4 Accounting Process KPIs Every Property Manager Should Track

Understanding the financial performance of your property management business is critical for compliance and profitability, especially in today's real estate market. Regularly evaluating your accounting process performance metrics can help you uncover inefficiencies and improve your operations.

If you are not currently monitoring these Key Performance Indicators (KPIs), you may be missing out on growth opportunities, making the wrong decisions, and opening your business and clients up to potential risk and losses.

Disclaimer: This article provides helpful information but is not legal advice. Consult a qualified tax attorney for specific questions about your accounting processes or taxes.

Four Critical Accounting Process KPIs to Track

Here are the four essential accounting process KPIs you should monitor:

Process KPI #1: Online Rent Collection

Online rent collection is one of the most business-critical KPIs you should be tracking.

• Why Online Payments are Essential:

  • Meets Renter Demand: The pandemic further solidified an already strong need for online payments, and 73% of renters now consider a mobile application important for managing their rental experience.

  • Faster Cash Flow: Online payments benefit everyone by moving money faster, speeding up downstream processes like paying owners and vendors.

  • Saves Time: Eliminates the manual work of collecting and processing checks or cash.

  • Improves On-Time Payments: Matthew Kaddatz, a former property management professional and current Sr. Director of Product at AppFolio Property Manager, saw a 30% improvement in on-time payments in some communities after transitioning.
    
    

• Key Factors for Successful Adoption:

  • Ensure the payment tool is safe, accessible, and mobile-friendly.

  • Monitor if renters are making payments consistently and setting up recurring payments.

  • The tool must be easy and intuitive to ensure continued use. Poor technology can cause renters to revert to paying by check.

Process KPI #2: General Rent Collection

This KPI encompasses all rent collection (online and offline). While 100% is difficult, aiming for consistent collection above 95% is vital.

• Importance of High Collection:

  • Attracts New Owners: Owners choose property management companies based, in part, on a strong track record of high rent collection.

• How to Drive Rent Payments:

  • Consistency is Key: Use a consistent criteria for rental applicants.

  • Implement a clear delinquency policy and late fee policy.

  • Utilize a property management system with built-in tenant screening to standardize the applicant process.

  • Practice Fairness: Follow all Fair Housing Laws and make no exceptions to your criteria or policies to mitigate risk and lawsuits.

  • Automate: Use a system with automated payment reminder notifications and late fees to instantly increase on-time payments.

Process KPI #3: Bank Reconciliations

Monitoring bank reconciliations is essential for financial accuracy and audit prevention.

• The Importance of Accuracy:

  • When reconciling property management trust accounts, everything should match dollar for dollar in your software.

  • It is critical to perform a Triple Tie Out (reconciling and tying funds to owners, banks, and the general ledger) to demonstrate that funds are being held clearly and transparently.

  • Trust accounts should be reconciled this way 100% of the time on a monthly basis.

• Technology Benefit:

  • Disjointed systems or spreadsheets make reconciliation challenging and time-consuming.

  • Adopt a solution that offers bank reconciliation and diagnostic reports to quickly verify all numbers align.
    

Process KPI #4: 1099s

The required task of preparing and sending 1099s to property owners and vendors is often error-prone.

• Risk of Late Filing:

  • Late filing to the IRS can result in hefty fines — hundreds of dollars per 1099 in some cases.

• Digital Advantage:

  • Preparing 1099s digitally and having accompanying reports saves time and increases accuracy.

  • Switching to a digital system can save hours per year and ensure compliance for timely filing.

Keep a close eye on the accounting process KPIs mentioned in this article to increase efficiencies and reduce risk for your business. And if you’re still using limited or disjointed solutions to handle your accounting workflows, then consider going digital and embracing automated tools.

To learn more about how you can overcome common accounting challenges and save time, download this free guide.