Real Estate Property Case Study
PLEASE NOTE: Business Pipeline upholds the confidentiality of its clients. It’s why business owners entrust us with their accounting and business management needs. Given the proprietary nature of Real Estate Property, names and specific details have been omitted from the case study below.
With an absentee owner and a large commercial building, the owner needed a better way to manage the bookkeeping and documentation of all the paper files the building produced.
The accounting department was responsible for accounts payable, accounts receivable, collections and invoicing. The building was losing a few tenants and the ones still there were frustrated with several issues from accounting matters to property management concerns. As a result, many tenants stop paying rent or were paying the wrong amounts with miscalculation of rent escalations and profits started to dwindle.
The owner needed to get an immediate handle on a few issues:
- 1. Filing taxes for the last four years
- 2. Invoice tenants correctly and consistently
- 3. Collecting arrears from tenants
- 4. Digitize the building filing system
- 5. Adjust and or revamp policies and procedures in place to manage all operations
Landlord using ADP to pay the staff and unfortunately the payrolls were run several times a week with significant errors resulting in three or four payments for one pay period. It was hard at times to peel through the re-creation of several payrolls runs for one pay period that would now be entered manually into QBO.
Rebuilding books and doing current work as time passed was easier said than done since we could not overload the software with unprocessed data at one given time. We consistently had to stay under the threshold for the software to be able to do its job effectively.
With Business Pipeline (BP) business management and full-service bookkeeping services, we were able to conduct an audit and assessment to determine and needs of this significant asset. Working with the CPA BP was able to decide on the point to reconstruct the books. Going back four years with four bank accounts of which two had closed to reduce banking errors that were occurring like overdrafts. The staff was used to writing checks to pay all the bills. There was no filing system to quickly access or review records what had taken place outside of numerous paper files. Then finding the balance between back work and current work was equally important so at one point we’d be up-to-date.
Business Pipeline was able to train new hires since most of the current staff left willingly after learning of the changes that would be employed. The new team set out under Business Pipeline instructions to digitized all necessary paper files into a cloud drive. The individual data that were on each personal computer was reviewed and placed into proper folders by departments with subfolders needed for all the staff to access simultaneously.
Business Pipeline then using the bank statements as their blueprint found all the data gathered by the team started to process the transactions. All the leases for current tenants were reviewed to recreate all the invoices from 2014 to 2018 to process all the deposits.
Simultaneously BP set-up QBO Plus to start generating current rent invoices for the tenants to start paying their rents as the lease abstracts were produced. Where BP saw discrepancies in the lease abstract and current tenants rents, payment histories were requested to review where the differences occurred if any. For the tenants that no longer existed, the landlord was able to write off the loss of income if it correctly was not paid at the time of tenants departure.
BP created an employee handbook for the staff, redesigned a few daily reports and set up accounts receivable and payable procedures. Omitted 97 percent of the check writing and instituted online bill pay to generate most of the checks written. The new systems eliminated many accounting issues.
By using QBO Plus to retain supporting documentation as well as the cloud drive, the data files are in two separate cloud drives. Records are more straightforward to find. Now tenants and vendors reports are more accessible. The landlord has a better handle on operating cost to the building. Currently, no extensions required for filing tax returns. BP collected a significant amount of back rent, issued proper credits and implemented payment plans where needed.
Monthly Bookkeeping Maintenance
Business Management and Advisory