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    Why is Accounting Running Your CRE Development Project?

    Successful real estate development teams recognize the importance of having complete control over their projects at every critical stage. This visibility is essential for on-time and on-budget project delivery. 

    Yet, some teams still lack this basic capability. Instead, they operate within information silos that typically exist between their team and the accounting department, which slows down their ability to make fast, data-driven decisions. This is because the accounting team often finds themselves managing aspects of the development process that fall outside of their reasonable scope. 

    From receiving, organizing, and storing key documents - such as proposals, contracts, change orders, invoices, etc. - to owning data entry into complex spreadsheets or legacy accounting software, accountants become the front line of a project team. Any experienced developer immediately sees the problem with this setup.

    When accounting teams own part of the development process and the majority of the project’s data, developers are left in the dark without fast, easy access to key project information to make day-to-day decisions. This leads to bottleneck decision-making and, ultimately, project delays. Worse, it could even lead to decision-making that relies completely on instinct and not on relevant information, data or context. This crossover of responsibility leads to adverse effects for both the accountants and the developers, including:

    • Development teams lose control of their project. Too many opinions and decision-makers slow the efficiency of a project and make it very difficult to move it along on schedule - taking the power out of the developer’s hands.

    • Accountants are unable to dedicate their time to the important tasks they need to get done. If accountants are spending their days doing the job of a project manager, they won’t have any time left to do the job of a good real estate project accountant. This includes: making sure bank accounts and ledgers are properly reconciled; ensuring vendors are paid in a timely fashion with all the proper compliance documentation (i.e. W-9s); coordinating responses to JV partners regarding accounts and funding; and much, much more.

    • Developers have to wait for accountants to pull the information they need. This ultimately delays the process of answering questions for investors and other key stakeholders, unavoidably leading to a domino effect of project delays.

    • Developers constantly require quick access to real-time data and don’t have it: Key stakeholders (financial partners, JV partners, exec teams) want answers right away. This cannot happen when the critical documents needed to inform those decisions live within a different department (accounting) with other priorities than just project delivery. These delays ultimately hinder the relationship between development teams and financial partners.

    • A clash of opinions and priorities. Accounting teams do not have the same goals as real estate developers. They are worried about balancing the general ledger, AP/AR, and other role-specific tasks. They are not focused on maximizing returns for developers or moving projects along on schedule.

    • Developers are more likely to base decisions on instinct rather than data. Since a top priority is to stay on schedule, these developers are pressured to make gut-driven decisions when there are too many hurdles and it takes too long to actually get their project data from accounting. Instead of basing decisions off of facts, they rely on instinct, which isn't always accurate. 

    These information silos slow down project teams by turning the typically instant process of pulling data into a long, back-and-forth communication across departments. This inevitably tarnishes credibility with financial partners and reduces overall efficiency and effectiveness in project delivery. 

    [Guide] Start exploring the world of commercial real estate technology to find  the tool that solves your team’s most pressing problem area.

    Not to mention, accountants rely on accounting software, not development software. These platforms were not created with developers’ needs in mind and often lead to friction and unnecessary complexities, including:

    • Accounting teams maintain ultimate decision-making power. All accounting teams utilize accounting software that enables them to make data-driven decisions that work in favor of the accountants’ needs and not the developers’. 

    • Developers are stuck in an industry utilizing software from the 1990s or managing their projects in complex spreadsheets. These spreadsheets are either too simple to provide adequate and informative data, or too complicated that only one person on a team can actually navigate the system effectively. 

    • Developers must force-fit very black and white accounting software into their project needs. Accounting software was created to complete tasks like balancing a general ledger and leaves very little room for the nuances required in real estate development projects. Proactive project management is often about asking “what-if” and exploring forecasted scenarios, whereas accounting tools tend to focus rigidly on actuals only. Force-fitting software often results in real estate teams changing their processes to work within the confines of the software and only getting marginal improvements in efficiency - if any at all. 

    Adopting sophisticated and clunky accounting software only slows and complicates processes for development teams. This is due to all the additional work needed to get the software to do what a project team needs. Technology should not make a process harder or more complicated; it should solve the burden of repetitive and tedious tasks that teams spend up to 30% of their time doing over and over again. 

    How to Avoid Project Derailment and Let Your Accountants Refocus on Accounting 

    Accounting teams have plenty to do without also taking on the responsibility of managing a development project, yet they commonly take on the role of data gatekeeper within a real estate development team. Not only does this provide an extra barrier for developers, who need to make fast decisions to keep their projects on track and moving forward, but accountants are also burdened with the added responsibility of pulling specific data points for project teams at a moment’s notice. They are distracted from tasks that actually require their skills and expertise. When accountants are balancing their own workload and that of a junior project manager, the entire firm suffers from avoidable inefficiencies. 

    The solution is a purpose-built technology made specifically for developers, allowing project teams to:

    • Make data-driven decisions without constantly having to go through their accounting teams 

    • Have increased visibility across their project and portfolio

    • Refer back to past projects for historical data that can inform budgeting, negotiating change orders and other day-to-day decisions

    • Increase productivity by utilizing automation

    • Forget about wasting time reconciling spreadsheet 

    • Automate the most time-consuming tasks and enable teams to create funding request packages in seconds

    Find the perfect real estate software for your development team. Upgrade with Northspyre. 

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