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If there’s anywhere you want to eliminate human error; it’s in accounting. Whether you have an accounting department, one accountant, or must handle most of the accounting tasks on your own, this is one area that is simply too important to get wrong.
Yet, mistakes happen. In fact, a BlackLine study in a recent CFO Daily News article revealed that the number one cause of financial mistakes is human error, representing 41% of all accounting mistakes. The results of a simple error, like mixing up to numbers or adding an extra zero, can spread far and wide in their damage potential.
It doesn't have to be this way, though. Accounting is made particularly easier through the use of the right AI technology. Before we go into how to best use commercial real estate software, particularly AI, to your advantage, let's first discuss why this is so vital to your team's short- and long-term success in the first place.
The Importance of Well-Done Accounting in Commercial Real Estate
Accounting plays a vital role in running your organization. This is because it helps you track income and expenditures plus provides investors, management, and other decision-makers with quantitative financial information to make business decisions. For businesses in the commercial real estate industry, a single accounting mistake could result in a significant loss of both productivity and bottom-line profit.
Your team, clients, and investors rely on your numbers to be accurate. For this reason, it may be disturbing to learn that the same CFO Daily News article tells us that 70% of financial experts are not sure of the authenticity of their crucial data.
Many human errors are avoidable by automating most of your business’s repetitive tasks and backup system processes. When your team has the right software in place, you'll be able to better prioritize accounting’s role. This accountant or department team members will be able to focus on high-level strategic counsel, not low-level administrative work. This is better for everyone when it comes to helping project teams make critical cost decisions.
Human Errors in Accounting
Everyone makes mistakes at work. Humans get tired, hungry, mad, bored, frustrated, distracted, and a variety of other feelings that aren't compatible with entering important numbers and data into the computer.
Most human errors fall into four categories: knowledge-based mistakes, lapses in memory, rule-based error, and slips. Memory lapses can frequently happen in a busy and stressful work environment like we often find in real estate. This could be something like forgetting to perform an important step in the data entering process. Slip error is a mistake that comes from a lack of concentration and fatigue among employees. This occurs when a team member accidentally mixes up information or performs the wrong task when trying to keep up with manual input. Even worse, these mistakes too often create a domino effect when other departments rely on the same inaccurate information or data for their work.
Without a doubt, human error can have disastrous consequences in cost accounting and project success. While it is notoriously difficult to get accurate data on the true cost of human error, some scholars have tried. In this article written by David M. Smith, Ph. D. for Pepperdine University entitled “The Cost of Data Loss", he estimates that human error is second only to hardware failure as the leading cause of costly losses.
“Added together, the costs due to technical services, lost productivity, and the value of lost data bring the expected cost for each data loss incident to $3,957,” says Dr. Smith. “When information on data loss episodes is mapped along with the cost data, an estimate of aggregate data loss may be obtained. This calculation estimates that annual data losses... cost US businesses $18.2 billion." That is a large sum of money that you should take very seriously.
The more a task requires manual data entry, the higher the possibility of a mistake. In your effort to reduce and hopefully eliminate mistakes, what you're really looking to do is eliminate low-value tasks, like data entry.
AI works by extracting data from incoming invoices, contracts, and proposals instantly. This information can then be imported into your existing accounting software with little friction.
How Commercial Real Estate Software Helps
Eliminating low-value tasks is one of the best ways to reduce the number of human errors negatively affecting your accounting department. Of course, not just any commercial real estate software will deliver the results you're looking for. Commercial real estate software built for development teams is not meant to replace accounting teams or systems, such as Yardi. It is designed specifically for real estate project teams and helps to alleviate the burden of mundane, manual tasks.
The most effective real estate development software integrates with your accounting systems or even offers two-way integrations with platforms like Yardi and MRI, which ensures even the most complex development projects are working off accurate cost data so that projects are delivered seamlessly on time and on budget. That means error-free data, so you can feel confident that your accounting and development teams are in sync.
The way a two-way integration works is simple yet ingenious. If a project team member approves an invoice within your commercial real estate software, that invoice (which includes the appropriate property ID, general ledger account number, vendor details, and corresponding invoice information) will be reflected in Yardi Voyager. Any payment details associated with that invoice will automatically flow from Yardi Voyager to your commercial real estate software.
This unified approach to project delivery feeds highly collaborative accounting and development teams! Consider the following impacts of integrating this software into your office:
Integration means your real estate development software syncs with your accounting system, ensuring data is consistent and your team isn't reconciling numbers across two systems.
Optimized Project Delivery
Two-way integrations with systems like Yardi Voyager enable your accounting and development teams to collaborate effectively and seamlessly with project leadership, vendors, stakeholders, and any other key decision-makers who are all looking at the same, consistent numbers.
Less Time Spent on Manual Entry
Say goodbye to entering dates over and over again! Commercial real estate technology automates data extraction from project documents like invoices, contracts, proposals, change orders, and certiﬁcates of insurance. This serves to reduce manual data entry and human error.
Real-Time Information Sync
Time is money in the commercial real estate industry. This software integration allows your team to expedite payments and ensure general ledgers are up-to-date. The information syncing between two systems is nearly instantaneous!
Your new software doesn't mind working past closing time. You can implement commercial real estate software overnight, without the typical change management process that bogs down software adoption.
Northspyre will remove the burdensome tasks that have fallen on your accounting team. Learn more about how our two-way integration with Yardi and MRI can help accounting teams focus on their core duties instead of managing project costs for development teams.
Tag(s): Real Estate Development
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