Outsourced Accounting for Real Estate Businesses
As a real estate leader, you’re focused on managing properties, expanding your portfolio, and maximizing returns. Yet, the financial side of the business, including tracking income from tenants, managing depreciation schedules, preparing tax filings, and ensuring compliance with lease accounting standards, can be time-consuming and increasingly complex as your portfolio grows. These tasks often pull you away from strategic activities that drive growth.
Outsourced accounting and finance services can make a difference. By partnering with a team of real estate accounting experts, you can streamline your financial operations, ensure compliance, and gain deeper insights into your portfolio’s performance. With the right partner, you’ll have more time to focus on growing your business while maintaining financial clarity.
Introduction
Introduction
For many businesses, the challenge of keeping up with the intricacies of financial management, from regulatory compliance to strategic financial planning, can divert valuable resources away from their core objectives. This is where the concept of outsourced accounting and finance comes into play, offering a solution that not only alleviates the burden of day-to-day financial tasks but also empowers businesses to focus on growth and innovation. Whether you’re exploring the benefits of partnering with external financial experts for the first time or considering a fractional approach to enhance your strategic capabilities, understanding the scope, benefits, and dynamics of outsourced accounting and finance is essential.
The competitive landscape for CPA firms is demanding. You need to offer a wider range of services, cater to complex client needs, and navigate staffing challenges. According to a survey by alliantTalent, 74% of CPA firms are introducing fully remote roles, and 79% are using technology for basic tasks.
What is outsourced accounting for real estate companies?
Outsourced accounting involves working with a third-party team of accounting professionals with specialist knowledge in the real estate industry. These experts can handle everything from routine bookkeeping and accounts payable to advanced tasks like property cost tracking, tax optimization, and financial reporting.
Outsourcing also offers you a more flexible and scalable approach. Whether you’re managing a small portfolio or overseeing large-scale developments, outsourced accounting adapts to your needs. It’s a cost-effective way to access specialized expertise without the challenges of hiring full-time staff.
Learn more about our Real Estate Accounting Services.
Are outsourced accounting services delivered by a team or an individual?
In most cases, outsourced services are provided by a team rather than a single individual. This team-based approach ensures you have access to diverse skill sets tailored to real estate accounting challenges, such as lease compliance, fund administration, project cost tracking, and tax strategies like 1031 exchanges.
What are the key benefits of outsourcing accounting for biotech companies?
Outsourcing your accounting functions can transform how you manage your business. Here’s how:
Specialized Expertise: Outsourced teams include professionals who are experienced with real estate-specific challenges like lease accounting standards like ASC 842, depreciation schedules, and property tax compliance.
Scalability: As your portfolio grows or during peak periods like tax season or new property acquisitions, your activity levels and accounting needs will change. Outsourcing allows you to scale services up or down as needed.
Cost Efficiency: Maintaining an in-house team of real estate accountants can be expensive and leave you lacking the specialist expertise you need for less frequent transactions or events. Outsourcing lets you save on hiring full-time staff while still allowing you to leverage top-tier accounting expertise.
Focus on Growth: Outsourcing more routine tasks can free up internal resources to concentrate on expanding your portfolio and improving property performance.
What services does outsourced accounting include for real estate?
Outsourced accounting services are tailored to meet the specific needs of real estate businesses. Common offerings include:
- Bookkeeping: Accurate record-keeping for all transactions.
- Accounts Payable and Receivable: Managing vendor payments and tenant invoicing.
- Tax Preparation and Optimization: Ensuring compliance while identifying opportunities for savings.
- Budgeting and Forecasting: Strategic planning tools to allocate resources effectively.
- Lease Accounting Compliance: Adhering to ASC 842 standards.
- Project Cost Tracking: Monitoring construction budgets and expenses.
- Financial Reporting: Detailed reports for investors or lenders.
- Audit Preparation: Organizing documentation for smooth audits.
How do you choose the right outsourced accounting partner for your real estate business?
Selecting the right outsourced accounting partner is essential for the success of your real estate business. Consider these key factors when you’re evaluating potential partners:
- Scope of Services: First, define your specific accounting needs. Are you looking for specialized services like lease accounting under ASC 842, property cost tracking, tax compliance, or financial reporting? Or do you need support with day-to-day tasks like bookkeeping and accounts payable? Understanding your requirements will help you identify a provider that aligns with your business goals. Scrubbed offers a wide range of real estate accounting services tailored to your needs.
- Industry Expertise and Experience: Your provider should have a proven track record in the real estate industry. Look for professionals with experience with real estate-specific challenges, such as depreciation schedules, capital expenditures, and property tax compliance.
- Flexibility and Scalability: Real estate businesses often experience fluctuating activity levels due to acquisitions, development projects, or market conditions. Make sure that your chosen partner can scale services up or down to maintain consistent support while also meeting changing needs.
- Data Security: Your outsourcing partner should have robust security measures in place, like encryption and access controls. This also includes secure systems for data management and compliance with regulatory standards to protect your information.
- Cost-Effectiveness: Outsourcing can be more cost-efficient than maintaining an in-house team. But you still need to know that their pricing lines up with both your budget and the value they deliver in terms of accuracy, insights, and efficiency. Evaluate not just the fees, but the quality of insight, technology, and strategic value they bring.
- Client Reviews and Case Studies: Reviewing testimonials and case studies from similar real estate clients helps you get a sense of the provider's track record, how they like to work, and the results they produce for clients. For example, Scrubbed has successfully helped companies like Sightline Hospitality transform their accounting processes through outsourcing.
How can a real estate business effectively onboard outsourced accounting and finance professionals or teams?
