Real property development and management is a complex endeavor. From purchasing land and financing transactions, to managing the building and construction process and eventually leasing or selling the property, the business of real property development involves many moving parts.
That’s why operations must remain as streamlined as possible.
One way developers and managers can simplify their business operations is through outsourcing their accounting function. Outsourced accounting offers a multitude of benefits and allows developers to focus on what matters most—maintaining and growing their business.
The five major reasons why developers should consider outsourcing their bookkeeping function are as follows:
1. Financial Continuity
As staffing challenges continue to impact the business environment, staff turnover also remains a major concern for most businesses. Outsourced accounting allows for stability in staffing while saving employers time and money they would have otherwise spent on finding and training qualified candidates.
Working with an outsourced accounting team also can help ensure the continuity of the financial function despite internal staff turnover and prevent in-house financial professionals from taking their expertise out the door with them while employers search for a replacement.
2. Employee Risk Mitigation
Outsourcing the accounting function can help eliminate risk associated with poor internal hires. Through partnering with a trusted third-party accounting firm, developers can better protect against financial risks like employee fraud and ensure that they maintain financial compliance.
3. Scaled Staffing
Outsourced accounting services allows for the function to grow along with the developer’s portfolio. As a developer’s business expands, their outsourced accounting partner can increase staffing to meet their growing needs while saving developers from having to spend time, money and energy on seeking and onboarding new staff.
4. Improved Business Processes and Controls
Through outsourcing and involving a trusted third-party in their operations, developers can improve their business processes and controls. Outsourced accountants can more easily identify compliance issues or human errors than in-house accounting professionals due to the objective nature of their involvement in business affairs.
In addition, they are also able to lend an experienced, outside point of view and address any deficiencies in a business’ current financial processes.
5. Real-Time Access to Key Metrics
Outsourced accounting services provide developers with access to metrics that matter. These key metrics can drive better business decisions and allow developers to provide timely and accurate information to project stakeholders.
Furthermore, outsourced accounting firms’ advanced technology and manpower provides clients with access to real-time reporting, without waiting for a developer’s internal team to provide this data.
Despite these benefits, developers may still be hesitant to outsource their accounting function due to apprehension about the costs associated. However, outsourcing is a cost-effective option that can help developers minimize costs associated with hiring full-time accounting employees. Hiring in-house accounting professionals involves steep costs associated with compensation, benefits and more.
On the other hand, outsourced services are often less expensive and typically assign a fixed fee for customized project services, meaning developers only pay for what they need.
As an alternative to outsourcing their entire accounting function, developers can choose to simplify their business operations by outsourcing only certain aspects of their accounting functions such as accounts payable processing, bank account reconciliations, cash flow management and planning, budgeting/forecasting and strategic planning.
Partnering with a third-party and outsourcing financial functions is an effective way to simplify business operations—allowing property developers to dedicate more time and resources to building their business.
Simply put, outsourced accounting provides stable staffing, mitigates risk associated with poor internal hires, allows developers to scale staffing quickly and efficiently as their business expands, improves business processes and controls and enables access to real-time metrics that matter. With all of these benefits, there’s little reason not to incorporate it in your business model.
Cheryl Prout is a partner in The Bonadio Group’s Small Business Advisory practice. Cheryl is also a leader in the firm’s Estateand Trust team, as well as a member of the Outsource Accounting team and the Real Estate team. She brings nearly 30 years of experience to the firm.
Like what you're reading?
Subscribe to our FREE newsletter and we'll deliver content like this directly to your inbox.