A Clearer View of Property Health through SmartSource Accounting

An operator or owner of a small property management portfolio has many roles. At any given point in the day, he or she can wear different hats, from leasing apartments and keeping the books to swabbing the deck. Only with the luxury of having ample staff that specializes in each facet of business operations can the stakeholder really look at the overall health of the portfolio and make critical decisions. And if talk to most small portfolio owners and operators, you’ll find that they aren’t in the business of property management to explore their inner accountant. Number crunching isn’t for everybody and requires a specialized skill set. The forte of many property managers and owners is managing occupancy and residents with the goal of making profit. Without bookkeeping expertise, an owner may be resigned to practicing cash accounting – accounting for expenses as they are paid and revenue when payments arrive. But that doesn’t always give a true picture of company’s health, experts say. While the business may look good on paper by only applying cash or pre-paid transactions, the real story can be much different. Invoices that haven’t arrived or been paid aren’t reflected, creating a false sense of security. The portfolio may show a nice profit for the month using cash accounting, but a $25,000 invoice for roof repairs that hasn’t been paid for one reason or another, for example, won’t truly reflect the full obligation and how the company stands month to month or quarter to quarter. Picture of health is within the company’s true obligations The true health of the company lies within accrual accounting, says Kim Kowalski, vice president of SmartSource Operations at RealPage. But many smaller property owners and managers can’t always make it happen. They may overlook it or not have accurate knowledge. Or they simply don’t have time. “Owners have so many different roles to play in a...