Developers rely on software to manage multiple interconnected processes, get data from various sources, and keep track of crucial dates for managing development projects.
Errors, omissions, and delays can be costly, especially when investors and stakeholders pay the cost as a result of any setbacks. Software designed specifically for Real Estate Development unites teams around consolidated, current project data, keeping projects on schedule, and reducing risks.
Understanding the differences between real estate development accounting software and conventional accounting programs, such as Quickbooks, is essential. Let’s take a closer look at some of the primary distinguishing characteristics.
Project Management & Cost Tracking
Real Estate Development Accounting Software provides a clear idea of how projects progress from various angles at any given moment. Executives looking for a project overview should be able to examine ongoing projects, their status, and recent and impending milestones. This includes costs to project completion.
Project data needs to be specific, listing all delivered items—completed and unfinished—as well as deadlines. Stakeholders, analysts, managers, and executives can all examine the development pipeline in as much depth as they’d like while keeping an eye on impending deadlines.
Regarding real estate development cost tracking and budgeting, it’s important to compare actual project expenses to budgeted prices at any given time. This usually occurs near the end of the month, before the books of an account for that time have been closed. This procedure is not used in traditional accounting systems. A real estate development accounting system should ideally provide a real-time snapshot of the actual task cost so that a project manager may compare actual costs to projections and make any modifications. Furthermore, project managers should be able to look at previous projects to compare costs and make decisions based on real accounting data.
Multi-Entity and Inter-Company Accounting
Most businesses are just that, a single business; therefore, their accounting software only needs to keep track of one business entity.
Real estate developers typically create an LLC (individual business) for each project which requires keeping track of many different entities simultaneously. Real estate development accounting software handles the many entities with a single sign-on to the software. It allows users to apply transactions to just some or all of the entities contained in the system with a single entry (inter-Company accounting).
Real estate development accounting resembles project management accounting in that project costs are allocated to individual contracts. As costs are incurred, they are allotted to the projects. Materials and labor may be included, but indirect costs such as insurance and, in certain situations, promotion and marketing may also be included. Traditional accounting software does not provide this ability – and for developers, it typically requires the use of other software applications or spreadsheets.
Because typical development projects are long-term, real estate development accounting must differ from other types of accounting. Developers may work on a long-term building project for months or even years, as opposed to ordinary business operations that are concluded in a single day or a single transaction. Over the course of the contract, project costs, scope, and revenue may change. As a result, the exact profit or loss connected with a job is unknown until the project is completed.
With so many factors at play, good accounting software has been developed over time to accommodate the real estate development industry’s specialized needs. Products such as Budgetrac provide developers with the tools necessary to boost productivity and accuracy with a modern cloud-based product. To learn more about Budgetrac or the distinctions between accounting for real estate developers and conventional accounting