Learn about some of the most common issues commercial real estate businesses run into in QuickBooks and how to improve them.
QuickBooks is a powerful platform for commercial real estate businesses, but common process issues can turn simple workflows into logistical challenges. This guide explores frequent problems in QuickBooks implementation for CRE businesses and provides practical solutions to streamline your accounting processes, improve accuracy, and save valuable time. By addressing these issues, you can focus more on growing your business rather than struggling with administrative busywork.
It’s not just minor irritation or occasional delays. When your accounting system has flaws, you risk major data issues, high costs, and even strained relationships. Don’t let this solvable problem harm your commercial real estate business. Read on to learn how to prevent or fix these major concerns now.
One of the most significant process issues in QuickBooks for commercial real estate involves the incorrect recording of triple-net (NNN) expenses and income. This mistake makes it impossible to perform accurate common area maintenance (CAM) reconciliations and prevents you from making precise CAM estimates for future years.
Many property managers fail to properly record NNN costs as expenses. Even though tenants will reimburse these costs, they must first be recorded as expenses in your books. Incorrect recording creates reconciliation nightmares and can lead to higher expenses for both property owners and tenants.
Record all NNN costs as expenses initially. At year-end, reconcile by comparing actual expenses to amounts collected from tenants, then either reimburse or invoice tenants for any difference. CAM charges collected should be posted to an Income account.
Create separate income accounts for taxes, insurance, and CAM to track collected amounts individually. This separation enables more accurate analysis and makes year-end reconciliation significantly easier to manage. By implementing this structured approach to CAM accounting, you’ll gain better visibility into your actual expenses and income, making it easier to create accurate budgets and ensure fair cost distribution among tenants.
Another common process issue in QuickBooks is the failure to separate reimbursable and non-reimbursable expense accounts. This oversight creates confusion, increases workload, and makes it difficult to charge tenants the correct amount for CAM expenses.
Consequences of Mixed Accounts:
The solution is straightforward: set up your chart of accounts to include separate categories for reimbursable and non-reimbursable expenses. Reimbursable accounts should contain CAM or operating expenses that will be passed on to tenants, while non-reimbursable accounts should include expenses that tenants won’t share as part of their NNN fees.
This separation saves considerable time during year-end CAM reconciliations. Posting expenses to the proper account when you pay them is much simpler than trying to categorize them months later. Additionally, this clarity ensures that anyone can run reports and calculations and achieve consistent, accurate results every time.
Invoicing issues represent another significant challenge for commercial real estate businesses using QuickBooks. Two common problems include creating invoices too far in advance and failing to invoice regularly.
Creating invoices for an entire year at the beginning can cause numerous problems. This approach doesn’t account for potential changes throughout the year and makes it easy to miss escalations, errors, or missed payments. The accounting method you use (cash or accrual) also affects how far in advance you should create invoices. Creating invoices too far in advance can also complicate CAM reconciliation and require unnecessary rework if budget adjustments become necessary.
Not invoicing at all is equally problematic. While some owners assume tenants will pay the correct amount based on lease terms, this often leads to confusion, mistakes, and incomplete payments. Without regular invoices, tenants lack clear reminders of what they owe.
Instead, invoice tenants monthly and create invoices for only one month at a time. This approach provides greater control if circumstances change and serves as a reminder to regularly check that tenants are paying the full amount.
When managing tenants who occupy multiple units across different buildings, proper organization in QuickBooks becomes even more critical. This is especially true for chain tenants where maintaining clear separation between different locations is essential for both your accounting and their records.
Create separate customer accounts: for tenants occupying multiple units or spaces in different buildings, create separate “customer” accounts in QuickBooks for each location. This prevents commingling of financial information and provides clarity for both parties.
Maintain location-specific records: keep all documentation, including leases, invoices, and payment records, organized by specific location rather than just by tenant name. This makes it easier to track performance metrics for individual properties, and helps you remember important dates like lease escalations.
Use location codes: implement a consistent coding system for properties and units to easily identify and sort transactions. This helps when running reports and analyzing financial performance across your portfolio.
