The Role of Property Management Accounting Software

Keeping track of money for property managers is super important. If they want their rental business to do well, they need to track finances carefully and quickly. But mistakes can happen easily if they rely on old-fashioned ways like writing stuff down on paper or using spreadsheets. These mistakes can waste time and end up costing them money. A missed payment here, a transposed number there, and even the most organized manager can slip up.

Fortunately, modern advancements in API integrations between property management accounting software now allow for seamless, automated accounting that all but eliminates human error. Property managers can gain new accounting accuracy, efficiency, and insight by automatically syncing data like rents, invoices, and payments between platforms.

Everyday Accounting Tasks Prone to Manual Error

With or without a property management solution, property managers handle a diverse array of critical accounting tasks daily. This includes core functions like collecting rent payments, tracking maintenance expenses, creating monthly tenant invoices, depositing owner distributions, and generating financial reports.

Traditionally, these tasks were handled through an array of manual processes. Rent checks were logged in paper ledgers. Invoices were created individually from templates. Reports were compiled manually using spreadsheets. The problem is that the risk of human error compounds dramatically with so many manual touchpoints.

It’s easy for small mistakes to slip through the cracks unnoticed. Even vigilant managers operating optimally make occasional errors. A rent payment is accidentally logged to the wrong unit, causing that tenant to appear delinquent. Numbers on an invoice or report get inadvertently transposed, leading to inaccurate financials. Monthly distributions get issued based on faulty rent collection data. Such mistakes can lead to delayed payments, compliance issues, and aggravation for property owners, tenants, and staff.

According to a survey by JTurner Research, human error causes over 60 percent of data inaccuracies in manual business processes.

The Solution: Automated Accounting Integrations

Fortunately, modern property management accounting software practically eliminates manual errors. By automatically syncing data between platforms in real-time, accuracy is no longer dependent on error-prone manual processes.

For instance, when a tenant submits a payment online, that rent amount is instantly logged appropriately in the property management solution and integrated accounting software, with no human touch points.

Popular property management software like AppFolio, Entrata, and Propertyware offer robust accounting integrations that enable these benefits:

• Automated rent payment tracking from online tenant portals
• Automatic invoice generation based on scheduled rents
• Bank feed connectivity for up-to-date balances
• Instant record syncing across platforms
• Consolidated general ledger

With core accounting data syncing automatically in the background, managers are freed from tedious and repetitive manual entry. There is no longer wasted time hunting down discrepancies and errors between systems. Data accuracy and transparency are improved for all stakeholders, from owners to tenants to staff. Higher visibility enables more informed business decisions.

According to Entrata’s 2022 Property Management Software Buyer Report, 68 percent of prospective buyers rank accounting integrations as an ‘essential’ feature in their buying decisions.

Tangible Benefits of Automated Accounting

Besides eliminating common human errors, commercial property management software provides a range of tangible benefits compared to manual processes:

• Automatically apply late fees and recurring charges based on set criteria.
• Instantly generate and email invoices to tenants through integration.
• Maintain consolidated ledgers across multiple properties for at-a-glance reporting.
• Import bank transactions to automatically match with rent payments for up-to-date fund tracking.
• Gain deeper insights through custom report building across accounting and PM data.
• Eliminate up to 15 hours per week previously spent on manual reconciliation.

For large enterprise property management firms, property management software is incredibly impactful. Portfolio accountants and asset managers can access a consolidated view of key metrics across all properties and markets. This enables better-informed strategic planning using holistic and accurate financial intelligence.

According to research by JTurner, companies can achieve over 90 percent reduction in financial close cycle time using automated accounting tools.

The Future of Property Management Accounting

Property management has reached a tipping point where automated accounting processes are quickly becoming the norm rather than the exception. Newer property management software is designed with seamless accounting integrations at its core, while legacy platforms are rushing to add integration capabilities.

Owners and investors increasingly demand detailed visibility into financials and compliance that integrated accounting enables. Operational efficiency continues to be squeezed as margins tighten across commercial and residential real estate. Tackling the last remaining manual processes through software automation makes sense.

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