When Updating Your CRE Technology, Consider Your Accounting Requirements
Logan Paton | November 15, 2018
As a commercial real estate professional, you know that financial information is more than just making lines in a journal entry and preparing various monthly reports. Beyond that, clear visibility into industry trends and opportunities can be used to help speed up decision making, improve your cash flow, and even drive a business forward. Unfortunately, however, your ability to contribute can often be limited by a number of tasks that are both time-intensive and labor-intensive — slowing down the process immensely (or worse, stopping it in its tracks).
Commercial Real Estate Technology Development
This is where technology comes in. Regardless of who you ask, you’re more than likely to hear that the commercial real estate industry has, historically, been an industry that was somewhat reluctant to embrace change or new technologies. But times, they are changing — and not only changing, but also making up for lost time.
For example, in 2017, approximately $3 billion of venture capital was invested in commercial real estate technology, or CRE tech, according to data-driven content and research specialists, CB Insights. Additionally, as another marker of technology growth, the Massachusetts Institute of Technology’s Center for Real Estate is specifically tracking startups in this space, and now has a list of around 2,000 vendors in its proprietary database.
Accounting Integration with CRE Tech
As a brokerage or commercial real estate firm, when you get new technology, one of the things that you will need to consider is the accounting ramifications — not necessarily the cost, but the logistics. We spoke to a managing broker who reported an important concept to consider was the tracking and transparency required for reporting back to agents — and how this process was significantly different than the reporting required by his lender or partners for the entire brokerage and property management operation.
Additionally, your business (depending on whether your organization is privately or publicly held entity) can require significantly different levels of security and reporting detail. Regardless, an accounting and commission calculating platform should adhere to generally accepted accounting principles.
Further, brokerage revenue was just one piece of the bigger puzzle — although, admittedly, the most complicated to track, due to the agent split plans and the overarching mantra and philosophy of the brokerage industry to “just get deals done.” You will need to think about how you run your back office, not just how you track the commissions for your agents.
Utilizing an open architecture software versus a closed architecture platform can significantly reduce the brain damage of migrating data between systems.
Other questions that will need to be taken into consideration as you implement and automate your back office operations is whether you want to utilize a desktop application or a cloud-based server application (cost and security are typically the deciding factors in this decision). There are several advantages and disadvantages to both, so management should carefully weigh all of your options before making a decision.
Accounting Software Integrated With CRE Technology
With CommissionTrac, you can streamline your back office accounting and commission management. CommissionTrac was designed and created to remove the headache from managing brokerage commissions and bookkeeping. Our platform provides simple workflows and accounting journal entry automation for everything that happens once the deal closes.
CommissionTrac also integrates directly with QuickBooks desktop and online applications. Our platform is also written with an open architecture structure, making integrations with other software applications possible.
To find out how you can use technology to manage your individual receivables, commission plans, invoicing and distributions, please sign up for our blog at www.commissiontrac.com and learn why Techstars Atlanta selected CommissionTrac as their first CRE application for their intense 90-day mentorship program joint-ventured with Cox Communications.