6 Tips To Improve Your Property Management Accounting

For property managers, keeping tabs on the financial side is very important. Property management accounting involves monitoring the financial aspects of owning and operating rental or association properties, including all associated income and expenses.

Property management accounting is a catch-all phrase including bookkeeping, rent collection, expense tracking, and financial reporting, ensuring smooth financial operation and that everything is accounted for.

It’s an important part of property management that helps you stay on top of your property’s finances, make smarter decisions, and ensure you’re following tax laws. Additionally, property accounting helps you identify areas where you can save money or boost income.

Handling this responsibility successfully requires precision, as mistakes can lead to inaccurate records, overspending, and potentially expensive financial losses.

Whether you are overseeing one property or many, mastering property management accounting is essential for keeping the business on track and financially healthy. To help you out we have compiled a list of six practical tips to enable you to do your property management accounting.

1. Keep Things Organised

Improving your property management accounting starts with staying organised. Rental property finances demand good organisational skills. When everything is neatly organised, creating clear metrics and tracking transactions becomes easier. 

Additionally, at tax time or during an audit, organised paperwork simplifies the process and can save you from the headache of scrambling for documents or missing important deadlines. 

2. Use Accounting Software 

Managing your property efficiently demands smart accounting practices. You can simplify your financial tasks with dedicated property management software. And this doesn’t have to be as expensive as you think.

There are plenty of different options, helping you avoid costly accounting mistakes and keep on top of admin, for instance being able to track tenant payments or providing a clear financial overview. In addition to this, many can integrate with other property management apps, making your workflow smoother and simpler. 

While most software has a cost, the software will save both time and money in the long run by automating tasks and reducing overheads. It also enhances tenant experience by offering various payment options and ensuring timely rent payments.

3. Optimise Your Accounting Approach

Two main accounting approaches are commonly used to manage the finances of a property – namely accrual accounting and cash accounting. Regardless of your choice, consistency is essential. 

When money is owed, accrual accounting keeps track of transactions, which helps you keep on top of late rent payments. Cash accounting, on the other hand, keeps track of transactions when money is paid and expenses are incurred, but may not give a full picture of overdue rent

For efficiency and clarity, choose the strategy that best suits your property management requirements and stick with it.

4. Pick Your Bookkeeping Method 

Following your choice of an accounting method, the next step is to choose a bookkeeping strategy for your property management. Maintaining accurate records is essential to understanding the performance of your property and implementing required changes. 

Single-entry and double-entry are the two standard options. While double-entry accounting, which is favoured by many property managers, records each financial transaction twice for improved transparency, single-entry accounting just records each transaction once. 

Be sure to do your research on each to find a suitable bookkeeping system that will enable you to monitor your property’s financial situation and make better decisions that will contribute to its success.

5. Create Accurate Financial Reports 

Accurate bookkeeping enables you to generate accurate and transparent financial reports. These reports are necessary for understanding your property’s financial situation and for making future plans. 

Your financial report should include a balance sheet, which details your assets and liabilities and tells you how much cash you have on hand. You can also understand where the money is going and how much is left over with a cash flow statement. 

Furthermore, don’t forget to include a monthly or annual summary of your profits on these income statements. All the details on these reports assist you with record-keeping and simplify the tax filing process.

6. Be Ready for Unexpected Costs 

Even if your tenants are reliable, unexpected costs like repairs or pest control can still arise, demanding urgent finances. Instead of panicking for money when these situations happen, it’s better to allocate a dedicated sum within your budget for them. 

Check your records carefully to see how much you might need, using past expenses as a guide. By planning for these costs ahead of time, you can handle unexpected surprises better, and keep managing your property without any hiccups.

Need Reliable Assistance in Block Management? Contact Habitare!

Accurate property management accounting is one of the most important duties in managing block properties, among other tasks. However, this task can become overwhelming, especially if you have a lot of other responsibilities.

This is where our comprehensive property management services can offer you invaluable assistance.

At Habitare, we have worked with countless property managers over the years, assisting them in successfully different responsibilities of property management. Additionally, we have a seasoned team of experts in marketing, maintenance, tenant screening, and accounting and tax issues. You can manage your duties with simplicity and raise the value of your property with our help. 

For any of your property management requirements, we are here to help you!

Check out our offerings here, and get in touch with us to find out more!