, translating to 650 errors per 10,000 fields. This highlights the risks associated with outdated or insufficient accounting practices.

Outsourcing providers can implement a more robust accounting solution, which can drastically reduce these errors. Advanced accounting software offers features like:

• automated data entry,
• error-checking algorithms, and
• real-time financial tracking

significantly improves the accuracy of financial reports. These technologies ensure the data reflects the company’s financial status, providing a reliable foundation for business decisions. Outsourcing professional accounting services can be a game-changer for your accounting operations. These solutions enhance the accuracy of financial reporting and streamline the entire accounting process.

5. Lack of Access to Advanced Accounting Technologies and Expertise

Property management companies face real challenges if they don’t have access to the latest accounting technologies and expert advice. Manual data entry, for example, can cause many issues in compliance and cash flow. Eliminating manual processes saves both your time and budget. But automation tools and property management software don’t come cheap. You might have to shell out a huge amount to acquire these cutting-edge tools. Outsourcing can be a viable option if you want to improve your workflow without compromising your budget.

Here’s a look at how this lack of resources can affect your operations:

Outdated Accounting Tools

Using outdated accounting tools can slow everything down and increase the chances of making mistakes. Old methods make it hard to handle transactions quickly and get accurate financial reports. Modern software enables you to stay updated with financial regulations and avoid non-compliance.

Limited Financial Insights

Without advanced technologies, property managers lack crucial insights into their financial status. It will make it difficult to analyze trends, forecast budgets, or make quick strategic decisions. Real-time data is important for responding to market changes effectively. It gives you an advantage over competitors, allows you to seize opportunities, and helps you avoid potential pitfalls.

Lack of Professional Expertise

Handling intricate financial tasks like lease management and tax strategy requires specialized skills. Lacking professional accounting expertise can hamper your ability to manage complex financial scenarios. You might face increased risks during audits and financial reviews, which ultimately impact your bottom line. However, property management companies typically handle them themselves because hiring accountants and auditors can be costly.

Impact on Strategic Planning

Expert accountants do more than just manage books. They contribute to strategic planning by providing insights, which can lead to savings and better financial health. These insights are necessary for companies to make sound financial decisions. Planning ensures that resources are efficient and your financial practices support business growth. It also highlights opportunities to invest in areas that could yield high returns or cut costs. Again, you need to have access to experts in this area without breaking your budget.

Difficulty in Scaling Operations

As your property management business grows, your financial management needs become more complex. A lack of agility can hinder your company’s ability to expand or adjust to new market demands. It can lead to bottlenecks in financial processing and delayed financial decision-making. Through advanced technologies and expert support, managing increased needs will be a lot easier.

Elevate Your Property Management Business with STAFFVIRTUAL

Accounting is a crucial part of any business. But in property management, you have to be wise about which areas you spend your time. If your accounting operations are starting to hinder your growth, then it’s time to outsource! Free yourself from routine and time-consuming tasks to focus on business development. Allow yourself to maximize your resources and outsource your property management accounting today.

Choosing STAFFVIRTUAL for your property management accounting needs brings numerous advantages. Our expertise can help you avoid the risks of inaccurate financial reports and inefficient processes. We offer cost-effective solutions and top-quality talent to handle your daily financial tasks. Our technology-driven approach makes us an ideal partner for property management companies seeking to excel in today’s competitive market.

Ready to take your property management business to the next level? Visit our website and schedule a free intro call today. Explore how our solutions can transform your accounting operations. Drive your property management business to financial success and start outsourcing today!

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Sources:

Outsourcing: How It Works in Business, With Examples | Investopedia

Real-time Data for Real-time Action | GeoPoll

Small Business Owners Must Think About Taxes Year-Round | Business.com