Why Outsourcing Property Accounting is a Smart Move

Did you know outsourcing property accounting can save your business thousands of dollars annually while boosting efficiency? Whether you are a start-up or a mature business, balancing revenue targets with building a robust back-office accounting infrastructure is crucial for measuring and supporting growth.  

Maintaining internal controls and producing reliable financial reports can divert management's attention from strategy implementation.  

Outsourcing back-office functions, such as property accounting, offers a practical solution. Discover how outsourcing your property accounting needs can enhance efficiency and support growth across diverse property types.  

What Property Accounting Functions Can Be Outsourced? 

Outsourcing property accounting functions, including senior-level roles, to specialized firms can streamline operations for real estate companies, private equity funds, and real estate investment trusts (REITs). These firms offer specialized knowledge in property accounting, entity structures, and capital stack layers, ensuring comprehensive financial management.  

You can outsource most property accounting functions for various investment entities, including: 

• Accounting for acquisitions, dispositions, or refinancings 
• Bookkeeping for the existing portfolio 
• Accounts receivable 
• Accounts payable 
• Cash management 
• Bank reconciliations 
• Payroll 
• Financial reporting 
• Audit Liaison  

An outsourced property accounting professional can create financial reporting with footnotes and provide all other necessary information to facilitate that audit. 

For private equity funds, outsourcing property accounting can be paired with outsourced fund administration, which includes accounting, tax planning and compliance, capital calls and distributions, and investor reporting at the fund level. (In a private equity fund, the outsourced accounting team can also support the calculation of cash flow waterfalls.) 

What Property Accounting Roles Can Be Outsourced?  

The specific accounting roles that can be outsourced include: 

• Controller 
• Systems Manager 
• Accounting Manager 
• Property Accountant 
• A/P Specialist 
• Treasury Analyst 
• Payroll Specialist 
• Bookkeeper 

As your company and its portfolio of investments grow, the outsourced staff is scaled to meet the increasing needs of senior management. The team is available just like any internal company personnel and an extension of your team. 

Benefits of Outsourcing Property Accounting 

Outsourcing property accounting to a specialized firm allows you to:  

• Focus on investment strategies, deal structuring, and maximizing property performance, rather than day-to-day accounting needs.  
• Leverage the knowledge of professionals who understand the intricacies of property accounting, entity structures, and capital stacks.  
• Reduce or eliminate overhead associated with in-house accounting teams, including salaries, benefits, technology, and office space.  
• Utilize cloud-based accounting systems for real-time reporting and enhanced accessibility.

How to Outsource Your Property Accounting  

Proper setup is crucial for successful outsourcing. Consider the following steps: 

• Define the scope and expectations clearly, outlining specific roles, functions, and reporting requirements. Specify which roles and functions will be outsourced and which will remain in-house.  
• Establish strong communication and governance through clear protocols for interaction and decision-making is crucial.  
• Complete initial review of accounting processes, controls, and technology, allowing the company and outsourcing partner to identify opportunities for improvement.
• Implement a phased approach that allows for process optimization and technology stabilization. 
• Designate a dedicated point person to manage the outsourcing relationship and establish a calendar for closing the books and financial reporting. 
• Make sure the outsourced property accounting team possesses the expertise and skill sets in real estate and property accounting, particularly in the types of properties and investment structures used by your company. 

It may take a few accounting periods to fully establish the data flow that will enable accurate bookkeeping and reporting. Processes and communications must be honed as technology is stabilized and then optimized. However, once up and running, the outsourced property accounting team can be scaled to support your real estate venture’s increasing deal volume and portfolio growth. 

Ready to transform your real estate accounting? Reach out to us now and discover how our expert property accounting outsourcing services can drive your growth and efficiency.