With property management – as it is with any business venture – solid accounting practices are one of the mainstays to achieving success. But when you’re running a business with so many variables, how can you keep up with them all effectively while ensuring that you, your employees, and your tenants keep up to date with all of your budgets and payments?
Making sure you adhere to an effective and efficient accounting model when you’re in the property management field is the best way to maintain a steady flow of income, ensure that your payments from tenants are received on-time, and that your business is flowing in the right direction and your finances are consistently in the black.
Here are five of the most important recommendations for improving your accounting practices with it comes to property management:
1. Encourage your tenants to pay via an online portal, as opposed to cash or check in-person. An effective means of managing your relations with your tenants is to create an online portal for them to pay rent, communicate, and report maintenance issues and repair requests. Online portals are especially useful when it comes to receiving monthly rent and other payments from your tenant (such as damage deposits). In addition, tenants will be able to view their records and get up-to-date information regarding amounts owed and it they are tardy with any payments so that they will have the information on-hand to live up to their financial obligations. You’ll find that typically you’ll get far fewer late payments this way.
2. Set up automatic tracking and reminders for your tenants. The one thing that is changing – and improving – the property management field more than anything else these days is automation. It increases efficiency and productivity and allows you to devote more time to other areas that you may be neglecting. Automating the renewal process and reminders for both you and your tenants – in conjunction with an online portal, already discussed above – is a great way to achieve this; you’ll be able to track your tenants’ payment history and single out who is late or running behind, or keep track of tenants who often report damages or other issues that they may be responsible for. You can setup the system so that reminders are automatically sent to both yourself and your tenants when rent is overdue; this, coupled with the ability of tenants to be able to make online payments, can go a long way to reducing the amount of physical time you spend banking, saving you both time and money.
3. Make payment processes simpler, not harder. Unfortunately, the property management business isn’t just about collecting rent and making money; the bills have to be taken care of as well. To that end, you need to be able to keep effective track of your debts, bills, and other financial responsibilities you may have, and make sure that they are all paid on-time and in full. To do that, be sure to set reminders via your online portal – which can come in the form of emails, text messages, and more – to pay any upcoming bills, and consider setting up automatic payments for reoccurring bills. Also, if you receive any physical documents or paper bills, be sure to scan them and upload them to secure, online digital storage that you will be able to access from any location. After all, the owners of the property will want to keep tabs on their finances and make sure that your management is efficient and all-encompassing, and a way to be able to generate statements on-demand will go a long way to satisfying that need.
4. Utilize compatible and merged tool-sets. Using different types of property management software that are able to “talk” with one another is a must in this day and age, especially when it comes to financial management and data management tools. This way you can simultaneously view and compare and contrast information covering your up-to-date banking information with financial projections, the status of tenant rent payments, and much more. Again, this can go a long way to making your operation far more efficient and increasing your – and the owner’s – bottom line.
5. Understand the importance of reports. Be sure to utilize property management accounting software that will allow you to generate custom reports so you can keep detailed tabs on every aspect of your financial past, present, and future. For example, you might require information on maintenance costs at one or even several properties at a time, or turnover rates among your employees, or any number of variables that can affect your bottom line. From there, you can see were any inefficiencies lie, plug any holes where waste may be escaping, and make more effective financial decisions going forward.