8 Tips for Managing your Small Real Estate Business Finances  

No matter how good your listings are, keeping your business profitable in the long run can become very hard if your finances are all over the place. So, here are some insider tips for managing your small real estate business finances a little better and getting a grasp on your cash flow.  

1. Make a detailed budget and stick to it 

Clutch survey has found that more than 50% of small businesses do not have any official budget for their company. This creates a major KPI void in the company because you lack the yardstick to measure your progress and growth. It will also help you identify unnecessary spending and help you revise your property prices if need be.  

Creating a budget for your real estate business also helps all employees and your business transactions to stay within limits and overspend. You can revise your budgets regularly, but creating a concrete budget at the beginning of every financial year is crucial, to begin with.  

2. Obtain a line of credit 

There are a lot of short-term credit and cash flow issues in businesses, like payroll, sustaining inventory, paying vendors, and conducting immediate maintenance. Securing a line of credit might be the best option to handle such immediate issues. But to work properly without you going into a lot of debt, you need to plan your finances well and not overspend more than absolutely required.  

Though businesses have a lot of stigma about taking credit or loans, statistics say that more than 29% of small businesses fail when they run out of capital. It is better to take a small credit than completely go out of business.  

3. Separate your business and personal accounts 

When a business has just started out, mixing up its personal and business expenses is one of the biggest mistakes people commit. Though setting up a corporate business account might seem like a hassle, your taxes and expenses can all get haywire without one.  

This will help lower your challenges of keeping track of money that your received or paid on your company’s behalf. This will ensure that all business transactions are accounted for and will help reduce the chances of internal fraud in the company.  

4. Optimize your payroll process 

Payroll is one thing that recurs every month and is unavoidable in running any successful business. It is better to take this load off your mind and integrate payroll automation software to streamline the process. The right technology selection in payroll management can help you optimize your financial resources and reduce your work.  

5. Improve inventory management and analysis  

Real estate inventory forms the core base of your business, and managing that can become difficult, especially if your portfolio of properties is spread all across the city/state/country. That is why you should use a property selection of technology in project management to automate the inventory management process. Integrate CRM software to keep track of inventory in real-time to reduce loss of money. 

You will get instant updates about property sales, vacant properties, or tenant turnovers and can plan your next steps accordingly without wasting any time.  

6. Opt for automated accounting software 

Managing your real estate business's back office accounting work is a major part of working on your finances and staying in control. Hiring full-time accounting help can be too costly for small businesses, but property management software like Yardi can easily automate the process. 

Things like transaction tracking, fraud detection, and financial data analysis can all be done on this software. Use this selection of technology to free up your vital time so you can focus on other important matters of business.  

7. Start an automated billing and payment method 

Another way to always have your cash flowing and stabilize your finances is to automate your billing and payment collection methods. Even if your employees forget to send out bills on time, the right software will always send automated bills and reminders to all tenants/vendors. This will ensure that payments come on time, and you do not have to spend extra time running around to get your money rolling.  

From rent collection to vendor payments, all of these transactions can be automated and speed up your cash flow management process.  

8. Make financial investments to grow money 

You need to plan your strategy and leadership in a way that you can make smarter choices in investment. Many PropTech trends and high-yielding real estate markets can get you better financial returns. So, study the market and make financial investments to grow your money on all fronts.