[Sponsored Content] Client service lead at technology-enabled accounting and consulting firm, Ximplifi, Kailey LeCompte explains the financial risks for property managers when it comes to leaning too heavily on software.
Similar to many other segments across the hospitality industry, short-term rental management companies face immense pressure to evolve rapidly and manage increasingly complex operations. In response, a wave of new technology solutions has emerged, offering automation, scalability, and cost savings across nearly every aspect of property management.
While software can be transformative, it is not without limitations, particularly when it comes to financial operations. Understanding where software excels and where human expertise remains essential can help STR managers make more informed decisions and avoid hidden pitfalls.
The Allure of Software in STR Management
There’s a reason that technology is so prevalent across the short-term rental industry. Tools like property management systems (PMS), dynamic pricing engines, and spend management platforms offer automation, real-time data, and centralised control. These systems help reduce manual work, improve accuracy, and allow managers to scale their operations with lower overhead costs.
Since many property managers have found success using an in-house technology
approach in other areas of the business, it’s easy to assume that accounting would be
no different. However, it’s important to recognise that software is only as good as the
person using it.
Accounting requires specialised knowledge and carries higher risk, with mistakes
leading to compliance issues, financial uncertainty, and lost trust. When it comes to
financial management, even the most advanced tools can’t replace the strategic
thinking and oversight of someone with a professional background in short-term rental accounting.
Financial Risks of a Tech-Only Approach
1. Mismanaged Trust Accounting
Trust accounting is one of the most regulated and high-stake aspects of STR
management. Funds collected on behalf of property owners must be handled with
precision and in compliance with state laws. While many software platforms offer trust accounting features, they still require manual setup and ongoing oversight.
A single misconfiguration can lead to improper fund allocation, delayed owner
payments, and skew financial reporting, resulting in false assumptions about the
company’s cash position. Without proper oversight, even well-designed software can
lead to errors that negatively impact the business.
2. Lack of Financial Oversight and Strategy
Software can generate reports, but it can’t always spot inconsistencies or offer strategic advice on how to interpret the data. STR managers who rely solely on tech miss out on the insights that come from working with a financial advisor, like identifying revenue leakage, optimising profit margins, or measuring performance against relevant benchmarks.
This can result in missed revenue opportunities, inefficient spending, and a lack long- term financial planning that slows business growth.
3. Hidden Costs of DIY Tech Management
Managing software isn’t always as “hands-off” as it seems. STR managers who expect
an out-of-the-box solution can end up spending hours or days of their team’s precious
time learning new systems, troubleshooting issues, and managing integrations.
Every hour spent wrestling with software is an hour not spent improving guest
experiences, building owner relationships, or growing the business. Even if it doesn’t
appear on a balance sheet, this opportunity cost adds up over time. If property
managers calculated the revenue-generating potential of that lost time, they’d likely find
it exceeds the cost of outsourcing those tasks to professionals.
The Missing Piece: Human Insight
What’s missing from the tech-only equation is human expertise. A financial advisor who
understands the STR industry can do more than just run numbers. They can:
- Ensure trust accounting compliance
- Interpret financial data and offer strategic recommendations
- Identify risks before they become problems
- Help plan for growth and long-term goals
The best approach isn’t choosing between software and expertise; it’s combining them. A hybrid model that pairs powerful technology with experienced financial advisors gives STR managers the best of both worlds: automation and insight, efficiency and security.
Don’t Let Software Be Your Only Strategy
While some STR managers successfully manage financial operations in-house, others
may find that outsourcing provides greater accuracy and peace of mind. Over-reliance
on software can introduce financial risks and often demands more time and attention
that could be spent on revenue-generating activities and strategic growth.
Technology plays a vital role in today’s STR landscape, but it shouldn’t stand alone.
Pairing your tech stack with expert financial guidance helps avoid costly missteps,
ensures compliance, and supports long-term success. For STR managers looking to
grow with confidence, a hybrid approach offers the best of both worlds.
To get in touch with a vacation rental accounting expert, visit ximplifi.com