Any job gets easier once you’ve got the right tools, and property management accounting is no different. But, do you really need accounting software that’s specific to property management to keep your books in order?
The short answer? Yes.
In this no-fluff guide, we’ll walk you through how to identify the best accounting solution for your business—regardless of budget and size. Let’s dive right in.
Before You Get Started…
Before we get in the weeds here, there are a few foundational topics you should be familiar with, such as structuring your bank accounts and understanding the accounting cycle. If you’re starting out, or just need a refresh, take a peek at our definitive guide to property management accounting to get up to speed.
Why Accounting Software for Property Management Is Non-Negotiable
You may be tempted to work off of a spreadsheet, and that may get you by—up to a certain point. But, for most property managers, spreadsheets simply don’t scale. Cash coming in and out of multiple properties needs to be regularly updated, and making sure the data is correct can be a painstaking process.
There are particularities to property management accounting that generic accounting software solutions can’t solve for—including rent payments, property fees, and different owner and trust accounts.
Property management software automates the redundant tasks that eat up most of your time, while keeping your books accurate.
Before You Shop: How Big Is Your Business?
At the end of the day, your business challenges really depend on the specific size of your business. How many doors do you manage? And what kind of properties are in your portfolio? Are they largely HOAs, single-family, or multifamily units?
If you’re a smaller operation, you may look for a simple solution with a few features that are quick and easy to set up. Larger businesses carry more complex and varied challenges that require considerable resources to implement. You’ll want additional support to ensure that you can track multiple transactions on any given day. Your staff may also need training to maximize software value.
Property Management Accounting Software: Generic vs Purpose-Built
Purpose-built property management accounting software serves all the accounting functions specific to the job and can also be integrated with software for other types of property management operations. While generic accounting software may be a quick and effective way to fill a single need (last-minute prep for tax season, for example), a purpose-built one can actually move your business forward and make it more profitable.
1. Start With Numbers You Can Trust
If you can’t trust your own numbers, you can’t reliably expand your business. For example, your financial records should always match those from your bank. One person cannot keep track of every rent payment, overdue fee, and maintenance expense.
Instead of manually triple checking every transaction in a spreadsheet, leaving yourself prone to human error, automate reconciliation with software that updates every transaction in real time.
The data can feed into balance sheets, cash flow statements, income statements, and other financial records that are always up-to-date. Automatic reconciliation is just one feature to look for. Let’s explore some others:
2. Set up a Property Management-Focused Chart of Accounts
The accounting ledger (or chart of accounts) is the primary source of data for financial analysis of your business, consisting of all your accounts and their assets, liabilities, equity, income, and expenses. It’s simply too risky to leave it open to human error, which is where software comes in.
The most effective property management accounting software records, updates, and categorizes your financial transactions accurately and quickly.
3. Stop Missing Payments—Automate Them
How are you keeping track of what you owe your company, property owners, and vendors? Property management-specific accounting software lets you keep all your accounts payable in one simple to use dashboard.
That cuts down the huge chunks of time it takes to manage, change, and pay off work orders, getting all those tasks done with just a few clicks. A sophisticated software will allow you to set up automatic payments and notify you whenever a payment is due.
4. Breeze Through Tax Season and eFile 1099s
Paying your contractors, brokers, and staff is already complicated enough. Come tax season, it gets more complicated with 1099-MISCs and 1099-NECs. When you automate your accounting, eFiling your taxes is quick and accurate.
Find an accounting solution that helps you get a head start on tax season—one that enables you to prep your forms before filing is open with the IRS so you can verify your tax numbers and missing information ahead of time.
The best accounting software for property managers allows you to create forms online for both property owners and vendors, postmark them, and track them in the same day.
5. Identify Areas for Growth
The best accounting software is one that not only saves you time, but provides a pathway for growth, as well.
Property management accounting software that gives you easy access and visibility into critical business stats such as revenue, turnover, and resident feedback, helps you make more informed decisions.
Those property management-specific insights will help you focus your time and energy on the right things at the right time.Generic accounting tools can’t get that granular.
6. Security During the Most Crucial Times
As a property manager, you’re constantly handling funds and other valuable assets from multiple owners and renters at once. Minimizing the risks that creates starts with reliable accounting security.
Look for accounting software you can trust to keep your books balanced on multiple fronts, whether their your own or your clients’.
Tools that both secure and simplify accounting for the team help you avoid any costly mistakes and protect your owners from the same.
7. Integrate With Your Existing (and Future) Technology
As your business scales, you don’t want to find yourself locked into software that silos your accounting information from your other tools. As you take on more doors and invest in new technology, you’ll either end up with a collection of different software that doesn’t “play well” together or one easy-to-operate system that actually takes work off your plate.
Let’s say you already have a website solution, call center software, or portal for residents. You’ll need an accounting solution that plugs right into those tools so you won’t have to manually run each system independently, train your team to use each, and share data between them.
Integrations are crucial to improving your workflow rather than making it more complicated. A disjointed tech stack will only cause more headaches, and be more costly than you think.
A good indicator is seeing if your accounting software has an open API and a publicly available marketplace that lists out their integration partners. These features make it easier to connect property management accounting software to new technology as you need to.
8. No Shady Business: Transparent Pricing
Some accounting software may provide a flat fee. Others will be on a sliding scale based on the size of your business. Some may even hide the price entirely.
Choose a solution that provides transparent pricing and tells you specifically what features you’ll get, at what capacity, and at what additional cost (if any).
Some software provides a free trial or product demo so you can get a good look and feel for the product before pulling the trigger. That can be a valuable perk to test if the software that you’re considering really fits your specific needs.
You may be in the position where generic accounting software seems like a good fit for your current needs, and, often it very well can be.
But a word of caution: if your business expands, you’ll inevitably outgrow the capabilities of most standard accounting software. Instead of dealing with the headaches of implementing new systems, choose a solution with product tiers that scale with the size of your business.
The #1 Feature Tenants Look For
According to the 2023 State of the Property Management Industry Report, residents prefer to pay their rent and fees online. Since rent collection is your primary source of revenue, automating that process can attract residents looking for a more convenient way to pay rent.
An effective online rent payment feature automatically notifies tenants when rent is due, keeps track of payment history, enables credit card and ACH payments, and ultimately updates your financial records.
So, What’s the Best Accounting Software for Property Management?
We understand that no two property management companies are alike, however, there’s some important capabilities that can benefit any business. To that end, we’ve put together this checklist of features you should look for. Keep it handy and we’re sure you’ll make the right choice in accounting software for your needs.
Buildium provides comprehensive property accounting solutions to keep your bookkeeping complete and accurate. Our accounting software offers all of these features, and reports all your financials to a single dashboard.
Read more on Accounting Accuracy