Many managers and investors are not entirely comfortable with the accounting and financial management components of their business or the real estate they would like to invest their capital into. While no single article can cover accounting and finance thoroughly, there are a few specific points that can be reviewed and will offer strong guidance regarding the condition of a project.
First, this article focuses on an operating property's current results. This article does not focus on a development project or new investment from the perspective of new management. With this in mind, the following tips suggested by Ms. Ateeya Manzoor (A Property Developer and Manager) are relevant:
1) The property should have a ledger of transactions that shows each and every transaction regardless of format.
2) "Paid the Visa bill" is not an accurate recording of the transactions. The accounting records will show a payment to Visa, but Visa should be a liability account with many transactions occurring potentially on that account. Additionally, the Visa bill will have a monthly set of finance charges and fees. Ensure that each payment with the Visa is fully recorded. This can be applied to all line of credit accounts or revolving credit accounts. This also applies well to petty cash.
3) Transactions fall in several categories including receivables or income transactions, expense transactions, capital cost transactions, capital receipts, capital distributions, liability principal and interest payments. Ensure each transaction is correctly recorded.
4) The account balances should tie accurately into the balance sheet.
5) The bank reconciliation should result in the account balance being exactly to the cash balance on the balance sheet.
6) The books should be closed on a consistent date each month. At the properties I've operated, we closed the books typically at the close of the 2nd full week of the month or later for the previous month. By taking this approach, we avoided conflicting with rent collections and provided a relatively slower operating environment for the work.
7) You should have a list of required compliance payments and reports made monthly, quarterly, and annually. In general, these payments are property taxes, payroll taxes, fees with the state corporation commission or equivalent. Additionally, most states have quarterly payroll tax reports to submit.
8) The accounting records should include a copy of project HUD1s or settlement sheets, copies of current and past loan documents, all long term service contracts.
Completing these steps will generally result in accurate books. Additionally, if all transactions are recorded in full any good accounting firm can quickly recover the books totally from this information. With these items in hand, the manager has what is required for accurate, effective, and producing accounting records. Further, keeping the records in good condition is much less difficult from this position.
Ateeya Manzoor is a Managing Director of Mayfair Management Group. She is a skilled strategic and risk manager and has worked on projects in the technology, legal, hospitality, property development, engineering, oil and gas and professional development industries.
Through her keen eye, Ateeya's core gift is to convert and fully realize potential. She has a unique ability to see things when others may not. Her talent is to anchor in businesses requiring structure or a fresh perspective. Clients value her vision and unrelenting commitment to delivering tangible results.
For more details, please visit here: http://ateeyamanzoorpost.simplesite.com
First, this article focuses on an operating property's current results. This article does not focus on a development project or new investment from the perspective of new management. With this in mind, the following tips suggested by Ms. Ateeya Manzoor (A Property Developer and Manager) are relevant:
1) The property should have a ledger of transactions that shows each and every transaction regardless of format.
2) "Paid the Visa bill" is not an accurate recording of the transactions. The accounting records will show a payment to Visa, but Visa should be a liability account with many transactions occurring potentially on that account. Additionally, the Visa bill will have a monthly set of finance charges and fees. Ensure that each payment with the Visa is fully recorded. This can be applied to all line of credit accounts or revolving credit accounts. This also applies well to petty cash.
3) Transactions fall in several categories including receivables or income transactions, expense transactions, capital cost transactions, capital receipts, capital distributions, liability principal and interest payments. Ensure each transaction is correctly recorded.
4) The account balances should tie accurately into the balance sheet.
5) The bank reconciliation should result in the account balance being exactly to the cash balance on the balance sheet.
6) The books should be closed on a consistent date each month. At the properties I've operated, we closed the books typically at the close of the 2nd full week of the month or later for the previous month. By taking this approach, we avoided conflicting with rent collections and provided a relatively slower operating environment for the work.
7) You should have a list of required compliance payments and reports made monthly, quarterly, and annually. In general, these payments are property taxes, payroll taxes, fees with the state corporation commission or equivalent. Additionally, most states have quarterly payroll tax reports to submit.
8) The accounting records should include a copy of project HUD1s or settlement sheets, copies of current and past loan documents, all long term service contracts.
Completing these steps will generally result in accurate books. Additionally, if all transactions are recorded in full any good accounting firm can quickly recover the books totally from this information. With these items in hand, the manager has what is required for accurate, effective, and producing accounting records. Further, keeping the records in good condition is much less difficult from this position.
Ateeya Manzoor is a Managing Director of Mayfair Management Group. She is a skilled strategic and risk manager and has worked on projects in the technology, legal, hospitality, property development, engineering, oil and gas and professional development industries.
Through her keen eye, Ateeya's core gift is to convert and fully realize potential. She has a unique ability to see things when others may not. Her talent is to anchor in businesses requiring structure or a fresh perspective. Clients value her vision and unrelenting commitment to delivering tangible results.
For more details, please visit here: http://ateeyamanzoorpost.simplesite.com
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