3 Strategies to Optimize Cash Flow in Commercial Real Estate

ARTICLE | July 09, 2024

If you own real estate, you know how vital it is to manage your cash flow in commercial real estate investments. You need to know income and expenses, of course—but you also need to factor in potential changes in insurance, property taxes, rental policies, and more, so you can maintain a steady, positive cash flow in good times and bad.

Let’s delve into three key strategies that can help you achieve these objectives and maximize your property revenue over time.

Strategy #1: Rent optimization

It’s a deceptively simple question: Are you charging your tenants the right amount? Rent optimization—setting rents at the optimal level to maximize revenue without driving away potential tenants—is critical to maintaining a strong cash flow, and it requires ongoing effort.

To assess your current rents, research local rental markets to understand trends, demand-supply dynamics, and rates for similar buildings in your area. Analyze data from online listings, property management software, and real estate websites to benchmark your rents against comparable properties.

Strategy #2: Lease administration

Efficient lease administration can save you hours of time and help ensure consistent cash flow in commercial real estate. For example, cloud-based, business-wide accounting software solutions like Sage Intacct can automate the rent collection process, provide a centralized repository for all your lease documents, and track lease expirations.

Sage Intacct and other advanced accounting solutions can also help ensure that you comply with all the latest rental laws, regulations, and requirements to avoid potential fines or disputes with tenants. 

Strategy #3: Operational efficiencies

Especially as your real estate portfolio grows, you need to make your operations as efficient as possible. That likely includes partnering with reliable contractors and property management firms to outsource maintenance and cleaning tasks, as well as potentially investing in security systems smart home devices, and other technologies. 

Sage Intacct again proves helpful in streamlining your accounting processes, automating invoicing, and managing both your business and real estate financial data effectively. Integrating Sage Intacct with your property management operations allows for seamless financial reporting, budget tracking, and expense management, so you can make informed decisions and optimize cash flow.

Get the support you need to manage cash flow in commercial real estate

Insero & Co. is a public accounting firm with decades of experience working with businesses and nonprofits, including many with commercial real estate investments. Our experts provide customized consulting services and end-to-end business optimization services. We can also serve as an extension of your accounting department and fill specific positions to meet your immediate needs.