Advantages of Outsourced Accounting for Commercial Real Estate 

Amid changing global and U.S. macroenvironments, the commercial real estate (CRE) sector must navigate a complex financial landscape. They must address changing tenant preferences and market risks while managing operational efficiency and business growth. CRE in a post-COVID environment also means staying up to date on rapidly evolving legislation and tax law.

One of the best tools that CRE firms have at their disposal is a sound financial strategy. This is accomplished through accurate, updated accounting and financial statement reports and the ability to analyze the numbers. When the financial strategy is maintained and operating well, CRE leaders can better deliver on partner reporting, more easily attract new investors, and focus on developing new business.

Three major challenges to achieving a sound financial strategy are lack of time, resources, and expertise. When CRE leaders can’t justify bringing a permanent, full-time finance executive on board or they need to better leverage their finance team’s time, Client Accounting Services can be an excellent solution. In many cases, a full or partial outsourced accounting model helps to create a more streamlined and efficient approach to financial management.

What is Client Accounting Services?

Client Accounting Services (CAS) is a suite of outsourced and/or automated solutions. Working with a CAS team can range from transactional services involving write-ups and reconciliations all the way to collaborative, advisory-based services, much like an on-call CFO. The goal is to help CRE firms proactively organize and direct financial business processes.

Transactional CAS solutions include but are not limited to:

• AP entry and review
• AR reporting
• Bank reconciliations
• Monthly journal entries
• Recording of bank transactions

Financial reporting CAS solutions include but are not limited to:

• Monthly/Annual financial statement partner reporting
• Monthly budget variance reporting
• Year-end audit assistance

2020 was an extremely challenging year for CRE firms. Many lost substantial revenue and most experienced payment delays and leasing issues. These issues appear likely to continue for some time. Whether a CRE property was in a distressed sector or a thriving one, there are unique financial and tax planning strategies that can help manage the volatility – if the right framework is in place. That’s where CAS comes in.

Advantages of Outsourced Solutions

Accounting for the real estate industry is a specialized skillset. Without the right expertise in place, a CRE firm is at risk of:

• Inefficiencies in the accounting process
• Lack of current, accurate financial data
• Delayed financial reporting
• Investor and/or lender issues

While many firms may believe they already have an automated accounting solution in-house, often accounting staff aren’t fully or properly trained on real estate accounting software. If it seems like the business is always playing catch-up or executives aren’t sure what the next year, or the next quarter, will bring, it’s probably time to invest in outside help.

For CRE firms, there are several benefits to working with an outsourced service provider on accounting-related functions. For one, CRE leaders have full assurance that CAS consultants are experienced and knowledgeable in the industry. There is no training or on-boarding and financial data can be accessed anywhere via cloud-supported software. Financial processes become more efficient and higher quality. CAS teams are flexible and can easily and quickly adjust course depending on current fluctuations in the marketplace. Plus, data is more secure thanks to robust cybersecurity tools.

This enables CRE executives to make real-time decisions with actionable insight. They can focus on growing the business, not on administrative accounting or bookkeeping tasks.

And, the cost is predictable and based entirely on need. If more, or less, support is needed, it’s easy to scale up or down as circumstances change.

What to Look for in a CAS Consultant

The best fit for a CAS team will be one that is deeply familiar with the nuances of CRE. They should understand the industry, its growth drivers, and impacts of federal or state legislation on the business.

Ask about the type of real estate experience and locations of other properties the CAS team assists. Ideally, the best fit will have experience in a range of sectors, like residential, commercial office buildings, real estate development, retail, and others. This provides the best possible foundation for financial support because it is based on expertise from several different areas of real estate.

In addition to knowledge of QuickBooks, Sage, Expensify, and SalesForce, choose a consultant who has experience in real estate accounting systems like Yardi Voyager, Yardi Breeze, and JD Edwards.

When to Look for a CAS Consultant

There is no one right answer on when to begin outsourcing a real estate accounting function; however, these scenarios may be signs that additional help is needed.

• If it takes longer than two or three weeks after month-end to generate reports
• If bank accounts aren’t regularly reconciled
• If investors aren’t receiving profit and loss information monthly
• If reporting isn’t fully automated
• If the firm recently experienced a merger or acquisition or has aggressive growth or restructuring plans
• If the portfolio or marketplace recently changed significantly
• If it’s difficult to find trained staff or the staffing needs are irregular

In addition to feeling overwhelmed or disorganized by an outdated or inefficient accounting system, issues like what is highlighted above can also give rise to fraud. A financial system without strong controls is susceptible to revenue leakage or bad actors.

CAS can play a key role in helping CREs grow. Utilizing the CAS solution helps CRE entities remain focused on improved property performance and high-quality prepared financial statements while allowing more focus on revenue-generating tasks such as growing the business, building business strategies, and reducing internal overhead costs.

The CAS team is flexible and can make changes on the fly based on client and partner needs, which is extremely beneficial in helping to manage current fluctuations in the marketplace. The ability to have accurate and up-to-date financial statements for CRE partners allows companies to understand and deal with any questions from lenders, lessees, or tenants on a real-time basis.

Contact Us

At Windham Brannon, we are committed to helping you find the best combination of outsourced finance solutions for your company. Contact Jodie Bartock and Rebecca Smith to discuss how Windham Brannon can assist your business.