Navigating accounting-related complexities as a real-estate owner can be challenging if crucial aspects, such as financial reporting and regulatory compliance, are overlooked or rely on traditional methodologies and systems to be completed.
As a result, the following challenges may emerge:
Manual and disconnected systems
Real-estate owners and portfolio managers still maintain important financial details using conventional tools, which can make it difficult to draw key insights that could help them tap into bigger, better revenue.
Legacy property management practices
Tasks, such as rent collection, is frequently done offline which often results in missed receipts, data inaccuracies, and non-documentation or inconsistent records of various charges.
Regulatory gaps
Most property owners are not equipped enough to adopt necessary regulatory standards such as IFRS (International Financial Reporting Standards).
Unskilled accounting
There is a gap in the understanding of how ownership splits should be handled, tax deducted and (or) income reported as most small- to medium-sized businesses employ accountants who lack real-estate accounting experience.
Not addressing these challenges, could result in:
Revenue leaks
Untracked utility bills, missed rent collections, and delays in issuing/following up on invoices could result in lost income and (or) reduce cash inflow.
Non-compliance
Improper reporting, coupled with lack of proper documentation could lead to compliance concerns and make it challenging to justify expenses or file taxes accurately.
Investor/Owner disputes
Without clear records, owner income splits become contentious.
Operational inefficiency
Manual reconciliations and scattered data consume significant time and labor.
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