This structured approach to managing multiple properties and units in QuickBooks provides several benefits. It enables more accurate reporting on the performance of individual properties, simplifies the reconciliation process, and makes it easier to identify issues specific to certain locations. Additionally, it provides tenants with clear, location-specific invoices that reduce confusion and payment errors.
By maintaining this level of organization, you’ll be better positioned to make informed decisions about your portfolio and provide better service to your tenants.
While implementing the best practices outlined in this guide will significantly improve your QuickBooks processes, commercial real estate businesses with growing portfolios may benefit from specialized solutions that integrate with QuickBooks to provide enhanced functionality. By combining QuickBooks’ accounting capabilities with STRATAFOLIO’s property management features, commercial real estate businesses can create a comprehensive system that addresses the unique challenges of the industry. This integrated approach provides better visibility into property performance, streamlines administrative tasks, and helps identify opportunities for portfolio optimization.
For more information on how STRATAFOLIO can improve accounting for commercial real estate businesses and help resolve the common QuickBooks process issues discussed in this guide, schedule a 1:1 demo to see the platform in action.
STRATAFOLIO is an online web-based, secure, mobile-friendly software application service made for people who own, manage or lease real estate and use QuickBooks Online or QuickBooks Desktop as their accounting software.
Yes. STRATAFOLIO has a seamless two-way integration with QuickBooks Online. When you use STRATAFOLIO to manage your commercial real estate along with QuickBooks Online, you get full automation, resulting in one easy-to-use, fully integrated property management and accounting solution. On average, customers using QuickBooks Online and STRATAFOLIO save over 80% of manual effort.
Yes. STRATAFOLIO currently integrates with both QuickBooks Online and QuickBooks Desktop. If you have another integration from another accounting system you would like us to consider, please send us an email so we can add you to our waiting list of future integrations.
At STRATAFOLIO, we make security one of our top priorities. That is one of the many reasons why we chose Microsoft Azure as our hosting provider. We gained many security benefits that come with the Azure infrastructure on our hardware and software. We have also gone above and beyond what is required in the industry to ensure your data is secure.
When you join STRATAFOLIO, you get:
No, STRATAFOLIO shows the whole platform on a cash basis only. The Owner’s Dashboard was specifically designed to show how much cash is available at any given time. For this reason, we do not show any of our reports on an accrual basis; they are only on a cash basis. To compare the QuickBooks accounts done on an accrual basis, select the Cash Basis button on the QuickBooks Reports page.
The categories on the Owner’s Dashboard Cash Flow are not adjustable. However, if you would like to remove the amount from being displayed on the Dashboard, please let the Onboarding Team know, and we can remove them from the view.
Yes! We know you are a busy professional growing your business, and STRATAFOLIO is here to help you get started. We work with your team to gather all the necessary information, load your data, and train and complete a final audit with your team. This is part of our onboarding process.
Yes, there is a one-time onboarding fee that is based on the size of your organization and the amount of data that will be set up in your account. Contact us for more information to schedule a free demo and evaluation.
No, in fact, we believe providing access to all your key team members (internally or externally) provides visibility to help unify and synchronize your entire team and organization.
No, unfortunately, QuickBooks Desktop (QBD) for Mac does not support Web Connector. This makes it incompatible with STRATAFOLIO because we use Web Connector to synchronize the data between QBD and STRATAFOLIO.
Yes. STRATAFOLIO currently integrates with both QuickBooks Online and QuickBooks Desktop. If you have another integration from another accounting system you would like us to consider, please send us an email so we can add you to our waiting list of future integrations.
We set up your CAM Reconciliation Reports to match what you have already given to your tenants. If you would like, during the Onboarding process, we will review the report and suggest ways to make it more complete or easier for the tenant to understand.
The categories on the Owner’s Dashboard Cash Flow are not adjustable. However, if you would like to remove the amount from being displayed on the Dashboard, please let the Onboarding Team know, and we can remove them from the view.
Learn how you can keep using QuickBooks and save over 80% of manual effort when using STRATAFOLIO to manage your operations, global finances, assets, and investors. Utilize our two-way connection with QuickBooks to gain one fully integrated system.
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