Let’s kick off with some compelling stats.
First, a survey by Robert Half, an international human resource consulting firm, found that 91% of senior managers are struggling to hire in-house accounting staff. This has nudged more companies toward outsourcing finance and accounting (F&A) functions, particularly in property management. This is due to the need for specialized knowledge of real estate accounting and software tools.
Second, Grand View Research predicts that the accounting outsourcing market will grow at a 9.1% compound annual growth rate (CAGR) until 2030. This signals an increased adoption of outsourcing in property management companies looking to streamline their operations and scale their portfolios effectively.
Three, industry sources state there is a greater demand for rental properties over ownership and more of single families. single adults are seeking residential options, thus indicating evident expansion of property portfolios to match this need. This burgeoning growth will impact or rather bring in the need for property managers/ owners to excel in business operations and especially the management of own’s finance and accounting process. Regardless, of the asset class, the offshore service delivery model is set to grow.
This paints a clear picture—the future of finance and accounting (F&A) in property management is leaning heavily toward outsourcing. But what does this mean for your business? How can you leverage these developments for growth and resilience in these challenging times?
Let’s dive in and explore!
Is Your Property Management Company Operating at 70% Efficiency but Aiming for 90%?
When it comes to cost efficiency, outsourcing can be a real game-changer for property managers. By leveraging specialized external teams, you can simplify your operations, reduce overhead, and focus your resources on core business activities. In addition, accounting for property management requires a deep understanding of the segment and also specific software solutions for real estate like Yardi, RealPage, Entrata and many others. With the help of outsourcing, you can solve a dual challenge a) Gain access to top talent already proficient in these tools at a fraction of the cost of hiring in-house. b) Solve your resource issue created by the lack of specialized talent that is unavailable in your market. This approach cuts down expenses and boosts overall productivity.
Let’s break it down with an example.
Suppose you run a mid-sized property portfolio and outsource your accounts payable, receivable and tax management. Initially, you might find yourself bogged down by the quantum of accounting processes and reports you need to keep track of plus the frequent errors that arise and/or the stringent state-wise taxation and compliance norms you must meet to avoid lapse/ penalties. The mismanagement of these processes can lead to wasted time and money. However, after outsourcing, you could experience a 20% to 40% reduction in operational costs and a noticeable improvement in accuracy and efficiency.
Why does this happen? The resources you save through outsourcing can be redirected to more strategic business areas, such as acquiring new properties or improving tenant services. This shift helps your company not only meet its efficiency targets but also accelerate growth.
Are You Missing Out on 24/7 Access to Property Management Expertise and Advanced Technology?
Access to expertise and advanced technology can be a powerful element for property management companies. By outsourcing your finance and accounting functions, you’re not just saving money—you’re gaining round-the-clock access to top-tier professionals with in-depth knowledge of property management software solutions like Yardi, Rent Manager and more. These specialists work US hours, collaborate with your internal teams and help streamline your F&A operational process.
Instead of spending heavily on the latest software or hiring niche experts, outsourcing helps you tap into a pool of specialized knowledge and tools whenever you need them.
Let’s understand with an example again.
A property management company that outsourced its financial analysis and reporting found that it could leverage advanced analytics tools and expert insights in property management without the heavy upfront investment. This improved the accuracy of their financial reports and provided better decision-making for future property acquisitions. A few advantages the specialized offshore team brought about,
- Property Accounting includes end-to-end client accounting services tailored to the unique needs of all stakeholders.
- Bank Reconciliation to ensure accuracy and consistency between bank statements and financial records across all levels, using property management software tools.
- Accounts Payable to efficiently manage the Procure-To-Pay cycle.
- Expense Report Audit to streamline expense management and compliance
Is Your Property Management Company Struggling to Stay Focused on Core Business Functions?
Managing your core property management activities while handling all financial tasks can be overwhelming. This is where outsourcing can make a significant impact. By building an offshore support team to handle non-core tasks like accounting, payroll, and compliance, you can free up valuable time and resources to concentrate on what truly matters—managing properties, improving tenant relationships, and growing your business.
Think of it this way –
Instead of getting bogged down by the day-to-day financial tasks, outsourcing channels your energy into strategic initiatives that drive growth in your property management business. For example, a growing property management company outsourced its bookkeeping and tenant billing processes. This decision allowed its internal team to focus on expanding its property portfolio, leading to a 15% increase in rental income within a year.
Are You Confident in Your Compliance and Risk Management?
Improved compliance and risk management are crucial in today’s property management industry. Outsourcing your finance and accounting tasks can provide you with the expertise needed to solve these challenges with confidence. By working with specialized providers who stay updated on the latest state-wide regulations, you can ensure that your property management business remains compliant and mitigates risks effectively.
Now, instead of worrying about whether your company is meeting all property-related regulatory requirements, outsourcing taps into experts who handle these complexities daily. For instance, a property management firm that outsourced its tax compliance found that not only did it reduce the risk of costly penalties, but it also identified potential tax savings that had been previously overlooked.
Strategic financial insights and decision support are key to driving business growth in property management, and outsourcing can be a powerful way to access these critical resources. When you outsource, you’re not just getting financial reports—you’re gaining insights that can help guide your property management strategy.
For example,
A property management company outsourced its financial planning and analysis functions and started receiving detailed forecasts and scenario analyses. These insights helped the leadership team to make more informed decisions about tenant management and property acquisitions, resulting in a more agile and responsive business strategy.
Outsourcing offers the strategic support needed to turn the data into decisions that drive success in property management. It’s about empowering your business with the financial intelligence needed to stay competitive and thrive in a rapidly changing real estate market.
Finance & Accounting Outsourcing: The Future of Property Management Strategy
You might be curious about how your property management company can achieve the cost savings, expertise, and strategic insights we’ve discussed. The answer lies in outsourcing. But, it’s important to partner with a company that excels in property management finance and accounting.
One of the standout names in the industry is EXO Edge.
EXO Edge is a top offshore and scalability partner, for real estate property managers. With its clients managing over 2.3 million units, the numbers speak for themselves. 10 of the top 20 property management companies trust EXO Edge for their finance and accounting needs. It offers more than 50 services, backed by a high-caliber team of over 400 full-time, office-based property accountants. Their expertise spans category knowledge, domain expertise and industry-leading software like Yardi, Entrata, RealPage, MRI, Camy and more.
What sets EXO Edge apart is its commitment to quality and best practices. With global certifications like SOC2 and ISO:27001, it ensures client data and operations are secure. Their obsessive focus on the quality of people and service helps property management businesses implement best practices, scale adaptively, and reduce labor expenses.
If you’re ready to take your business to the next level, EXO Edge can be the partner you’ve been looking for!