In our last post, we explored three challenges of property tax forecasting and budgeting. If you’re doing your forecasts and budgets in Excel, this process can be painstakingly slow. Luckily, technology has come a long way, and there are many tools that you can leverage to:
In this post, we’ll share four ways that technology can help improve your property tax budgeting and forecasting processes.
Because forecasts are so data-centric and data-heavy, you ideally want access to your historical data across your portfolio in one central location. Having historical data at your fingertips can help you identify jurisdictional trends and, consequently, how they impact your forecasts for the upcoming year. For example, knowing how the rate changed over the last several years can help predict how you should forecast for the future. This is especially helpful if you’re creating multi-year forecasts.
Having readily available historical data also helps you create forecasts faster. What’s more, the “big picture” data is what makes forecasts truly meaningful. You can look at the forecast, compare it to the actual values, and reforecast easily as new data comes in.
Conversely, if you don't have a repository with this historical data, forecasts can be tedious: searching for and assembling historical tax rates, values, and other data points out of 100s of spreadsheets or off individual jurisdiction’s websites, manually scraping paper and electronic tax bills and documents, working with dozens of third parties to fill in gaps...you get the picture.
If your team doesn’t have the bandwidth to gather all of this data for your forecasts, it may force you to cut corners. This may mean making a less accurate, more high-level forecast instead of a more granular, highly accurate one, simply because you don’t have the time.
As we mentioned in the last post, many companies will complete property tax projections by jurisdiction, as the assumptions tend to be the same, before drilling down to individual locations and granular detail.
Property tax software solutions like itamlink offer a Data Manager, which allows you to manipulate data in bulk. This means you can complete your projections for an entire jurisdiction or even state at once, instead of going line-by-line in a spreadsheet.
If you’re not using property tax software, completing forecasts by tax type (County, City, School, Personal Property, etc.) and for each parcel or property may be difficult (or impossible). That’s because you can’t go down to the level of granularity that you need in a spreadsheet, such as pulling up an individual tax type by parcel. What’s more, your forecast represents multiple tax types and parcels rolled into one. It’s impossible to compare later, as you receive the actual bills, to see how truly accurate you were. Finally, it’s impossible to link to your accruals from spreadsheets. As such, you may be forced to complete forecasts at the property level, and also forego detailed retrospective analyses, which aren’t as accurate.
Ideally, we recommend you complete forecasts by tax type by parcel. This is only possible with software, where you can pull together historical data (as mentioned above), and drill down to individual parcels and tax types to make extremely detailed projections.
Of course, once you’ve created your forecasts and budgets, you’ll need to present them to senior leadership. But executives don’t have the time to review your detailed projections; they want to understand quickly and concisely how your projections will impact the business.
When you use dedicated software to complete your property tax projections, you can track at the granular detail level, as well as build high-level, summary reports based on the big picture. The details are important for review and for pulling out insights; the high-level reports are effective for reporting up the chain and for providing a holistic overview.
As part of this, you may be able to leverage built-in reporting tools to prepare these reports (in a single software, too). That way, you can easily show executive leadership clear, accurate projections and liabilities for the upcoming tax year.
Forecasting and budgeting can be involved, complex processes for property tax teams. But with technology, they can be made easier, actionable, and more useful.
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