The Top Challenges Faced by Real Estate Accountants and How to Overcome Them
All industries have challenges and issues. Some of these challenges are universal that face all businesses, such as finding qualified new hires. Other challenges though are specific to industries, especially as operations or procedures change. The accounting industry has several challenges that are facing it, such as technology or public policy. On the technological front, new systems are becoming available to accountants and the public that dramatically reduce the time needed to input data into books. This means that accountants now have a new competitor, AI-based systems. From a public policy perspective, tax policies are constantly changing, whether it is on the national, state, or local level. Accountants, from general accountants to real estate accountants, must deal with all of these challenges in order to provide their clientele with the highest service possible, while taking advantage of new opportunities that arise from the changes.
Technological Challenges
Like many industries, technology has begun to have a large impact on the accounting industry, regardless of the type of accounting a firm offers. Today AI-based systems offer more options in completing the mundane functions of input of data. Some systems are sophisticated enough to automatically calculate changes and directly input that data into the entry points on all financial documents. This form of technology has changed the process so much that some businesses, investors, and organizations are not using their accounting firms’ services as much as they might have used them in the past. Whether the inputs are everyday inputs, such as a regular expense or the firm is dealing with a rare credit that might only be used once. The systems automatically calculate and input the data with little human interaction.
In some situations, this technology change will allow accounting firms to handle larger amounts of data to reconcile. Real estate investors and businesses will often have a large number of transactions or the frequency of transactions in any period of time. This function can allow a firm to offer faster service to their clients. But it might be a double-edged sword, as technology can automate these functions that the client may not require, with less input service. What the client might need now is more advice or consulting services rather than help with numerous accountings of transactions. A firm that offers to help with the frequency of transactions, the accurate inputting of the data but also the advice of managing the investment is what may be best for a client. This is true regardless of the type of service the client wants. This means that clients want and need more advice on managing investments in real estate or issues related to real estate, such as tax issues.
These challenges have impacted some of the traditional operations of an accounting firm and as implied new opportunities are appearing in the industry and field. Moving forward, the services that an accounting firm offers will become a larger differential in the industry and between firms. Indeed, the advice services of an accounting firm have always been a major selling point of a firm. A firm that can analyze an investment, whether in real estate or business, will be the firm that succeeds. The forms of advice can take multiple shapes. A firm might be offering advice on how an investor can save money on property taxes by ensuring that the real estate an investor owns is properly classified. Classifications of real estate or zoning of real estate can vary greatly between property that is side by side. If a firm can offer advice on how a piece of property can be classified, they could offer their clientele a greater service and possibly save the client some costs. Sometimes these types of issues are overlooked by owners, accountants, and others involved in the project, as the property might have changed over the time of ownership, such as through improvements. It is through this type of knowledge and insights that the accountant can add value to their client using their services. Additionally, offering to regularly review investments, positions, expenses, and revenues will allow firms to provide their clients with a higher level of service. The additional services will allow firms to make stronger more concrete connections with their clients and will often lead to the accountants becoming the “go-to” advisor for all financial decisions regarding all investments. This means moving forward the accountant will become the trusted advisor and not just a financial service firm inputting data into a spreadsheet.
Summing It Up
Accountants, whether they are real estate accountants or general accountants, face several challenges as the industry moves further into the digital age. Technology is beginning to have a larger impact on the industry. Artificial intelligence is beginning to change the industry as more systems become automated. Technology has forever changed the data entry of information in financial accounts and accounting. Systems will now take data from the moment it is generated, say from a receipt for services rendered on a piece of property, and automatically populate every data point that that expense will affect in the books of the investor or firm. These changes are improving accuracy in the accounts and decreasing errors. Additionally, it helps both the investor or the client and the firm with the time needed for managing the books. This means that both clients and accountants will have more time to focus on advice and discussions of the financial situation. This is an example of the greatest change these challenges are bringing to the industry, the ability to become a trusted advisor to the client. Moving forward as technology improves the speed with which data is entered into the accounts of a client, smart firms will take advantage of these changes and offer their clients a more important service, advice on managing accounts. The game changer for accounting firms, whether they are in real estate or general business operations, will be if the accounting firm can become their clients' trusted advisor, using the financial books to assist in helping clients make better more informed decisions. For more information on this topic, check out the following links:
https://www.accountingseed.com/resource/blog/top-7-issues-accountants-face/
