The real estate industry deals with a large number of transactions every day. In 2020 alone, 5.64 million existing homes were sold in the US. These transactions also vary in magnitude from huge property investments to small maintenance expenditures. That’s why accounting and bookkeeping play a major role in real estate.
As a property manager, producing accurate financial reports and maintaining internal records are top accounting priorities. Most of these real estate accounting functions can be effectively outsourced to experienced service providers. Apart from the cost and time benefits, we list the top reasons why you need to outsource your real estate accounting.
Issues with hiring an internal accountant
Today, more companies are outsourcing their accounting and bookkeeping services. And that’s because they find it more convenient and cost-effective.
Even though hiring an internal team is an option, companies can face significant issues such as:
Real estate businesses need reliable accounting to deal with continuous transactions. With an in-house team, financial tasks can suffer due to leaves, absences, and staff turnover. According to a 2021 report by Inc., 52% of employees plan to look for a new job this year, leading to a mass employee turnover.
Training and inducting new hires can be expensive. An ATD report says that employers spend an average of 33.5 working hours and 1252 USD to train new employees.
Hiring in-house accountants increases your risk of employee fraud. In a survey by ACFE, more than three-fourths of occupational frauds were conducted by employees in key departments like accounting.
Outsourcing property accounting is one of the best ways to deal with these issues. It is reliable, cost-effective, and more secure. Among the companies that outsource, 78% report being happy about the results. If you are still skeptical about outsourcing real estate accounting, then here are the top reasons why you need to do so.
Acquisition of expertise
Any financial service heavily relies on accuracy. For property accounting, your data needs to be handled by skilled accountants. According to experts who spoke to The Ladders, the lack of quality candidates is one of the top challenges of hiring an in-house employee.
Instead, you can hire experts for your accounting needs through outsourcing.
Service providers focusing on real estate have trained and experienced accountants that can handle your work. They also often work in teams which helps you surpass any time and financial constraints. Since they are already trained, the cost of hiring is also much lower than that of an internal accounting team.
Mitigate risk
The real estate industry makes an attractive target for scammers and hackers due to the large number of financial transactions involved. According to Perimeter 81, one out of three real estate companies has faced a cybersecurity attack. But half of them reported not being prepared to deal with the attack. This is due to inadequate steps taken by the company to manage its financial data.
Outsourcing companies understand the sensitivity of such information and set up their own security measures to protect client data. Moreover, the risks of internal fraud are also significantly reduced by outsourcing.
Versatile services
Real estate back-office accounting requires different services such as payroll management, financial planning, and budgeting. In-house teams consist of one or two employees who specialize in limited services. Handling tasks outside their specialization leads to the compromised work quality.
Hiring an outsourcing company gives you access to a variety of services. Instead of one person doing all the work, outsourcing companies have dedicated staff for each service. Companies like KriyaGo have expert resources that not only handle your accounting but also provide guidance to improve your business.
Pain-free tax season
Well-planned tax deductions save a significant amount of real estate revenue. This involves a thorough knowledge of tax laws and filing for the right deductions. To avail of the benefits, you also need to organize your bookkeeping and have the necessary paperwork.
Outsourcing makes your tax season hassle-free. It lets you hire industry experts who specialize in real estate tax. They can help you with bookkeeping, reconciliation, audits and also advise you on the best practices to save more on tax. They also ensure compliance with tax laws and keep you away from legal hassles.
Latest technology infrastructure
Real estate technology has made complex accounting problems easier and more accurate. But investing in these technologies is usually too expensive for property management companies, considering it is a non-core function. Access to such technology is an added advantage of outsourcing.
For example, a survey by Xero shows that businesses that use cloud accounting get five times more customers than businesses that do not. By outsourcing to a company that uses cloud accounting technology, you can effectively improve your real estate business. Along with numerous other benefits, you also leverage technology at a fraction of the cost.
Portfolio-specific experience
Real estate business involves portfolios that require different methods of accounting. For example, multifamily accounting deals with CAM reconciliations which are usually not required for single-family homes. They are also governed by different rules and regulations.
Outsourcing companies have experience handling a variety of portfolios. They know the different financial laws and can assist you better in your particular industry. This ensures your accounts are always up to date and accurate.
Partner with KriyaGo for accurate back office accounting services
KriyaGo provides back-office accounting services to real estate companies. We understand the complexity of managing real estate accounts and aim to build an efficient back-office strategy for our clients.
Our expert team combined with the latest technology can provide you with the right accounting solutions. We focus on giving the most efficient and accurate service based on client requirements. Our cost-effective services help clients channel their time and money into other core activities.
With an experienced team of knowledgeable accountants, we help our clients make well-planned financial decisions and achieve business goals. We also value accuracy and give you better control over your outsourced processes.
Book a free consultation with KriyaGo to leverage our back-office accounting services!
