If you run a real estate business or work for a firm that deals in properties, then you probably know the importance of real estate accounting software. A comprehensive accounting app can make the job of brokers, real estate agents and processors are much easier and quicker. It helps them keep track of income, expenses and a host of other information that can be used to offer better services to customers
Types of Real Estate Software
There are five types of real estate accounting software that are used in the industry. Each type is used for different operational purposes. The most popular types of accounting software include the following.
Real Estate Transaction Management Software
The software is used by Asset Managers and Investors who deal in properties for generating cash flows. It helps forecast return on assets and income streams over a period.
For example, if you invest in a property and want to calculate cash flows at a certain interest rate, the software can quickly crunch the numbers on a monthly basis for you. On the other hand, if you want to charge a certain amount of rent each month, the software will tell you the exact rate of return on investment.
The transaction management software helps real estate investors improve the efficiency of their investment.
Real Estate Accounting Software
The pure accounting software is used to manage the ledger accounts and for recording expenses and income. They are the most common type of programs and used by almost everyone in the real estate industry.
The accounting software is also used to track any expenditure you make on a property for maintenance or upgrades. Real Estate professionals record marketing and admin expenses on the accounting software as well as the expenses they incur for prospecting on a client’s behalf. Commission income is also recorded on the software and it forms the basis of tax returns.
Customer Relationship Management Software
The CRM software does not fall directly under the umbrella term ‘accounting software’ but it is closely related to other management programs. The CRM is used to generate leads and prospects that the real estate agents nurture and convert into active client accounts.
While it is possible to generate sales without the CRM software, you would be relying completely on chance and hope that a customer approaches your agents on their own. The CRM software helps you build a database of potential leads and contacts that will drastically improve your sales team’s efforts.
Real Estate Investment Processing Software
Special database platforms are used to turn regular loans and home mortgages into specialized security packages that can be traded on Wall Street. The programs help create database files in the form of packages that can be purchased by institutional investors in the market.
Benefits of Real Estate Accounting Software
The advances in digital technology have made it much easier to develop and implement accounting software for real estate businesses. For example, the ability to update the accounting database through cloud accounting software will allow better coordination between staff members. The five major benefits of accounting software for real estate business are outlined below.
1. Well designed real estate accounting programs make it easier for agents and processors to record information or generate bills and invoices. A lot of software use automation where information entered in one column is automatically filled in the other relevant columns as well.
2. The real estate accounting software makes it easier to organize records in the central ledger and search through them quickly. A real estate firm without any accounting software would be severely restricted in its ability to grow operations beyond a certain point.
3. The ledger records created through accounting software can be stored in multiple locations for better security and reliability. All it takes to create backup records are a few clicks and data can be easily restored in case of accidental damage.
4. Modern Accounting Software offers synchronization where multiple sales agents can work on the same client to update different information. For example, suppose a broker is working with a client in the field and shows them a property that the client signs up to buy. The broker gets the client’s e-signature to seal the deal and the record is updated via their mobile device. The client then makes an EFT through their bank to the real estate agency that is received and confirmed by the firm’s accountant sitting in the office. This kind of real-time coordination is only possible with real estate accounting software platforms.
5. Accounting software can also improve your business profitability by decreasing processing times and ensuring accuracy for your business transactions. Since many of the functions are automated, the staff can focus on core business operations.
6. Real Estate accounting software also helps you calculate the accurate financial position of your business with the help of analytical tools and ratios.