Let's face it, these words describe the technology typically used by property management companies. The real estate industry is known for being slow to adopt new technology, compared to many other industries.
That is true and since its release in 1985, Microsoft Excel has been an important tool for business planning. A 2016 study by the Altus Group found that nearly a third of the global CRE industry still uses spreadsheets for asset and portfolio management.
This number represents up to $11 trillion in assets!
Four decades later and Microsoft Excel is still the primary tool for many property managers for:
- basic accounting functions.
- its ability to track rental income, expenses, budgets etc.
- manage the billing and reconciliation of CAM expenses.
But property managers need to process even more data than that.
When Excel doesn't Excel
Property managers that insist on using Excel for finance and accounting soon discover that they may be doing more harm than good to their business. Here’s how:
- Past the basic calculations, using Excel's more complex features such as macros and formulas, involves a learning steep curve. Even if you have employees that are proficient in its use, what happens if they're absent?
- In its own way, Excel is pretty robust but taking advantage of its many functions requires a lot of manual data entry. The downside to this amount of manual data entry, is the increased risk of costly human errors.
One research study by the University of Hawaii found that as many as 88% of spreadsheets contained errors and most caused by simple data entry mistakes.
I'm sure you can agree that when it comes to the financials of your business, a "little" input error can prove to be quite costly.
- For property managers managing multiple properties using massive spreadsheets, there could be hundreds of such errors hiding in the data. This means that you could be using inaccurate data to make important business decisions.
- Other than the option to password protect files, Excel lacks any appreciable security features. With hackers looking for company information to hold for ransom, your financial information needs better security than using a password like "1d13i18a10l!".
The ease of data entry also presents a drawback as easily manipulated spreadsheets can lead to original entries getting overridden. This eliminates any form of data integrity.
At its core, Excel is a valuable program; the spreadsheet function is great for organization, analysis and storage of data. It’s simply not up to the task when it comes to complex data calculation, management, data visualization and data communication.
At Admiral, we appreciate how valuable data security is to property managers, this is why we advise them to use a dedicated commercial property management software, rather than multiple disparate systems. One such software is our easy-to-use property management accounting software powered by Microsoft Dynamics NAV, Soft4 Real Estate.
Alternatives to Microsoft Excel
Accounting software users know you can't mention Excel without talking about QuickBooks, another favorite for tracking the accounting side of small business.
QuickBooks is great for general accounting, but like Excel, it has its limitations when compared to a property management software with an industry-specific accounting system.
Modern businesses, regardless of industry, are recognizing the need to collect (and assess) data. But using obsolete tools will do more harm than good. A better solution is to use a software that's designed specifically for the real estate industry.
In addition to accounting functions, you'll also get industry-specific tools to manage work orders, calculate CAM, store documents, generate comprehensive financial reports, share important information etc. A good tool will even integrate with any other software you already use.
Whether you start off managing your accounts with Excel or QuickBooks, the truth is you're better of using the righttool for the job, not the most popular tool.
Property management tools like Soft4 Real Estate provide users with a clear oversight of key aspects of their business, helping them make better business decisions. Built on the powerful accounting platform Microsoft Dynamics NAV, Soft4RealEstate is an all-in-one turn key solution to support your business growth.
By: Kat Wuethrich, Business Development at Admiral Consulting Group | firstname.lastname@example.org