Quickbooks was a godsend for businesses upon its creation nearly four decades ago. And while it remains good at what it does, limitations abound. If you’re consistently forced to create workarounds to solve problems, that’s a good indication you may have outgrown your software.
QuickBooks is an accounting software package developed and marketed by Intuit. First introduced in 1983, QuickBooks products are geared mainly toward small and medium-sized businesses and offers a general business accounting application that accept business payments, handle payroll functions, and manage and pay bills.
When it debuted, QuickBooks represented a sea of change in how small to medium-sized companies were able to conduct business.
Time for an upgrade
QuickBooks is an accounting software package that was designed for small- to medium-sized businesses. It’s an ideal accounting platform for businesses in their earliest stages of growth. It’s affordable and easy to set up. As such, it can hold your business back in more ways than one. Its limited scalability, manual processes and lack of specific functionality can create a barrier to success instead of paving the way for it. If you’re consistently having to use other programs such as Excel to build reports, it may be time to consider an upgrade.
There are many reasons why your corporate structure may soon need to become more complex if it hasn’t already. Typically, each of your real estate projects are individual LLC’s, with separate accounting needs. Although QuickBooks allows you to set up multiple company files, it doesn’t allow you to track multiple entities in one place. You’ll struggle to get a consolidated view of your corporate finances. Your business software should allow you to track these entities separately as well as to see an overall view of your business finances.
If you find that everything you do with regards to your books is taking up a significant portion of your day, it might be time to move to a more robust system. Or better yet, call in the professionals.
Dedicated software solutions offer more robust tools
Designed for entry-level businesses, QuickBooks has limited functionality and customization options. In contrast, dedicated real estate development software and Enterprise Resource Planning (ERP) systems are designed for your workflow or can be customized to ensure that your business software reflects the way you conduct your business.
QuickBooks doesn’t offer adequate flexibility in reporting. You need more than just the ability to run queries and see the results. It’s much easier to gather the business insight you need if you can also customize your reports to present the exact data you want in the format you prefer. You also need business software that provides visual, intuitive dashboards containing widgets that connect you to key performance indicators (KPI) and applications from inside and outside your organization.
QuickBooks is also not adequate because it lacks the specific features that real estate developers need to operate their businesses such as preparing loan draw requests, contract management, and an AP reviewal and approval process.
Documentation for QuickBooks is provided by its user community. Because of this, when a problem arises you typically have to review user responses, compare one with another and decide whom you trust most. You’ll then need to try the suggested fixes one after the other in the hopes of finding a resolution. However, a quality software solution will ensure vendor support. You can receive reliable assistance straight from the support staff and developers.
CRE developers need state-of-the-art project budgeting software
In the commercial real estate (CRE) development industry, developers are very dependent on project budgeting software. The best solutions in this space should give the project perspective as much attention as the financial perspective. All the software modules or functionality should be project aware, with each module providing the necessary project perspective to complement the general ledger perspective.
Independent perspectives are the key to addressing the real estate developer’s needs and reducing technical debt. In this way, the project perspective permeates the software design, and the developer gets to see the project from the top-down. Since most developers hire a general contractor and subcontractors to implement projects, top-down financial control is more critical than bottom-up details.
Nearly all job costing software emphasizes the subcontractor or general contractor perspective where the detail level drives the reporting. But success in the developer market comes from its ability to go beyond the details and show management top-level project status and the various detail levels that support it. The software solution must address the complete life cycle of a real estate asset: from project inception to project completion, and from pre-development to property management, in order to minimize budget debt and maximize profit, efficiency and client satisfaction.
Obstacles to growth
But even if you’ve kept detailed records in QuickBooks, you should know about a potential pitfall. With QuickBooks, there’s no audit trail behind your accounting data. Keeping accurate books is one thing. Being able to drill down to the reasons behind the facts is another. What you need is the ability to click through to see who made each transaction and when. You’ll then be able to identify the root causes of any financial irregularity.
Many investors will tell a smaller business that runs on QuickBooks to migrate to a “real” accounting system and establish an audit trail before coming back to reapply for funding.
This ties back to our original point: QuickBooks is a great option for small companies that want to get their feet on the ground with accounting software that’s affordable. But when you’re ready to take that next step in terms of productivity, growth, capital and revenue for your real estate development company, a specialized real estate accounting software package is a must.