Controllers in real estate development firms have a heavy load to bear. Other departments often don’t know the importance of the processes that need to be followed in the finance department. They might not know exactly which documents need to be submitted prior to a draw request or how long the process takes. They may not know that when presented with a scattered email chain of PDFs, someone has to sort through the documents and manually enter the data in accounting or AP systems—and that someone is you.
Why Are Real Estate Development Controllers Struggling With Inefficiencies?
The inefficient processes that real estate development managers have been using for decades simply aren’t working for today’s controllers. Finance teams use AP and accounting software to automate their processes, but other departments still send information buried in emails and spreadsheets. While Excel is the most widely used program for both lenders and developers to manage projects, it’s been reported as the least favorite tool for both groups. Everyone knows Excel isn’t working, but why is the industry standard failing the industry?
Keeping data siloed in spreadsheets creates a lack of centralization in development firms. Different versions of Excel sheets on dozens of individual laptops make it impossible to locate the most up-to-date information when you need it. When the accounting team finally receives a spreadsheet, they need to manually enter the data into their systems to make it actionable. In fact, only 30% of construction finance data is in a centralized system, leaving the rest (70%) trapped in spreadsheets. This lack of centralized information makes it close to impossible to perform efficiently.
Time isn’t the only thing impacted by lack of centralization. The risk of errors or mistakes is compounded during manual data entry. Each time information is manually transferred—from a PDF to an Excel sheet to AP software—the risk of error grows. Many controllers have seen how one small typo can lead to an entire project delay or even a duplicate payment. Lenders report spreadsheets contribute to their growing risk burden: 48% of lenders say that developers provide Excel spreadsheets with errors.
Controllers are often held responsible for these mistakes, whether or not they originated them. This is why many finance teams are turning to real estate development software to improve their risk management and collaborate more easily with development teams. CRE-specific software not only encourages every department to centralize their information, but it also provides extra layers of safety to automatically double-check data that other teams provide.
What Are Other Controllers Doing to Streamline Processes?
This year, 62% of development firms said they’re looking to invest in technology to decrease risk and improve alignment. To learn more about how developers are using tried-and-true software to address these challenges, download the State of Construction Finance Report.
