The Secret to Shortening your Financial Close Cycle
Month after month, year after year, financial close management is a dreary fact of life for real estate accounting staff. While it’s absolutely essential, there is little that’s creative or enjoyable about it.
Most companies still handle month-end and year-end closes using Microsoft Excel: 33-year-old software that remains useful, but for this particular task entails hours of copying and pasting trial balance data from the accounting system into spreadsheet tabs, reconciling the subsidiary ledgers to the trial balance and attaching supporting documentation.
Real estate accountants report that it can take anywhere from two to four hours to close each property. Which means that for a modest portfolio of 10 properties, you’re looking at 20 to 40 hours of drudgery every month.
But as Accounting Today reports,
“Old habits, including business processes, die hard — and for many organizations, the monthly close is the perfect example. While other accounting functions have applied technology to streamline and automate recurring tasks, the monthly close process has remained mired in inefficiencies.”
True, you can already implement third-party software that helps automate close management. But unless it’s integrated with your accounting software, it’s a half-measure at best.
Saving time through automation
Starting this month, RealPage Financial Close Management will automate the creation of month-end and year-end work papers. And by automate, we mean you click a button and the workpapers are done. There’s no error-prone, manual back and forth between the accounting system and sub-ledgers: the data is integrated with RealPage accounting, placed in the appropriate sub-ledgers and reconciled to the trial balance. All supporting documents are attached to the appropriate sub-ledger.
And there’s more: Workflow management will be incorporated as well. This means the software will track and document the flow from preparer, to reviewer, to approver. PMCs will be able to show owners and auditors a verifiable review process, with compliance and internal controls – something you don’t get with Excel.
The result is a complete history of closes, complete with all data, workflows and documentation, in one place. Not Susan’s laptop or Dave’s backup drive, but integrated right into the accounting system where it’s safe and accessible.
At the end of the year, it’s ridiculously easy to make all of this available to auditors, owners or lenders who need to see it. There’s no need to waste time pulling reports together.
Using technology to shorten your financial close cycle
A focus group helping to weigh the potential value of RealPage Financial Close Management agreed it will cut the time for closes at least in half. One client participant believes closes will take no more than one hour, vs. the two to four hours they currently require. And another large customer with hundreds of properties believes the solution will “revolutionize” the accounting function at his company and within the real estate industry as a whole.
Between now and the March 2019 introduction of RealPage Financial Close Management, your staff can revel in the fact that they might be experiencing the final days of the old-fashioned month-end close. Learn more!