The business of real estate and property management can be very difficult to manage if you don’t define the niche you are; this is because, real estate isn’t all about developing properties and reselling to potential buyers, it also entails sourcing and managing tenants on behalf of property owners, or acting as a middleman between interested parties who would like to execute high-ticket transactions for a commission.
These categories of real estate businesses require a different accounting system and financial reporting. For instance, accounting for a real estate broker requires effective recognition of commission income after deducting direct expenses like advertisement on dailies, or any other relevant direct cost. This is totally different from a real estate manager who is interested in tracking rental payment from tenants, receivables on overdue rent, remittance to property owners, service charge collections and maintenance fees.
As of this write-up, our team had just concluded QuickBooks setup for a fast-growing real estate developer in Lagos, Nigeria – they acquire a large expanse of land from families, clear the land and re-package the virgin land into an estate land, process the necessary papers like excision, survey, C of O and resell to interested buyers.
Request For Our Accounting Software ServiceFor over 5 years, we have implemented QuickBooks for several companies under Retail, Manufacturing, Oil & Gas, Real Estate & Construction, Travels, Hospitality,Legal, Co-operatives, NGOs, Financial & Service Sectors.
- Mbaire Services Nigeria Ltd(Construction)
- Chisco Transport Limited(Transport)
- Lounge38(Hotel and Bars)
- CTRL System Technologies Limited(Procurements)
- Aristokrat 360 Limited(Creative & Media Agency)
- Alpha Pharmacy (Health Care & Supermarket)
- Ericsson Nigeria Multipurpose Co-operative Society (Co-operatives)
- Fastanet Limited (ICT and Security)
- Britanic Maritime (Maritime Service)
- CEO Business Limited (Salary Advance, Credit Finance and Loan)
- OneHealth Pharmacy (Health Care)
- Olpharm Pharmacy (Health Care & Distributor)
- Hawkes Legal(Legal)
- Kantessa Limited(Fashion Store)
- OPI Nigeria International Limited (Oil & Gas Servicing)
- Zenilum Company Limited (Oil & Gas Servicing)
- Lilygate Hotel(Hospitality)
- Benstel Nigeria Limited(Bottle Water Production & Distribution)
- Paraclete Nigeria Limited (Bottle Water Production & Distribution)
- Josien Holdings Limited(Distribution)
- Aisha Buhari Foundation (Futured Assured)(NGO)
- Doheney HR Services(HR)
- Insights Limited(Health Consultant)
- Biddel Oil & Gas Limited (Oil & Gas)
- System Intelligenz Limited(Contractor)
- MagTech Information Security (IT)
- Infusion Cakes Nigeria (Bakery)
- Landmark Centre (Event Centre)
- M.D School (Private School)
- Travel Options (Travels)
- Logos Travel Support & Solutions Ltd (Travels)
- Germaine Auto Centre (Autos)
- Starlight Nigeria (Retail)
- Temple Private School (Education)
- Value Mart Supermarket (Retail)
- Transweb Bureau De Change (Financial Service)
- Vektro Food Limited (Manufacturing & Retails)
- Orient Petroleum PLC (Oil & Gas)
- Plus More
The whole essence of engaging us was to help design an automated accounting system that will track all cash inflow and direct cost on their various real estate projects so that they can ascertain the profitability of all real estate transactions.
Here Are Quick Tips On How We Deployed Quickbooks Starting With The Project Requirements:
- List of banks and their respective balances: every cash inflow from buyers on property purchases and payment to sub-contractors or service providers goes/come from the bank and such, we requested for a complete list of operating banks in local and/or foreign currencies so we upload to the Chart of Account and generate real-time bank statement.
- List of clients/customers and their receivable balance (including the properties on which these balances were owed): This is important for us as we weren’t only interested in the client’s receivable balances, but a simpler to segment their receivables by properties. In addition to the outstanding balances on property purchase, we also requested for pending payments on the survey, developmental fee and deed of assignments.
- List of real estate on offers: This is the key revenue driver of the real estate developer, so it makes sense to upload all the properties on sale and set them up in such a way that users can categorize all invoices and direct cost to properties.
- Sub-contractors/service providers and their payable balances: every land acquisitions come with clearance, dredging and construction of walls around it. These, in addition to other related expenses, are examples of direct cost incurred on these properties and when full payments aren’t made to the sub-contractors, it leads to a payable balance which should be properly tracked until they are settled.
- Equity share capital: For real estate developers with an audited record of their previous financial year’s transactions, it is easier to find the equity share capital of the owners, but for a growing business with unorganized record, QuickBooks compute a share capital that is equal to the net of assets over liabilities.
- Standard chart of accounts: Although, QuickBooks accounting software has default charts of account for different industries – a simple design that categories all your transactions to income, expenses, assets and liabilities. We always like to know whether the client already has existing charts with account codes.
The invoice window lets you record all the sales of real estate land, including receivables on the deed of assignment, survey, and development levy. It also gives you option of stating the terms of payment (for properties with instalment payment spread for a specific number of months).
To see how a typical invoice is processed in QuickBooks and the overall effect on their financial report, see this screenshot below:
The above invoice captures all the relevant information a real developer needs to track expected cash inflow; the property type/location (A), name of the buyer (B), the number of plots sold (C), the terms of payment (D), the sales rep that won the deal (E) and the total amount receivable throughout the payment period.
As customers/client make the necessary one-off or instalment payment directly to the bank account, there is a simple “Receive Payment Window” that lets you record all inflows against the customers’ receivable balances.
Tracking the cost of acquiring the land from a family, clearing and repacking the estate land sales/development, is as important as invoicing, so that management can ascertain a realistic profit or loss of a project.
QuickBooks “Write Cheque” lets you monitor all these direct costs and the banks from which payment was debited.
Account Receivable Report:
One of the most vital financial reports of a developer is “Account Receivable by Properties”. Simple information displays money owed on different real estate projects and clients that owes them. With this, they can easily plan their cash flow on each project.
Profit or loss by Project:
This is another important financial report that tracks the profitability of each of the properties based on revenue recorded on the invoice window, and their relevant direct cost incurred.
While these are some of the basic setups we think you might be interested in as a real estate developer, we also understand specific issues that may be peculiar to your business, our consultants are a call/mail away from you.
Connect with us at email@example.com or call 08105090001, 08084219399 for a one on one support.
If you run a property management company and would like to see how QuickBooks will work for you, click here
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