While spreadsheets are commonplace, cheap, powerful, and easy to use, using spreadsheets for property management cannot compare to adopting robust, dedicated property management software package. Here’s why you should consider ditching (or at least relegating) the spreadsheets, and getting some proper property software for your letting agency.
Where there are numbers, there’s Excel. Microsoft’s spreadsheet program is one of the most commonly used software applications in the world. it is used daily by everyone from financial traders dealing with billions of pounds on the international markets to housewives managing their shopping budgets. It’s incredibly powerful and easy to use, and can be employed in all manner of complex ways by even the least technical users.
And therein lies the problem.
Spreadsheets certainly have their place, but for many applications they fall short of the mark. Instead of using spreadsheets for property management, investing in dedicated client accounting software for letting agents is a much more sensible approach.
Consider the following shortfalls which may be causing you pain already, and in turn consider ditching the spreadsheet for comprehensive property management software such as Elevate.
1. Too easy to make mistakes
All software breaks occasionally, but since Excel allows you to quickly and easily change virtually any cell, probably without any validation or constraints, spreadsheets tend to break often.
Now that’s not a problem in itself, if you’re aware that you’ve just made a mistake. However, spreadsheets don’t tell you when you’ve broken them, they just give you the wrong result.
One formula can reference another, which in turn spans a series of rows, maybe across multiple worksheets. Add a new row, and two new columns. Update (fix) a formula or two. Things can get out of sync very easily. The user is unlikely to spot this until some value is so far out of kilter that it catches someone’s eye. That’s usually too late.
A high-profile case of this type of error concerns the JP Morgan Chase global financial services firm in 2012 in an incident involving the “London Whale”. A trader who implemented his multi-million pound hedging strategy using a spreadsheet heavily dependent on copying and pasting incorrectly defined a formula to use SUM instead of AVERAGE and the resultant losses totalled a staggering $2bn!
2. Data is far from secure
You can password-protect a property management spreadsheet so it must be secure, right?
Wrong, very wrong.
Don’t confuse protection with security.
Having a Rottweiler patrol your front door isn’t much use if you leave all your back windows open. The level of protection and encryption on Excel spreadsheets is very simplistic. Hackers can easily crack the passwords using the myriad of cracker utilities on the web. If a trusted person decides to steal data then it’s a simple case of copy and paste into another spreadsheet. Many spreadsheets (particularly spreadsheets used for property management) employ Microsoft’s VBA language to develop powerful macros. However, this language can equally be used to embed viruses and other malicious code in your systems.
If your data is confidential and commercially valuable, then it’s worth protecting properly in a dedicated secure cloud software for lettings.
The best property management software will come complete with robust roles and privileges to strictly control access to the various spheres of key business data, and reliable backup processes to safeguard against data hacking or loss.
3. Property management spreadsheets do not scale
Most letting agencies create property management spreadsheets to perform a fairly simple tasks such as applying and recording rent receipts. But, over time, they inevitably morph into hundred-megabit monsters with dozens of worksheets and interlinking formulae.
As your letting agency adopts their use further, the initial few hundred records can quickly grow to many thousands. That “IT guy” who has taught himself the basics at college will become the Excel guru. The entire business will look to him to evolve (read “mutate”) the property management spreadsheets to meet the needs of everyone who asks. Each time you open the spreadsheet it slows down that little bit more. Eventually it takes five minutes to open, and ten more to save when you close it. And did I mention backing that mission-critical file to a secure offsite location daily?
Using spreadsheets for property management may well appear to function, albeit slowly, with huge volumes of data. But they are not built for it. Performance will eventually grind it to a complete halt, along with your business. When you can feel your agency’s rent spreadsheet starting to grow out of control it’s time to act. Invest in robust cloud property management software. The best property management software will grow as fast or as huge as your agency dares to dream. Backups, resilience and blazing performance are all included as standard.
4. No history or audit trail unlike property software
I’ve already mentioned one of the biggest drawbacks of spreadsheets in that it is very (too) easy to overwrite cells with erroneous values or incorrect formula.
What makes the impact of this all the more devastating is that when you save and close the spreadsheet there is no way to recover the old data. More than likely it will be some time before an error raises its head. In that case, even file backups may not be able to rectify the damage.
Spreadsheets have no history of who changed data, or when, or why.
A web-based property management solution such as Elevate will have robust constraints in place to prevent accidental or indeed malicious data loss and should data actually be removed it will most likely be recoverable from a backup. Identifying who modified or deleted data (and when) can be instrumental in analysing changes and taking further action if required.
Even just making users aware that the software tracks activity can be a useful step to improving data entry.
5. Version control becomes a nightmare
More than likely you pass spreadsheets around your agency in emails, or each editor creates their own version.
Every time the email lands in a new inbox the owner changes. Eventually no-one is quite sure which is the latest version. Indeed there may eventually be multiple “latest versions” floating around. Some lucky soul (that IT guy again) is going to get the grand job of consolidating that into one master spreadsheet. In turn, someone will pass that email to the department head from where it will recommence its erratic journey round the office.
There might well be a master copy sitting in a designated folder on the company’s network but it’s all too easy to share that file in an uncontrolled manner. Unless you’re using an online spreadsheet solution such as Google Sheets, it is even possible for two people to be making changes at the same time. The last person to save is going to overwrite all the other’s work.
Great property management software will take care of concurrent editing and version control automatically, ensuring that no data is lost and everyone is always using the trusted latest copy of all data.
6. The real world doesn’t work in cells and rows
To see John’s balance multiply D44 by the sum of C3 through C6, and subtract that from A9. Of course, it’s obvious now that you say it! We don’t think of the world in terms of rows, columns and cells, of course. Trying to implement anything more than number-crunching in a spreadsheet will get complicated quickly. Where confusion takes root, data errors are sure to follow. It’s a recipe for further disaster to just leave staff to come up with their own error-prone formulae.
Dedicated property management software will present you with simple attractive forms. It will ask you for names and addresses, management fees and transaction values. The software will then display this data in easy-to-read, sortable, searchable tables. If you want a report, click the Generate Report button. No more getting your hands dirty with formulae and cell references. You’re less likely to mess up data entry, for starters. And using software will feel a lot more intuitive and enjoyable than labouring with spreadsheets.
All said and done, Microsoft Excel is still most powerful software applications of all time.
But, like any tool, it must be used for the right job by the right person. You wouldn’t try to drive a nail home with a pair of pliers (unless you’re really stuck!). So don’t try to manage properties in your letting agency using spreadsheets.
It need not cost the earth either. This article gives you some practical advice on how much good property management software costs.
Invest in the right tool for managing and growing your business – sign up for a free 14-day trial of Elevate today.