Once you’ve found your team or professional, onboarding will go more smoothly if you keep these tips in mind:
- Establish clear expectations: During your initial meeting with the outsourced team, clearly outline your expectations, including the scope of work, timelines, how you prefer to communicate, and what kind of reporting you need. Define key performance indicators (KPIs) to track the outsourced team’s performance and the overall health of your accounting function. Maintaining an open feedback loop allows you to ensure the team is consistently meeting your needs and exceeding expectations.
- Share information: Securely grant outsourced team members access to your current accounting system and historical financial data. Provide basic training on your specific accounting software or internal systems if needed. Don’t forget to share any internal accounting protocols or workflows, like how invoices are approved or expenses are reported.
- Build relationships: Introduce your internal team to the outsourced accountants. This fosters relationships and ensures everyone knows who to contact for what.
- Set the team up for success: Establish a regular communication schedule with clear goals for each meeting to ensure a long-lasting and productive partnership. Discussing progress, addressing questions, and staying aligned are all crucial for success.
What are some best practices for working with outsourced accounting and finance professionals?
Collaborating with outsourced accounting professionals in the real estate industry requires clear communication, structured processes, and a focus on mutual goals. You can maximize the value of the partnership by adopting some best practices:
- Maintain Clear Documentation: Real estate accounting involves managing lease agreements, property valuations, depreciation schedules, and tax compliance. Keeping contracts, financial records, and accounting guidelines organized and accessible ensures accuracy. It reduces errors and makes for easier collaboration between internal and outsourced teams.
- Foster Transparency: Your outsourced team should explain processes and reports clearly, giving you deeper insights into cash flow, property performance, and compliance matters. Regular updates help make sure that their work continues to support your business goals.
- Establish Contingency Plans: The real estate market is volatile, and market shifts or operational changes are common. Your outsourced team should be flexible and scalable enough to adapt to changes, but make sure they have plans in place to manage transitions smoothly.
- Leverage Their Expertise: One reason for bringing on outsourced talent is to access specialized real estate knowledge. This is a great opportunity, so make sure you use their expertise to help streamline your operations and uncover growth opportunities.
- Regularly Review Performance: To keep everyone on track, it makes sense to periodically review your outsourced team’s performance against key metrics such as accuracy in financial reporting, compliance adherence, and timeliness of deliverables.
- Cultivate a Long-Term Partnership: Treat your outsourced team as strategic partners invested in your success rather than a temporary solution. If you share long-term business goals and foster collaboration, they’ll be able to better align their services to support your objectives. A strong, long-lasting relationship means your outsourced team builds up knowledge of your firm, and you can benefit from deeper insights into your financial operations.
What results can you expect when partnering with an outsourced accounting team for your real estate business?
Here’s what you can expect:
- Enhanced Financial Visibility: You’ll get deeper insights into your portfolio’s performance through detailed and expert financial planning and reporting. From cash flow analysis to property-specific profitability metrics, outsourcing can give you more data for better-informed investment decisions.
- Streamlined Compliance Processes: Outsourcing to real estate accounting experts reduces your audit risks and improves your compliance with complex regulations, such as lease accounting standards (ASC 842) and property tax requirements. Because they stay up to date on changes, you’re always well prepared.
- Optimized Cash Flow Management: Effective cash flow strategies are critical in real estate, where large transactions and variable income streams are common. Your outsourced team can stretch your dollars by allocating resources efficiently, managing construction budgets, and ensuring timely rent collection.
- Improved Investor and Stakeholder Relations: Accurate documentation and reporting can strengthen investor confidence, helping you secure funding or attract new investors.
- Greater Operational Efficiency: By delegating time-consuming tasks like bookkeeping, accounts payable, and tax preparation to experts, your internal team can focus on higher-value activities such as property acquisition or tenant relations. Internal teams can shift from clerical work to growth-focused activities like deal structuring, due diligence, or performance optimization.
How can real estate businesses measure the success of working with an outsourced team?
Ultimately, you’ll measure the success of engaging an outsourced accounting team through improved financial management, reduced risks, cost savings, and better strategic decision-making. Some ways to assess the effectiveness of your partnership include:
Accuracy and Timeliness of Financial Reports:
- Are financial reports delivered accurately and on time?
- Are there fewer errors or discrepancies in financial statements since engaging the team/professional?
- Do reports provide clear insights into the company’s financial health and performance?
Compliance and Risk Management:
- Is your company complying more closely with tax laws, regulations, and financial reporting standards?
- Has the risk of financial errors or non-compliance decreased since engaging the team/professional?
- Are there fewer audit findings or issues related to financial management?
Financial Analysis and Strategic Guidance:
- Has the quality of financial analysis improved, leading to better decision-making?
- Are there valuable insights provided by the outsourced experts that have positively impacted the business?
- Have strategic financial plans been developed or optimized since working with the team/professional?
Client Satisfaction and Communication:
- Are you satisfied with the level of communication and responsiveness from the team/professional?
- Do they proactively communicate financial trends, potential risks, or opportunities?
- Have there been improvements in collaboration and integration with your internal team?
Key Performance Indicators (KPIs):
Cost Savings and Other Efficiencies:
- Are processes more efficient and streamlined with the outsourced team
- Have there been cost-saving recommendations or strategies implemented by the team/professional?
- What are the long-term benefits of the engagement, such as improved financial stability, growth opportunities, or increased valuation?
Conclusion
At Scrubbed, we understand the intricate needs of real estate businesses—whether you manage investment funds, operate multifamily developments, or oversee construction projects. From fund accounting and compliance to reporting and budgeting, we bring clarity and expertise so you can focus on what matters most: growing your portfolio.
Contact us today to learn how our outsourced accounting services can support your real estate business!