India’s economic slowdown is no longer a secret hidden from the general public. A slowdown that started a few years ago, is peaking in 2019. An overnight announcement of the news of demonetisation and a hasty implementation of Goods And Services Tax (GST) has been quite detrimental to the economic health of the country. As we struggle with hiring freeze, low capital in the business market, a similar wave of recession is brewing around the world. With whispers of a coming recession around Wall Street, a slowdown that will affect the major economies of the world like the Emirates or South East Asia, one has to sit back and think of its impact on real estate, and therefore, by extension on apartment communities. apartment accounting software.
Apartment communities are non profit revenue generators. They generate their own revenue through maintenance dues, utility bills and renting facilities to maintain the needs of the apartment community. However, with the recession bells sounding loud all round, it is imperative to understand that money isn’t as freely available in the hands of residents, owners or tenants as it used to be. Therefore, apartment management committees must strategise to ensure the community stays afloat, even in these hard times.
So what can they do?
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Punctuality And Efficiency Are Your Best Friends
It is the responsibility of the management committee to foster a spirit of punctuality and regularity when it comes to maintenance payments. Maintenance dues are the bulk of the revenue of any apartment community in any part of the world. Therefore, maintenance dues must reach the bank account of the committee within the first ten days of every month. Some of the practices that can be adopted to promote this practice are :
- Make it a point to generate new invoices for maintenance payments on time. Ensuring all residents have received their invoices on the first day of every month is a best practice. The visual stimulation of an invoice not only acts a reminder but it continues to be in the mind of the resident to pay the maintenance as soon as possible.
- Charging late penalty in the event of failure to pay or late payment. There are two benefits to this – the extra money earned is extra revenue; on the other hand it deters individuals to pay late.
- Giving multiple options of payment method encourages timely maintenance payment. With a hustling lifestyle, payment methods like cash, cheque, net banking, Credit/Debit cards or any other method give residents the flexibility to make payments at their convenience.
Once punctuality is taken care of, streamline the process to breed efficiency. Perhaps, go digital.
Transparency is a Necessity – Apartment Accounting Software
The last thing a management committee can afford, is a vote of no confidence from the residents and a boycott of payment of maintenance charges due to an opaque management system. Practice transparency in income and expenditure of funds. Under no circumstances, should residents feel their money is being misused. Make it mandatory terms and conditions to keep records of every single transaction, no matter how small or big. A simple culture of Purchase Approval can go a long way to foster transparency. The process is simple. Raise a purchase request, send it for approval, once approved raise an invoice and then make the necessary payment. This will ensure the members of the committee are well aware of the income and expenditures made. Such a habit, can also reduce expenditures. If purchase orders are raised for items that may not be needed at that time, expenditure on it can be postponed. How do you do it? Apartment Accounting Software does it for you.
Regular Bank Reconciliation with Apartment Accounting Software
With constant transactions taking place in maintaining an apartment community, it is difficult to understand if any monetary infiltration is taking place. A management committee must always be prepared to deal with such financial mismanagement. It cannot go through a recession without having a protective measure against pilferage. An easy way to prevent this, is to go through bank reconciliations once a month. The more regular the checking, the better. This is where going digital helps the most while protecting data privacy. Every bank statement is right there on the phone, available at just a click. It eases the procedure of thorough checks and that helps to be on top of efficient apartment financial management. Often this necessary task is ignored for the hassle of pouring all over the books for several hours to ensure all records match invoices and receipts of transactions.
Budgeting Is A Mandatory Skill
Optimum use of finances and balancing it with increasing savings cannot happen without budgeting. So plan. Plan where to spend, plan where to cut costs. Ideally, there should be an annual budget listing every single necessary expenditure. It further helps to have a monthly budget of expenses and income. Allocation of emergency funds in the budget helps to keep finances in a better order and it takes away the stress of surprise expenditures, if such a case arises. Meticulous planning of finances also leads to higher savings. And in this day and age of recession, savings is the guardian angel.
To learn more about apartment budgeting, read here. Apartment Accounting Software gets you the track of income and expense so your budgeting makes more sense.
With automation comes the reduction in manpower. Manpower can be heavily reduced in security and financial segments of the apartment community. Apartment management software are designed to work with as less manpower as possible. Setting up CCTV cameras give the guards eyes everywhere without being physically present at the spot; IoT devices installation again makes management easier. For instance, IoT water meters can automatically send meter readings to the frontend app. Access door controls governed through bluetooth devices can be operated without human interference. A software taking care of calculating the financial aspects for the community again cuts down the need of several financial managers.
Hawk Eye On Costs
It’s not possible for a human being alone to keep track of every single cost and to remember it. An efficient housing community must have their building manager on a robust software system to have an unbiased visibility on transactions and costs and at the same time, stay in contact with all stakeholders . This helps not just the manager to stay updated, but also residents and management committee will know what is going on with the community finances. Recession makes it all the more necessary to migrate to an apartment management software.
Making Wise Investments
Investments cannot be ignored no matter how slow the economic growth is. Investments are for massive savings in the long run. Research and find out apartment community projects that has a good rate of RoI. For instance, installation of solar can drastically cut down electricity bill saving hundreds of thousands on electricity bills; or rainwater harvesting plants can make an apartment community self sufficient with water needs thereby eliminating dependence on tankers or high water bills. While in the short run, it may feel a lot, but in the long run the returns are manifold, not just financial.
Think Off-Beat Revenue Generation
Gated communities have several facilities in the form of clubhouses, gyms, swimming pools, game rooms, banquet halls. They are not used by residents everyday. Leverage the clubhouse to augment revenue. Their low rental costs compared to professional standalone clubhouses, can make them an extremely attractive deal for third parties, especially when cash flow in the economy is low and people are looking for cheaper options without compromising on quality. Charge clubhouse memberships, usage charges from tutors, renting banquet halls, marketing campaigns from brands can all bring in revenue that can be safely put in a rainy day fund.
The recession is sure to bring in a disastrous hit to the finances of apartment communities. It does not hurt to be prepared, to do your homework on time and implement financially sustainable programmes to make sure your apartment community does not bear the brunt of the cruel economic slowdown. Prevention is always better than cure.