An efficient back office is behind every successful company. It has a big impact on your business operations and how well you can achieve your objectives.
As a result, it is necessary to give a hard look at your back office operations. It is more important than you think and decides your performance, irrespective of the industry.
Today, we will explore top back office accounting misconceptions that are holding back your growth. Let’s start with a basic myth that many entrepreneurs still entertain.
Back Office Equals to Data Entry
Many people confuse back office responsibilities with data entry. However, that is a big mistake.
Data entry refers to entering data into computer systems. It is also possible to automate the process using a range of technologies.
The back office, on the other hand, is a whole department. There are several roles tied with vital responsibilities like:
Handling calls and emails from tenants
Coordinate with contractors for maintenance tasks
Manage documents relates to leases, tenants, insurance claims
Maintaining accounts, preparing financial reports, preparing taxes
Therefore, back office operations are more expansive than data entry. They support your day-to-day activities and form the backbone of your company.
All I Need is Accounting Software
50% of businesses today rely on accounting software to balance their books. However, can you run your whole back office with just an accounting tool?
Some realtors may feel their accounting solution is enough to manage back office accounting. However, that is not the right way to think if you want to achieve business growth.
Accounting software helps streamline the tasks of your back office accountants. It is also ideal to automate repetitive tasks and boost productivity.
But sadly, an accounting tool cannot replace your back office accounting processes. They will always need human judgment and analysis for tasks like:
Interpreting numbers and making sense of them
Identifying opportunities for cost savings
Implementing accounting best practices
Conducting risk analysis
Forecasting
As a result, you will always need humans to run your back office. However, the duties they handle will vary based on your industry and business size.
Back Office Operations are Really Simple
Many entrepreneurs make the mistake of oversimplifying back office duties. Sure, your back office processes can seem simple if you have a small real estate agency. You may even be able to handle all your operations with a few people.
However, that is not the reality, especially for big businesses.
For example, the back office generally handles payroll calculations and taxes. The process may seem straightforward but has endless hidden nuances.
Did you know the IRS penalizes 1 out of 3 businesses annually for payroll errors?
To avoid such penalties you have to consider several factors like:
State and federal labor laws
Pay schedules
Minimum hourly wages
Overtime rates
In addition, you need to maintain comprehensive payroll records to comply with IRS regulations.
Therefore, back office operations are more complex than you think. You need the right expertise and skills to ensure you can run your back office efficiently.
For this reason, many entrepreneurs choose to outsource their back office processes.
Back Office Accounting is Expensive
There is a general misconception that accountants are expensive. The same notion exists in many real estate agents who view back office accounting as a costly affair.
However, it is up to you how you look at things.
Back office accounting can cost money but also provide more than adequate returns. Moreover, an efficient back office can help you cut costs and optimize value from every vendor.
Consequently, inefficient back offices can incur more costs than you can imagine. Fortune 500 companies lose out $480 billion each year due to back office inefficiencies.
Therefore, your back office operations impact your profitability directly. You have to spend a bit of money to ensure you can run your back office accounting like a pro.
Paper-Based Back Office Accounting Saves Money
Your back office is in charge of processing invoices and disbursements. They may also handle claims from employees and reimbursements.
Unfortunately, many real estate agencies still rely on a paper process to manage invoices. They don’t want to invest in technology for fear of cost.
However, that can be a sad mistake.
Research shows it takes around $12.90 to process one paper invoice. Now, think about the cost if you process dozens or even hundreds of invoices every month?
In addition, think of the possibility of manual errors and the cost of rectification. By the end of the year, the whole process can add thousands of dollars to your expenses.
Instead, a better choice is to use technology to manage and automate your paper processes. You will be able to reduce inefficiencies, speed up processing, and save more.
Plus, your back office will have more free hours to conduct market research and support front-line operations.
You Should Not Outsource Back Office Accounting
Outsourcing your business processes can have a remarkable impact on your bottom line. Yet, many realtors are afraid to outsource their back office processes as they fear:
Losing out on control
Compromising confidentiality of data
Barriers in communication
Hidden costs and terms
Delays
However, these concerns do not have any solid ground. Many businesses are enjoying more freedom and optimum returns by outsourcing back office operations.
In fact, accounting is one of the most common businesses processes to be outsourced. Its market size is predicted to grow from $36.9 billion in 2020 to $51.5 billion by 2027.
Therefore, real estate agencies can outsource back office accounting without any concern. They will be able to improve efficiency and get more free time to focus on growing their business.
Final Thoughts
The back office is a crucial part of every business. You cannot hope to run your business and earn a profit without the support of the back office. As a result, it is necessary to have the right information that helps you optimize your back office processes. In addition, real estate agencies can outsource their back office accounting to reputed partners like KriyaGo. Contact us to know how we can help.
