For decades, the commercial real estate (CRE) industry has used and depended on spreadsheets to manage back-office tasks, like accounting, data management, and record maintenance. Although spreadsheets have long been an industry staple, they have inherent limitations that can impede back-office tasks and efficiency. As we approach an impending recession, there is little to no room for errors and avoidable roadblocks – which spreadsheets often cause.
Read ahead to learn common challenges posed by spreadsheets, specifically with regards to commercial real estate back-office operations, and to explore alternatives for driving efficiency and optimizing workflows.
Why CRE Firms Need Back-Office Efficiency
Commercial real estate back-office efficiency is paramount for the success and growth of firms operating in this industry. A streamlined and optimized back office ensures smooth operations, effective management of critical tasks, and improved productivity. By implementing efficient processes and leveraging technology, commercial real estate firms can automate routine administrative tasks, such as lease management, financial reporting, and document management. This in turn allows employees to focus on strategic initiatives, client or tenant relationships, and revenue-generating activities.
Back-office efficiency also facilitates accurate and timely data analysis, enabling informed decision-making and enhancing the firm’s ability to identify market trends, assess investment opportunities, and proactively mitigate risks. Overall, a well-functioning back office ensures that commercial real estate firms are well-positioned to focus on activities that maximize cashflow and ultimately stay ahead in a competitive market.
How Spreadsheets Can Limit CRE Back-Office Efficiency
While Excel has long been a widely used tool, relying solely on it for commercial real estate back-office tasks can hinder your organization’s growth and efficiency. Common pitfalls of using spreadsheets, like Excel, to perform back-office jobs include:
Excel was designed primarily for simple data organization and analysis. As your CRE business grows, the limitations of Excel become apparent. Handling large datasets, complex calculations, and integrating multiple data sources can quickly become overwhelming. Excel’s performance and stability can suffer, leading to errors and delays.
Potential Harm to Data Integrity and Accuracy
Maintaining accurate and current data is vital in the commercial real estate sector. However, Excel lacks the built-in data validation and error-checking mechanisms found in specialized real estate software. Manual data entry and formula-based calculations in Excel are prone to human errors, which can have far-reaching consequences. Inaccurate financial models or lease calculations can lead to faulty analysis and poor decision-making.
Lack of Collaboration
Collaboration among team members is essential for smooth back-office operations. However, Excel’s collaboration features are limited, especially when multiple individuals need simultaneous access and real-time updates. Sharing and consolidating Excel files via email or shared drives can quickly become chaotic, leading to version control issues, data loss, and a lack of accountability.
Time-Consuming Manual Processes
Commercial real estate back-office tasks often involve repetitive and time-consuming processes, such as data entry, reporting, and financial modeling. Excel often requires extensive manual effort, potentially leading to increased workload, reduced productivity, and higher chances of errors. These manual processes limit your team’s ability to focus on strategic initiatives and may impede overall efficiency.
Lack of Customization
CRE workflows can vary significantly from one organization to another. Excel, with its fixed structure and limited customization options, may not adequately meet the unique needs of your business. Customizing Excel templates or workbooks can be complex and time-consuming, often requiring advanced programming skills. In contrast, an entity management solution offers tailored solutions that align with your specific requirements and streamline processes.
Limited Reporting and Visibility
Excel’s reporting capabilities are often limited to basic charts and tables. Commercial real estate demands advanced analytics, visualizations, and robust reporting functionalities. Real estate software platforms provide powerful tools to extract meaningful insights, generate comprehensive reports, and visualize data trends, empowering you to make data-driven decisions with confidence.
Excel Alternatives: How Modern CRE Firms Are Creating Back-Office Efficiency
Many modern CRE firms actively seek opportunities to create back-office efficiency and gain a competitive edge. From implementing strategic outsourcing initiatives to leveraging specialized solutions, these firms are adopting new methods to enhance productivity and optimize their back-office workflows.
Adopt Purpose-Built Tech Solutions
Purpose-built tech solutions can more effectively automate manual processes, such as lease management, financial modeling, and reporting, reducing the risk of errors and saving significant time and effort. They provide centralized databases, real-time data updates, and advanced analytics tools, enabling accurate and efficient data processing and analysis.
Purpose-built solutions can also offer customization options to align with the specific requirements of each CRE firm, ensuring a seamless fit with their existing systems and processes. By adopting purpose-built solutions, commercial real estate firms can streamline their back-office operations, enhance productivity, improve data accuracy, and make informed decisions with confidence.
Entity management software, like EntityKeeper, can eliminate error-prone, time-consuming manual tasks that prevent teams from focusing on other valuable, revenue-generating work.
Outsource CRE Back-Office Tasks to Third-Party Specialists
Commercial real estate firms operate in a fast-paced and complex industry, where efficiency is critical to success. To streamline operations and focus on core competencies, some CRE firms outsource their accounting and administration functions to third-party specialists. Tasks that are often outsourced include payroll, financial reports, bookkeeping, and more.
Below are some benefits of outsourcing back-office tasks.
Maintaining an in-house accounting and administration department can be costly for CRE firms. It requires investment in hiring, training, infrastructure, and software. By outsourcing these functions, firms can reduce up to 70% of overhead costs. Third-party specialists already have the necessary resources, infrastructure, and technology in place, eliminating the need for costly investments. Additionally, outsourcing allows firms to convert fixed costs into variable costs, scaling their accounting and administration services based on business needs.
Enhanced Efficiency and Focus
Outsourcing accounting and administration functions frees up valuable time and resources for CRE firms, allowing them to concentrate on their core competencies and strategic initiatives. Rather than dedicating internal staff to back-office tasks, outsourcing enables the reallocation of talent towards revenue-generating activities, such as property acquisition, leasing, and client relationship management. This increased focus on core business areas leads to improved efficiency, faster decision-making, and enhanced competitiveness in the market.
Scalability and Flexibility
Outsourcing accounting and administration functions offers CRE firms scalability and flexibility. As the business grows, third-party specialists can quickly adapt to accommodate increased workloads. They have the resources and expertise to handle additional transactions, complex financial models, and expanding reporting requirements. Conversely, during periods of reduced activity, firms can scale back their outsourcing services, avoiding unnecessary expenses and maintaining cost-efficiency.
A service provider, like Thirty Capital Performance Group, can take on tasks such as asset management reporting, annual budget review, market analysis, and more to free up time within your organization. View a complete list of services here: https://www.thirtycapitalperformancegroup.com/services/.
In the ever-changing commercial real estate landscape, staying ahead of the market will require CRE firms to seek new ways to streamline back-office operations. By prioritizing and investing in back-office efficiencies, these firms can position themselves for long-term success and navigate the challenges of the market with confidence.
Ready to learn how back-office efficiencies can help your firm withstand the impacts of today’s changing market and be more competitive? Get started with EntityKeeper today!