Selecting accounting software is one of the most critical operational decisions your company can face. Dedicating some time and effort in vetting the best choice to meet your specific needs, procedures, and goals will obviously benefit you in the long run. But it’s not enough to just make a selection, implement it, and forget about it. Au contraire! As with all business systems, reviewing the ROI on a regularly scheduled basis to ensure performance and systems integration is meeting your current business climate should be SOP.

Is Your Accounting Software System Scaling to Meet Current Needs?

Is your current accounting software solution growing in parallel with your company? Perhaps it has the capabilities to expand as you grow, but you are not utilizing it to its full potential. Sometimes companies start out conservatively, and implement systems that work for the company at that specific snapshot in time. Yet as they grow, they may forget to expand their systems to include and automate particular components (or add modules) which will help them be more competitive – and generate bigger bottom lines.

This happens a lot with users of entry software like QuickBooks and MS excel spreadsheets. They seem sufficient at the start, but as projects grow more complex and disparate business systems need to be integrated, there tends to be better solutions.

Does Your Accounting Software Fit Your Needs?

• Can your team generate the right reports easily?
• Is your data integrated into one solution?
• Do you spend too much time trying to find the data?
• Does your software support your company’s internal policies?

For accounting software to fully support your business needs, it should reduce time spent searching for relevant data and more time analyzing the data. In addition to this, you need to easily produce reports with critical information used for making fluid business decisions. On top of all of this, the software needs to be customizable to suit your internal accounting procedures and policies.

Ultimately, Accounting Software should Streamline Operations

Tracking time cards, invoicing, receipts, payments and check printing are the daily operations that provide a quick overview of the complete payables and receivables processes. An industry-specific solution such as Sage 100 Contractor, or Sage 300 Construction and Real Estate, can help tie these activities with contractual information such as subcontracts, purchase orders, and project item procurements.

While accounting software is a key to a successful business, the information and data used must be current and accurate. By having an integrated solution, data can be input from the office or the field and your team members can have instant access to critical project information allowing them to analyze data, manage the budget, distribute reports, input time cards, and more.

If you are still using entry level software, it may be time to consider a better solution. And if you use a highly capable business management and accounting software it may be time to have an expert review your processes and needs to verify you are using your current solution to its fullest capacity. In either case, it is likely to improve your profitability.

We at Ledgerwood Associates are happy to help you with your accounting software solutions, implementation, system optimization review, and software training to help you grow your business.

A Debt Service Coverage Ratio (DSCR) is a measure of risk often used by real estate lenders to assess the risk of a particular loan or portfolio of loans. A DSCR measures the ability of a real estate asset to cover its debt service requirement. The calculation is made by dividing the Net Operating Income (NOI) by the amount of the debt service. NOI is defined as the income generated from a real estate asset minus the operating expenses necessary to operate the asset, but before the deduction for debt service, depreciation, and taxes. Debt service is defined as the periodic payment to service the debt.  If an annual NOI is to be used in the calculation, match the debt service by using the annual amount. Let’s take a look at the calculation (where N is the number of loans secured by the asset or portfolio):

A DSCR of 1.19 tells us that the asset’s debt service is being covered with enough income left over to cover an additional 19% of debt service. Notice that the monthly payment of Loan 1 was multiplied by 12 to arrive at an annual amount. The $23,250 of debt service for Loan 2 is already an annual amount.  The NOI was also stated as an annual amount.

Let’s take a look at how DSCR might change over time. The chart below tracks the DSCR of a real estate asset that is secured by two loans. The first position loan is a constant payment with a fixed interest rate and a the second position loan is interest only payable monthly with a variable interest rate floating on Prime with a 5% floor.

Let’s see what we can learn from the chart.

• In the beginning of the year in 2008, the asset was not covering its debt service. There was not quite enough NOI to cover its debt service with a DSCR of about .99.
• As the Prime rate was falling during 2008, it began to better cover its debt service because the debt service on the 2^nd position loan was falling inversely with Prime until the 2^nd position loan hit its interest rate floor of 5%.
• NOI increased between 2008 and 2009 and the DSCR leveled off. It’s now barely covering the debt service with a DSCR of about 1.04.

The question is: Do you know the Debt Service Coverage Ratio for each of your real estate assets and for your entire portfolio of real estate assets? Calculating the DSCR for each of your real estate assets can be time-consuming and the calculation keeps changing over time as your debt balances change and the NOI changes. Fortunately, with loan software you don’t need to be a mathematician or hold an MBA to calculate your own DSCRs. Your loan transactions can be initiated from within the system and automatically imported into your other financial systems. By maintaining current loan balances and current interest rates in the debt management system, you can calculate the DSCRs for each of your assets and portfolio and much, much more at the touch of a button. For more information on loan and asset organization and Portfolio Debt Manager, visit http://www.portfoliodm.com/.

For additional information about this and other topics contact Ledgerwood Associates.

Did you know that the Sage TImberline 9.5. and later releases of Sage Timberline Property Management include access to an Archive Leases wizard? 

This wizard guides you through the process of moving or archiving leases that are no longer used in your day-to-day processing. Archived leases are removed from the main lease file, increasing the normal processing performance in Property Management. For example, accessing leases in Change Lease will be more efficient since you will not have to filter through obsolete leases.

Before archiving leases, all custom fields need to be made available for general use. To do this, go to File > Company Settings > Custom Fields and select [Yes] if you see the message Do you want to make these custom fields available for general use? Complete this step for the following custom field records:

• Lease
• Lease Option
• Lease Insurance
• Lease Late Charge
• Lease Recurring Charge

Need more help?  Feel free to contact Daren or Myrna.  We can help!

Accounts Payable

The Problem:
The exempt, on-hold and join check status no longer displays in Enter Invoices or Change Invoices

What You Really Need To Know:
Sage Timberline knows about the issue and will soon issue a fix. Be assured that the issue is isolated to the display itself. The Exempt, On-Hold and Joint Options are working just as they always have.

Why’s it doing that?
The addition of distribution grid lines adjusted the items that will display in the Enter Invoices and Change Invoices screens.

Payroll

The Problem:
The format you added to the phone number field is not retained after saving the employee.

How To Fix It:
If you imported your employee phone number using ODBC and there is no formatting, retype the whole number, or use Cut and Paste, and then add the format.

Why’s it doing that?
Payroll automatically adds formatting to employee phone numbers (xxx)xxx-xxxx when setting up a new employee. However, if you import the employee information using ODBC, the employee phone number may not be formatted correctly and adding the formatting will not be recognized without changing the number.

Install

The Problem:
You’re getting an Error 1904 message.

What it means:
This means the install failed to register multiple dlls.

How To Fix It:
Uninstall and reinstall Pervasive on the server or the affected workstation.

Why’s it doing that?
Pervasive was not correctly installed on the computer.

Property Management

The Problem:
The Property Management Comparative Occupancy Analysis does not run for February.

How To Fix It:
Go in and change the design formula named “Test on February” from Month-As of Date (Design Formula) = 2
to Month-As of Date (Design Formula) >= 2

Hope this helps!