Accounting is a critical component to property management. Ensuring that you know where every dollar is, whether it’s been collected or spent, is important for ensuring your owners - and you - get paid. There are two different ways property management companies can manage accounting: full cycle accounting or expense tracking.
Full cycle accounting is a comprehensive accounting system that records every financial transaction in a property management company. It ensures that all transactions are accurately recorded, categorized, and posted to their appropriate accounts to provide clear analysis and financial reporting. In other words, it provides a complete financial picture of a property's operations, from rent collection to property maintenance expenses.
Expense tracking only looks at money coming in and money coming out. In other words, did you collect rent and did you pay out management fees?
Using general expense tracking whether it’s done manually or on an app, does not accurately represent all that goes into managing a property. Manually tracking expenses has a lot of room for human error such as double entry and becomes time-consuming considering all the tedious processes such as copy/paste that come along with it.
Software that only tracks expenses leaves property managers and owners to look for more options on how to satisfy the rest of the accounting features needed to create full financial statements. Contact and building information is often disconnected from operations and accounting causing duplicate data entry across systems.
To manage full cycle accounting, property managers should look for a tool that provides a complete accounting system including a starting chart of accounts for each property, calculations to post rent roll, owner income payouts, management fees, accounts payable and receivable, account reconciliations, and approval settings to meet regulations.
Propra offers a full-cycle accounting software, designed to meet the unique needs of Canadian property management. This accrual-based accounting system includes:
- A starting chart of accounts maintained by each property and owner combination,
- Calculations to easily post rent roll, owner income payouts, management fees and more,
- Accounts payable and receivable to ensure money is flowing where it should
- Approval settings to meet regulations
- Automatic accounting transactions to reduce human effort
- Account reconciliations
- Reporting and budgets to make informed decisions.
Propra’s accounting system works directly with maintenance requests, information records including leases, and campaigns to reduce wasted time. With all existing building, unit, and resident information flowing cohesively through the Propra platform, rent rolls or unit expenses can be logged automatically to the associated contact or unit.
While expense tracking can help property managers keep track of money coming in and going out, it is an incomplete financial system that does not provide the detailed financial statements needed for informed decision-making. Managing full cycle accounting, in a system like Propra provides accurate records and the ability to analyze all financial transactions for properties helping property managers and owners make informed decisions, saving time and frustration.
If all of this sounds too technical or complex, don't worry. Professional bookkeeping services, including specialized property management accounting, are available. And also coming soon to Propra! Learn more and sign up for updates here.