Countries within the EMEA region offer very compelling value for Real Estate Investors which in turn increases the demand of specialist property management expertise.
Fulfilling the specialist needs with a supporting Property/Investment Management system of an Investor or Property Manager on a per country basis within EMEA is not as straight forward as it may appear. For the uninitiated, it is a Pandora’s box which can have a negative impact on the effectiveness of how their new country operation functions.
Countless companies have underestimated the complexity of implementing in EMEA. They have all come to learn the huge benefit of clear precise diligence coupled with a structured project plan and the right expertise is paramount to ensure their continued success.
The EMEA region comprises of 128 countries: 58 in Europe, 56 in Africa and 14 in the Middle East.
Each country has its own unique fiscal and legal requirements as well as property management requirements. The unique requirements are also true of each of the eighteen countries that have adopted the Euro as their currency.
In addition, each country has its own legal jurisdictions and customs. Some countries do have some similarities but it should never be ignored there are far more complexities that must be understood in order for any system to be implemented.
Currency is quite often the first consideration of suitability of any Investment and Property Management system.
However, currency is not straight forward because it affects multiple parts of the system. i.e. processing and reporting.
One of the wider implications of currency is to understand the property management system’s ability to process, record and report in a multi-currency world. It is paramount to understand the full needs and requirements of each country. Any limitations uncovered will have an impact both internally and externally. Crucially, it will have a huge bearing on your legal requirements perspective too.
Multi-currency businesses models will need to give due consideration to their full currency requirements. For example, taking into consideration the country’s exchange rates, exchange rate frequencies and differences as well as how processing and reporting is handled.
There are some systems that have limited currency functionality which is often due to the complexity of processes and reporting requirements which are essential for successful multi-currency systems.
The convolution of this area often requires specialist assistance to focus on navigating through the multi-currency minefield.
Custom, Cultural and Legal differences
Countries, companies and industries always differ on cultural descriptive terms of processes. It’s always a good idea to ensure the appointed project group are all on the same page and adopt, agree and understand common terms.
Fiscal and Tax processing and reporting requirements vary from country to country and are highly complex. Understanding what is required is core to its compliance. For example: GDPdU in Germany.
Some example questions that need to be asked are:
- What are the Fiscal/Tax Requirements?
- What are the VAT processes and where is the VAT liability?
- How does my VAT need to be reported and when?
- How does the system cope with withholding tax?
- Is the existing Property Management System able to process the required transaction in the correct manner and report in the required fiscal format?
The answers to these sample questions are vital in ensuring a legally compliant implementation of your Investment/Property Management system.
Reporting and Invoicing
The Invoice/Credit Note Challenge
Your existing Investment/Property Management system produces invoices and credit notes which have been your conventional format for years. But are these invoices and credit notes suitable for a new country? Yet again, what appears to be the same process is often far from that. Each country’s customs and more importantly legal requirements vary considerably.
Countries such as Poland, Germany and the UK have very different ways of processing, numbering and formatting of both invoices and credit notes.
Is your existing Investment/Property system ready for processing statements, application for payments or even the Polish Corrective Note and handle the resulting legal reporting?
Chart of Accounts – Legal Charts, Reporting Charts – What is the challenge?
Having a well-structured, planned and thought-out Chart of Accounts is vital for clear, precise and meaningful financial & fiscal reporting both internally and externally.
In many countries across EMEA the fiscal Chart of Accounts is mandatory by law and differs hugely from your internal reporting requirements.
It is necessary to establish if the existing or proposed new Investment/Property Management system will meet all of your multiple Chart of Accounts and legal needs to enable the correct processing and reporting.
Yet again, there are many questions that need to asked and answered. Sample questions can be:
- What are this country’s particular legal requirements or legal Chart of Accounts structure?
- Do we need multiple charts of accounts?
- What are the individual Chart of Accounts or reporting Charts of Accounts needed to ensure that both legal and business requirements are met?
We trust this article makes it clear that understanding the process and procedure of a particular country is vital for a legally compliant implementation and yet there are many more key areas to consider, for example:
- Receivables, GL and AP Specific Requirements
- Service Charge or Recoveries
- Current Process Vs Process Re-engineering
- Terminology and Language Differences
Fiscal requirements change with every country’s jurisdiction. Understanding each country’s fiscal requirements for fiscal legality is key to each successful Investment/Property Management software implementation.
The professional guidance of an experienced software implementation specialist should be sought at the offset of the project plan to ensure the project milestones are achieved. This will ensure cost and internal resource are minimised so as to not impede the company’s progress in a new region.
Kyriacos Striftombolas, the MD of TopUp Consultants & a new contributor to the Global Real Estate Experts Platform. Check out his LinkedIn account.
Top image credit: Ashraf Jandali