A client had a rent roll for a large shopping centre with three floors. The rent charged is based on the footfall of the unit’s location in the shopping centre.
The teeny, tiny error…
While preparing the quarterly report, the centre manager unintentionally assigned a vacant unit to the wrong floor in the rent roll, which resulted in underestimating the potential rent for that space.
Unless a business that manually processes its rent rolls has robust data-checking methods in place, such an error could go unnoticed for – who knows how long?
And the big consequences
- One incorrect value could lead to inaccurate financial reports, budgeting and forecasting.
- Rental income is a crucial factor in determining the price of commercial properties. In this instance, when capitalising the rent to determine the potential price of the building, the impact was close to €1 million for this large unit as a result of the capitalisation of the lower rent of the unit.
- Inaccurate financial reporting could also erode the trust of stakeholders, including investors, lenders and partners.
- The company’s credibility could be compromised, leading to challenges in securing future investment and business opportunities.
- And when the error is finally uncovered, there’s the manual work of reviewing and adjusting calculations, reports and analyses – and rebuilding credibility, trust and reputation.
Identifying the error in the vast rent roll would have involved manually cross-referencing entries – a highly labour-intensive task with opportunity costs.
As a result of the client already processing their rent rolls on PRODA’s platform, the error was caught very early.
PRODA’s unique tracked-changes feature automatically compares the latest rent roll to previous versions and flags any anomalies, so the discrepancy was instantly highlighted and corrected.
By detecting and rectifying the rent roll error promptly and efficiently, the client avoided potential financial mis-estimations that could have resulted in a costly repercussion.
If you could do without the headache of errors like this in your rent rolls – or want to see the full powers of rent roll automation – talk to us today.