Did you know that people and institutions around the United States spend more than $109 billion on property management each year? More than 900,000 people in the United States work in the property management industry.
With so much demand for property management, there are many powerful software tools that help property managers manage their accounting. However, many property managers do not make the most of these tools.
One of the results of this is that property managers may end up doing much more busy work than is necessary. In other cases, property managers make mistakes with their software that cause novel problems that would not occur without using software tools.
However, as long as you know when and how to use property management accounting software, there is no denying that it provides much more value than it costs.
So what are the most important things to do and avoid doing with your software? Read on to learn all about the most important do’s and don’ts of property management accounting software!
Automate Property Management as Much as Possible
The most obvious way for many property managers that their accounting software helps them is by providing automation opportunities. Property managers often start by automating payments or withdrawals or security deposit returns. However, there is a lot more that you can automate if you get to know your accounting software system.
Many property managers are still spending hours every week performing tasks that they could get off of their plate in a permanent way if they would invest a few hours learning how to automate more tasks with their accounting software.
The exact do’s and don’ts of this strategy vary. Some software tools do not provide the same automation opportunities that others do. However, it is still worth checking if your accounting software provides automation opportunities you are not taking advantage of.
You may always feel too busy to step back and learn a little bit more about your deep accounting processes. However, doing so is an investment. A few hours invested at the right time can save you many dozens of hours in the long run.
On top of that, automated functions are more reliable. You can take work off your plate while removing errors at the same time. Although computer tools sometimes glitch out, the data show that humans make errors much more often.
If you are not persuaded by the chance to remove busy work, consider automation for reducing errors.
If you are not sure how big of a deal this is, consider checking how much simple human errors have cost your company over the course of a month or a year. You may be surprised how much value could be yours once you automate the right processes.
Review Your Real Estate Accounting Classification
Classification errors can cost property managers a lot of money. For one thing, classifying costs the wrong way can sometimes lead you to pay the wrong amount of taxes. You may end up with fees and other such issues if you have a mistaken view of which costs belong where.
On top of that, misclassifying costs can keep you from enjoying the full benefits of available tax credits and deductions. Some of the most brilliant accountants around the world specialize in finding ways to help people classify legitimate costs in a way that decreases total tax liability.
One problem with automated programs is that they do what you tell them to do instead of what you think you told them to do. What happens if someone makes a mistake while programming your software automation? You may end up misclassifying costs on a permanent basis.
It may be a long time before people review an automated cost classification. However, you can avoid this problem by remembering to check your cost classifications once or twice each year.
Use as Little Paper Accounting as Possible
Whatever possible, it is a good idea to avoid relying on paper for your accounting. Your accounting software will let you replace old-fashioned systems with more modern new ones.
Many people appreciate some of the advantages of paper accounting. However, you can imitate these advantages. For example, you can be careful to back up your data and files in another safe location.
That way, even if your computer or software crashes, you will still have your essential documents. With that out of the way, you can proceed with eliminating as much paper as possible.
Decide Whether to Automate Security Deposit Returns
Automating security deposit returns can save you time. At the same time, you might have reasons to want to manually return security deposits. If you take too long to return a security deposit, you may have to pay legal fees.
To have the best of both worlds, set up conditional returns. That way the security deposit will always go out on time. However, it will only do so conditional on tenants fulfilling all requirements that you set.
Find the Best Accounting Software for You
Finding the right accounting software may be the most important thing that affects how much value you get out of it. Using great choices like AppFolio or Yardi is a great way to enjoy tried and true options.
Even if you are not yet sure if they are the right choice for you, you can always try them out on a temporary basis. Once you see what they can do for you, you can decide if they are right for your situation.
Understand How to Make the Most of Your Property Management Accounting Software
The more that you know about property management accounting software, the more value you will get out of such tools. Many people get excited about the immediate and obvious improvements in performance that a new accounting software provides. However, that easy improvement sometimes keeps people from realizing that there are other improvements they could enjoy with a little work.
To learn more about how to make the most of your accounting software and property management practices, reach out and get in touch with us at any time!