Month-end close for real estate finance teams, with a checklist built for the industry

Most standard month-end close processes don't account for the specifics that you have to deal with when it comes to a property business. If you go online to research the subject, you will soon realise that most of the guides you will come across are written assuming you're closing a single business and operating with one purchase and sales ledger.

If you are responsible for the spend management for a real estate group and are reading this, you are most likely looking for a guide that focuses on the parts of the close that are unique to property businesses. This guide does just that. It covers the month-end close process only where it differs for real estate.

If you need a refresher on the general process itself, we've already covered the complete month-end close process in detail. This article picks up where that guide ends and focuses specifically on the challenges faced by property finance teams managing multiple assets and entities.

Why is closing a property more difficult

Property closings, especially when managing multiple portfolios at once, are complex, and the reasons usually come down to the following factors:

The rent roll is not a part of the general ledger

Rental income is usually managed inside dedicated property management software rather than the accounting system itself. With this setup, all finance departments need to reconcile lease income, tenant receipts, vacancies, incentives, deposits, and outstanding receivables back to the ledger.

Any mismatches here will affect reporting of revenue at the property level.

Service charges and recharges need to be accrued correctly

Property businesses routinely recover maintenance costs, utilities, security expenses, and shared operating costs from tenants or related entities. In some cases, these invoices can arrive after month-end, while others require allocation across multiple properties.

Without appropriate accruals, expenses and recoveries can fall into different reporting periods.

Intercompany balances multiply with every SPV

Many developers and landlords operate through separate legal entities for each project or building. As a result, any management fees, financing costs, shared employees, head office expenses, and central procurement often move between these companies throughout the month.

Every recharge needs a matching entry in another entity before you can begin the actual consolidation.

Site spend often arrives after the work is finished

Facilities teams, project managers, engineers, and property supervisors continue purchasing goods and services throughout the month. At times, receipts are submitted late, invoices arrive after work has been completed, and corporate card transactions need to be tracked separately.

This leaves finance teams still looking for information rather than focusing on closing their books.

Industry guidance under IAS 1 requires financial statements to reflect appropriate cut-off and accrual principles. At the same time, the UAE government has laid out its own set of rules on how businesses must maintain their books.

What you should focus on the week before close

The most effective way to close your books at the end of the month is to focus on the following a week before.

The property-specific month-end close checklist

While the standard accounting activities still apply during month-end, your teams should go through these additional checks before you consider the books closed. If you need a complete walkthrough of those, download our month-end checklist tool alongside the broader close process.

1. Rent and receivables

1. Reconcile the rent roll (total rental income, lease incentives, deposits, and outstanding tenant balances) to the general ledger.
2. Review tenant receipts received after month-end and allocate receipts to the correct accounting period where appropriate.
3. Confirm outstanding receivables are genuine and identify accounts requiring follow-up or impairment review.
4. Ensure new leases, renewals, and exits have been reflected correctly in both rental income and receivables.
5. Verify concessions, rebates, and lease amendments have been processed against the correct property.

2. Service charges and recharges

1. Record expenses relating to the current reporting period even if supplier invoices have not yet arrived.
2. Allocate shared property costs like utilities, maintenance contracts, security, cleaning, and facilities expenses to the appropriate buildings or cost centres.
3. Confirm recoverable costs match lease agreements and supporting documentation.
4. Ensure charges between property-owning entities and management companies are supported and recorded consistently.
5. Confirm amounts billed to tenants reconcile with underlying expenditure.

3. Property costs and accruals

1. Accrue the work completed before month-end even if invoices remain outstanding.
2. Confirm building improvements, repairs, and maintenance have been classified correctly.
3. Assign every supplier invoice, expense claim, and corporate card transaction to the correct property.
4. Allocate insurance, maintenance contracts, software subscriptions, and annual service agreements across the appropriate accounting periods.
5. Check that VAT has been applied correctly and that supporting tax invoices are available for recoverable input VAT in accordance with FTA record-keeping requirements.

4. Intercompany balances

1. Reconcile intercompany receivables and payables.
2. Review head office allocations like shared payroll, administrative costs, financing expenses, and procurement.
3. Match every recharge with its corresponding entry in the receiving entity.
4. Investigate long-outstanding intercompany items instead of carrying them forward each month.
5. Retain supporting documentation like agreements, allocation schedules, approvals, and calculations for audit purposes.

How to deal with intercompany transactions across SPVs

For property businesses that deal with multiple intercompany transactions across multiple SPVs, you should incorporate the following checklist into your month-end closing process.

• Reconcile intercompany balances before the end of the month, preferably in the third week.
• Confirm if both entities have recognised the same recharge amount in the same reporting period.
• Review your allocation methodologies to ensure costs are distributed consistently across properties.
• Investigate aged reconciling items instead of rolling them into the following month.
• Retain allocation schedules, supporting calculations, and approvals for every recharge.

The key to succeeding here is to maintain proper account reconciliation discipline month after month and keep a clean chart of accounts with dedicated intercompany codes per counterparty entity to make recharges easy to trace.

The best way forward to address month-end close challenges

The best ways to overcome the hurdles that make month-end closing a scramble for most real estate finance teams are to:

• Capture receipts and code them to the correct property or cost centre the moment a transaction goes through.
• Routing approvals automatically instead of manual follow-ups via easy to lose track of email chains.
• Applying consistent spending controls across every site.
• Synchronising approved transactions directly into the accounting system.

The easiest method to implement the aforementioned suggestions is via accounting automation. The right system will capture all of the above details as each spend happens, thereby eliminating much of the manual work that creates reconciliation issues at the very last moment.

Summing it up

As we have established, a property close involves a lot more than most generic checklists were never designed to handle. If you follow this checklist and get the four property-specific areas right, the rest of the process will run the way any well-run close should.

That said, none of this has to run on memory or goodwill from site staff. Once spend is captured and coded automatically, closing ten entities takes barely more effort than closing one. Alaan is built to make that the default.

Book a demo with Alaan to see how.

FAQs

What are the main steps in a month-end close?

A standard month-end close has five major steps: reconciling accounts, recording accruals and prepayments, reviewing journal entries, and preparing financial reports.

How long should a month-end close take?

There isn't a universal benchmark for this scenario, as portfolio sizes, number of entities, and reporting requirements all affect close timelines and vary for each real estate firm.  Your goal should be a repeatable process that produces accurate reports with minimal post-close adjustments.

What should a property month-end close checklist include?

Alongside the standard accounting tasks, a proper property month-end should cover rent roll reconciliation, service charge accruals, property cost allocations, VAT checks, intercompany eliminations, SPV reconciliations, and property-level reporting reviews.

How can you speed up month-end close?

The best ways to speed up the month -end close are to capture receipts at the point of spend, code them correctly, obtain approvals promptly, and automate data capture. This significantly reduces the manual work required during the close itself.