How Property Management Companies Are Modernizing Financial Reporting

Property management runs on numbers that don’t behave like typical business financials. Revenue is received in discrete units, with varying timing, including partial and late payments. There are dozens of properties – many owned by different people, many have different reporting dates, and many have different fiscal years. A general ledger designed for a traditional business does not necessarily fit this type of business paradigm easily.

Such a disparity has become increasingly costly to ignore, as operating expenses continue to rise across the industry. The National Apartment Association’s operating cost research indicates that cost pressures will remain consistent across the multifamily market, and that expenses will continue to rise faster than revenue in several markets. Those sorts of margin pressures add to what is already a manual financial reporting process that can be very costly for property managers already inundated with staff.

Where Manual Processes Break Down First

Some patterns emerge readily at companies that are still using spreadsheets, or a relatively basic accounting program that was never meant to be used for that purpose:

• Owner statements assembled each month manually, pulling data from multiple sources into a single report per property.
• Cash versus accrual reporting handled through parallel, disconnected spreadsheets rather than a single system capable of both.
• Delinquency tracking that lives in a separate tool from the general ledger, requiring manual reconciliation.
• Portfolio-level reporting that takes days to compile because each property’s data lives in its own file.

None of these gaps are cataclysmic in and of themselves. They add up to a controller or accounting staff dedicating an excessive amount of each month’s time to data assembly instead of focused financial analysis—when owners and investors are asking the more penetrating questions of where margin is going.

The addition of time pressure only exacerbates the issue. Typically, owner statements and portfolio reports are due monthly, even if they take a long time to compile, so a slow manual process not only costs staff time; it also shortens the time they have to review their statements before the numbers get sent out the door. A team with an extra 3 days to set up data has 3 fewer days to detect errors or flag trends before an owner sees the report.

What a Purpose-Built System Changes

A property management ERP platform can overcome these challenges by incorporating multi-entity, multi-property reporting as a fundamental function and not an afterthought built on top of existing accounting software. All of these owner statements, delinquency tracking, and portfolio-level rollups use the same underlying data, eliminating the need to reconcile each month manually.

One thing to note is that while most accounting systems use the accrual method, many property owners and lending institutions request that this method be used instead. Sprinterra, a New York-based Acumatica ISV, has built out Acumatica cash-basis reporting specifically to address this gap, enabling property managers to generate accurate cash-basis statements without the manual, error-prone adjustments that a purely accrual-based system otherwise requires in every reporting period.

Consolidation Without Losing Property-Level Detail

Financial reporting is always about balancing the accuracy of property-level financials vs. the visibility of portfolio-level financials. While owners may be interested in the overall performance of their portfolios, each asset also needs accurate, auditable financial information. Systems that force a choice between the two are either all in one set of books or so separate that a portfolio report must be compiled manually.

Sprinterra’s work on Sprinterra focuses specifically on solving both sides of this problem simultaneously, structuring the underlying data so that consolidated portfolio views and detailed property-level statements come from the same system rather than requiring two separate processes maintained in parallel.

The Staffing Reality Behind the Decision

A lot of the push towards this change is not a software preference, per se. It’s about staffing. They are more difficult to find and keep on board than other accountants, and companies that rely on institutional knowledge to work around a weak system are at risk whenever a key employee goes on vacation or moves on to a new job.

The inherent complexity of the property accounting system will diminish the memory requirements for the spreadsheet used to create the report. That’s a significant risk reduction without any efficiency benefit due to a quicker report.

Deciding When the Shift Makes Sense

This isn’t something that every property management company should do right away. If you have just a few properties with one owner and are a firm that wants to stick with simpler accounting software for a longer period, you might truly be okay for a while. As portfolio size, the number of entities holding units, and the complexity of reporting increase, the calculation also changes, and at some point the cost of the manual approach becomes greater than that of a system built to accommodate the complexity. Companies that can make this evaluation proactively, rather than following a reporting mistake that has negatively impacted an owner relationship, will generally have a much smoother transition.

The companies that are most rewarded by a purpose-built system tend to use it as an opportunity to standardize the reporting process across the entire portfolio – and not just to duplicate an existing process that was inconsistent and time-consuming before, on accelerated software. Having standardization across all properties in a portfolio is as much a benefit as any individual feature offered by the new platform, since each property was established by a different person at a different time.