How real estate firms reimagine the back office

The challenges faced by finance back offices are well known to many of us and can be summarized as: too much time and effort spent on repetitive tasks using inefficient or outdated processes. These issues are exacerbated by the recent high level of turnover among finance employees.

 Real estate firms have an opportunity to reimagine their back offices to be able to keep both their primary focus on investing and operating, as well as leverage cleaner, more timely financial data for insights into their businesses.

Strategic steps

Invest in technology

Manual data entry and systems that don’t speak to each other have to become phenomena of the past. Companies should move to a cloud-based ERP system that allows data from various departments to interface with each other. Imagine if leasing integrated with accounting, accounting with investor relations and all of the above with operations. Having one system for property management and another for general ledger, let alone maintaining certain records or reports in spreadsheets, allows too much room for error.

Additionally, it slows down the process by requiring reconciliations and manipulation of data before insights can be gathered and assessed. Cloud-based software allows multiple users, including consultants, to work simultaneously and from any location. It’s key to actually utilize the various functionalities available: many companies aren’t using some of the best features common in real estate accounting and property management systems, including data analytics and innovative forecasting tools.

Outsource

From outsourcing various tasks and processes to executing a lift-out of the entire accounting team, real estate companies are increasingly turning to solutions that allow them to operate with smaller teams in-house. This is critical at a time when firms are struggling to replace and train staff quickly enough, as well as looking to control costs while maintaining quality.

Outsourcing the more repetitive tasks can free up the finance team for higher level analysis the company needs for investment and operational decision-making. Bringing consultants on for projects and ongoing processes like budgeting and data analysis provides access to a wealth of expertise and real estate market insights without needing to keep a full roster of accounting, finance and technology specialists on staff.

Streamline processes and increase automation

Formally documenting the processes and controls in place for cash management, monthly close, investor reporting, etc., is the first step toward improvement. Things may have been done the same way for years and even be working well, but with the high turnover in recent years it’s simply not responsible to rely on the status quo of informality and knowing the team will get it done.

In addition to memorializing the procedures to properly train new team members, it will create the opportunity for consultants to advise about weaknesses, where to add controls, and how to increase efficiency and effectiveness. Opportunities for automation are myriad, from importing and classifying cash transactions directly from the bank, to utilizing dashboards to run reports and highlight trends automatically for the management team.

De-stressing the back office will help finance teams retain and better utilize talent by removing manual and repetitive tasks and allowing staff to better focus their efforts. Simultaneously, it will allow leadership to focus on running and growing the real estate business with access to clean, accurate data and insightful, timely reports.

Our Mazars Real Estate Accounting and Financial Reporting team can help you strategize how to improve, as well as help you implement these changes. 

Reach out to a Mazars real estate specialist today. 

The information provided here is for general guidance only, and does not constitute the provision of tax advice, accounting services, investment advice, legal advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers.