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Things to Keep in Mind before Outsource Real Estate Accounting and Bookkeeping
The reasons and motives behind outsourcing accounting functions are almost universal and uniform cutting across all businesses. Real estate bookkeeping is all about managing profits and loss of business into a format that depicts the financial position.
Now, this activity of categorizing the data under different heads does not require any specific managerial discretionary powers. But on the other hand, it is a huge drain on finances. Investments have to be made in specialized hardware and software and qualified accountants at lucrative salaries have to be hired.
To avoid the situation, businesses are outsourcing accounting and bookkeeping process to reliable firms in the market. The real estate industry is no exception to this scenario. In fact, the very dynamics of the industry make it imperative that accounting functions should be outsourced.
The real estate sector is based on the demand and supply of land and projects, vulnerable to economy impacts.
Price fluctuations mean that your wealth can be eroded at any time in terms of market value. Hence, you have to be over-cautious to protect your investments. Maintain documents of title, mortgages, sales, and taxes properly. Hence, it is always advisable to outsource real estate accounting and bookkeeping to focus on core activities.
However, it is easier said than done. There are a lot of factors and variables that have to be kept in mind before you outsource accounting functions.
While weighing the pros, the first point is the advantage that you will gain from making the decision to outsource.
Benefits of Outsourcing Real Estate Accounting Services:
Setting up a full-fledged accounts department, providing infrastructure and equipment can set you back financially. By opting to outsource at affordable fees to agencies that perform the task just as well you are saving substantial amounts in the long run. This can be used for investment in your core activities and offer competitive prices to customers.
Every aspect of your accounting functions will be taken care of comprehensively. Even monitoring and tracking of expenses and cash inflows and outflows are not needed from you. On the other hand, you’ll get updated reports at regular intervals, even on a real-time basis in an urgent situation when you have to take crucial investment decisions based on the current state of your finances.
By having this repetitive and tedious accounting function taken off your hands, you have all the time to focus on your core activity of business growth and expansion.
After taking the decision to outsource but before you really do so, be clear in your mind about the areas that you want to spin off although it is always advisable to outsource comprehensively –
Bank and Credit Card Reconciliation
This should be almost mandatory in your scheme of things. It will allow you to access your true financial status once you know that the bank account debits and credits are matched with receipts and payments in your cash book. You can also be sure that no fraudulent transactions have gone through and are outstanding in your books of accounts.
Accounts Payable & Receivable
If you take time savings as a motive to outsource real estate accounting, there can be nothing better than deciding to outsource accounts payable and receivable. The number of invoices that you have to deal with and keep track of otherwise will divert you fully from your business development plans.
Further, when outsourcing agencies take full control over your invoice management process, you can be sure that your cash flows and cash management will be in capable hands and there will not be any default in payments or receipts from invoices on due dates.
Outsourcing this function will free you from monitoring a tedious and repetitive task. Simply upload employee details and salary particulars and your payroll will be processed and data generated for salary disbursement including tax computation.
These are the main areas that you should compulsorily outsource. But make it a point to spin off accounting functions fully from data entry to data processing, from report generation to balance sheet preparation. Doing it partly will only lead to confusion in consolidation since two different entities like in-house work and outsourced work have to be brought together for the finalization of accounts.
One important thing has to be done before you outsource real estate accounting and bookkeeping. Many real estate players and agents have a common bank account for personal and business transactions. Compulsorily segregate the two first into different accounts.
Talk to the outsourcing agency and point out the personal and business transactions in the existing account so that future transactions can be taken forward from there.
Follow these simple steps before outsourcing your bookkeeping activity.
One of the leaders in real estate bookkeeping is Cogneesol Pvt. Ltd. We have systems in place that facilitate the process and enable us to deliver consistent and high-quality results. Get in touch with us at [email protected].
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