Why Rabbet Integrates with AP and Accounting Systems

Development management and accounting are distinct and important activities for any real estate developer. Like drywall and paint, both are important and can sometimes be done by one contractor or two. However, it is critical that they work closely as the quality of the paint job is dependent on the quality of the drywall installation. Just like the quality of the development outcomes is dependent on the quality of the accounting.

Right now, development management and accounting collaborate in clunky, outdated, and painful ways. That’s why Rabbet built integrations with major accounting software systems like Yardi and QBO.

Before we dig too far in, let’s generalize the key management, finance, and accounting activities:

• Development Management: Ensuring that individual projects are completed on time and on budget.
• Accounts Payable: Ensuring that the company meets financial obligations and pays invoices while responsibly managing available cash.
• Accounting: Ensuring that the company properly records transactions to both meet regulatory requirements and to inform management as to the financial health of the company.

To even further simplify, the development team manages individual project outcomes, and the accounting team manages and records transactions for the company.

Areas of Overlap

These responsibilities require overlapping information to get the job done. However, how each team uses the information is different.

For example, when it comes to invoice management, the development team may ask the question, "Is this invoice expected and in line with project progress and budget?" The accounting department, on the other hand, might ask whether the invoice is vendor-approved with all required documentation. Accounts Payable will need to know whether the payable is recorded on the balance sheet.

This is just one instance where three teams use the same information in completely different contexts. There's a lot of variability in the industry of which team is responsible for these applications. For example, some development companies have the accounting team manage everything related to draw requests and owners' reports, but others put the responsibility of creating the draw request on the development team.

Another lack of standardization is who is responsible for managing contracts and change orders. Some real estate companies see this as an accounting responsibility and others place responsibility with the development team.

When Rabbet talks with development companies we aren’t working with yet, we commonly hear that accounting teams have all the information they need, and it’s the development teams who are keeping spreadsheets on the side to manage information. It’s not different information that development teams need, it’s a different use of that information.

The Current Process

Currently, most developers handle invoices in a manual, cumbersome process that involves a number of painful steps:

• Accounting receives the invoice (or it gets forwarded to accounting)
• Accounting sends the invoice to the development team for approval
• Development approves invoices, hopefully after comparing to the budget and contracts
• Development manually updates their spreadsheets for tracking the budget
• Accounting logs invoices in the AP and accounting software
• Accounting software pushes invoices for payment
• Accounting & development teams reconcile costs at some regular interval

In the best of cases, accounting and development teams meet regularly to agree on how to treat costs; development teams proactively monitor for budget changes and update the accounting team; and capital partners are happy with the information provided and fund draws quickly.

In the worst of cases, development teams are making decisions about the project without all available information, accounting teams are frustrated that the development team doesn’t update the budget, and capital partners scrutinize the information they receive. Everyone wastes time separately tracking, reconciling, and second-guessing information.

The Rabbet Integration

With Rabbet’s integration into various accounting systems, the new process is simplified and automated:

• Rabbet receives and logs invoice
• The development team approves the invoice
• Rabbet pushes invoices to accounting software
• Accounting team processes payment

Redundant work is eliminated and the status of both the approval and the payment is always known.

We are often asked whether the accounting team needs to be involved in evaluating Rabbet. If the accounting team is responsible for any of the activities in the “Development Uses” column in the table above, we encourage their involvement. If not, there is no need to involve the accounting team. Thanks to our integrations with AP and accounting systems, the development team can use Rabbet without disrupting the needs of the accounting team.

Conclusion

Rabbet has always cared about paying invoices faster. By helping development and accounting more seamlessly connect, we help eliminate burdensome and error-prone tasks from the process and make payments move faster in the construction industry. Rabbet brings development and accounting together, resulting in faster payments and less frustration for everyone.