This Real Estate Accounting feature focuses on why it is important to Invoice commercial real estate tenants.
Though it often gets overlooked, invoicing is a key part of good commercial property management. While it may seem like an unnecessary and annoying task to send invoices to every tenant every month, the benefits are undeniable. Successful commercial real estate businesses ensure they send regular, thorough, and up-to-date invoices to all tenants to create a clear paper trail of who owes what and when they pay.
Here, we’ll discuss some important strategies to leverage invoices for maximum success. We’ll also go over the benefits and drawbacks of invoicing in QuickBooks, as well as alternative solutions to make invoicing as stress-free as possible.
Since invoicing is such a crucial part of good property management in commercial real estate, it’s a smart idea to establish best practices for a smooth, effective invoicing system. Below are some of the most helpful strategies to make invoicing easier and more beneficial for your business.
While it may seem excessive to send a bill for the same amount every month, the benefits far outweigh the small amount of extra work. While many tenants pay rent on time without issue, plenty of others benefit from an extra reminder of when and exactly how much they are expected to pay.
This is especially true when handling rent escalations, as even tenants who pay on time might pay the old amount out of habit. When there is a thorough paper trail of a tenant’s rent responsibilities, it reduces mistakes and conflict.
Making sure your invoice template is professional, readable, and thorough helps avoid confusion and disputes with tenants. Make sure to include key information like the invoice number, which allows you to easily find and reference it, the amount due, the due date, and a detailed breakdown of rent and any other fees included in the total. It may also be helpful to include a statement on the invoice about your late payment policy, including any grace periods or late fees, to help encourage tenants to pay on time.
Invoices are most effective when you also use reminders. Send out a reminder via email, text, tenant portal, or other communication methods about a week before the payment is due, along with instructions for various payment options. After the due date, catch late payments with reminders about grace periods or late fees.
Whenever possible, automate your invoicing processes to avoid time-consuming manual labor and human error. Many accounting and property management systems offer options like automatic recurring invoices, reconciliation, automatic lease escalation adjustments, and payment reminders.
It is possible to create and send invoices in QuickBooks. Depending on what version of the program you use, the process may be different, but most versions do offer a professional template and options for recurring payments.
However, because QuickBooks is focused on general accounting, not commercial property management needs, it may be difficult to keep up with all the tenants' rent escalations across a large portfolio. In addition, you will still want a place to track all of your rent income information, which QuickBooks is also not primarily designed to do, as well as a spot allowing tenants to easily make online payments. While QuickBooks is an excellent resource for many accounting processes, when it comes to commercial property invoices, you may want additional software.
Property management software is designed to help simplify and automate the complex tasks involved with running a commercial real estate business, including invoicing. Take advantage of a secure, centralized place to manage rent payments, communicate with tenants, analyze financial data, and more. Take a look at some of the biggest benefits below.
Many commercial property management software platforms include a tenant portal for convenient online payments. Offering options like ACH payments are a great way to lower hurdles for tenants to pay on time. Automated invoices and reminders can lead directly to this portal, making the whole process quick and simple.
A dedicated tenant portal also provides an extra layer of security and comfort for both tenants and landlords, minimizing the risk of losing or mishandling rent payments. Property management software offers a professional, secure, and intuitive way to receive and track payments.
Trying to keep track of which invoices are sent, received, late, or missing by hand is a massive task, especially as your business grows. Commercial property management software such as STRATAFOLIO makes this process a breeze by automatically tracking invoice status, so you can quickly spot issues. Within STRATAFOLIO, you can generate invoices directly in the software across as many company files as you have, saving the trouble of manually adjusting to account for each tenant’s unique lease terms. With property management software, you’ll free up time from tedious invoicing tasks to focus on strengthening your business.