Accounting Spreadsheets Are Sweating Thanks to AI
What AI automates in PE real estate accounting
I’m writing a series of posts about jobs I’ve done and all the ways that AI would have made that work easier. For any of you in these roles today, I’d be curious as to how you’re using AI. Comment, DM me, tell me where I’m wrong. ;)
Quick announcement: I’ve been working on a new project with a friend. We plan to release it at the end of this month or early next. I’d be honored if you check it out. More to come soon.
Huge thanks to all of you who wrote in last week. I want to share a few of your notes in case they benefit other readers.
From Nathan:
“We rolled out Siro.ai. It’s traditionally for door to door sales of HVAC, roofs, windows, etc. but we used it in multifamily leasing. For us it listens to the apartment tour and grades leasing professionals on how well they’ve done. Really cool way for AI to make an impact quickly at the property level.”
From Chris:
If you aren’t following Marius Andreasen, you should. He is leading the charge on AI for valuations.
From Ross:
Would be really curious if you tried these finance automations with Claude’s Excel plugin. It’s 10x better than Copilot IMO.
I admit that I made the mistake of referencing Copilot too often in last week’s post. Here’s how I feel about AI models:
Alright, onto this week’s AI analysis of a PE real estate job: accounting.
If asset managers in PE real estate are the jack-of-all-trades, accountants are the workhorses. I never understood how our accounting team — particularly our CAO — accomplished so much so correctly in so little time and somehow made it look effortless.
I often joke that I’m a recovering accountant. I worked for about 6 months in accounting before my CFO swooped in and pulled me into his workstreams. While my time working directly in PE real estate accounting was limited, I worked closely with our CAO my entire time in real estate. And I’ve consulted in this area as well.
Given that accounting also covers so much ground, this post will be broken into two newsletters. Part 1 — today’s post — will cover bookkeeping, financial statement preparation, audit project management, and property-level accounting oversight. In each of these categories, I will list the typical big-ticket tasks. Then, I’ll rate how automatable that part of the job is and how much time would be saved with AI. Previous issues in this series include:
I Went Looking for AI in Real Estate Finance. I Found a Spreadsheet.
AI Isn’t Replacing Asset Managers. It’s Replacing the Mess They Deal With.
Let’s gooooo!
1. Fund bookkeeping, close, and GAAP financial statement production (monthly/quarterly/annual)
Run monthly close; post accruals, reclasses, and standard JEs
Reconcile cash, restricted cash, prepaids, deferred costs, credit facilities, accrued expenses
Maintain fund GL, chart of accounts, and accounting policies
Prepare quarterly/annual GAAP financials at the fund/syndication level and GP/LP levels:
Balance sheet, income statement, changes in partners’ capital
Schedule of real estate (cost/fair value/ownership)
Prepare and maintain footnote templates; roll-forward disclosures
Your accounting software improves much of these previously mundane activities like manually posting monthly accruals, reviewing accounts that may need to be reclassed, and performing loads of reconciliations. For example, many accounting softwares now auto-draft JEs from patterns (accruals, amortization, fee true-ups), classify transactions or provide GL coding suggestions, and have anomaly detection for miscodes. Even if you use Excel for your rollforward schedules, you can still use an Excel AI plugin or Copilot to speed this process up. I’ll provide a few links to helpful videos if this interests you. And of course, how much of this your accounting team actually does will depend on how much work, if any, they outsource to a fund administrator.
For those of you who don’t know what a fund administrator is, they do what their name describes: administer funds. They provide bookkeeping services in accordance with GAAP, waterfall calculation services, and financial statement preparation services. Most fund administrators provide additional services beyond traditional accounting and reporting services. But for now, let’s stick with accounting.
And let’s assume your accounting team decides to do their accounting and financial reporting in-house. (Because let’s be real; I or teams I worked with have used three fund administrators and ended up redoing the work of each of them. I’m sure that these fund admins have good people working in certain teams, as all big companies do, but we never found them.)
Check out the below videos from Quickbooks on how they’re using AI to improve these accounting processes. Sage Intacct says they’re using AI behind the scenes, but all the example videos were for rules-based automations. If you’re a Yardi, MRI, or similar user, you’re SOL on user videos. Unfortunately, property management software tends to be a closed ecosystem, unfriendly to YouTube influencers.
As far as maintaining/cleaning your chart of accounts, boy, would I have loved AI for this. One of my early projects included reviewing a property’s 8000+ chart of accounts (COA) to see how we could simplify it. Apparently, the previous property manager just added a new account for each new property, and the list quickly spiraled out of control. Also, creating or updating accounting policies would be MUCH simpler with your favorite LLM today. No more blank page syndrome or CTRL+F-ing your way through PwC’s 572-page user guide on lease accounting (in all seriousness, their user guides were incredibly helpful).
Having an LLM review your draft financials would also save a ton of time. Forget to update a balance sheet line item from last quarter? Added an extra comma? Maybe your net income was significantly different from quarters past? Your favorite LLM can easily compare the current quarter or annual reporting to last period’s and tell you what you should review or update. This becomes especially impactful at the LP/GP level, where you may have hundreds of changes in partners’ capital to prepare and review.
Changes in partners’ capital statements also require waterfall calculations. The waterfall structure allows you to split profits between your LPs and yourself, the fund manager (the GP of the fund). Fund administrators do this for you today. Startups like Maybern aim to make it even easier. Now, I’ve never used Maybern so I’m hopeful this isn’t required if you use them, but with fund admins, we always recalculated the waterfall splits ourselves in Excel. We just couldn’t trust their calculations to be right (often they weren’t). With some solid prompt engineering, you could automate this review process for differing calculations or differing partners. No more copy-paste tab and update, just write a good prompt and have your spreadsheet work some magic for you. At the risk of being too clear here: AI is better used to compare two waterfall outputs for discrepancies than to build a complex multi-tier waterfall from scratch. That is, today.
As part of GAAP financial statements, you must prepare and maintain footnotes, roll them forward, and include or remove disclosures as needed. Again, your favorite LLM can be a sanity-check here. Use it and save yourself the trouble of triple-checking your reports — only double-check, now.
This should go without saying but never, ever upload sensitive financials into a public AI tool. Ensure it’s your company’s private instance of an AI model and you’re approved to use it in this manner.
However, even if AI can speed up a lot of these tasks, you will still want a CPA to review the outputs. AI can make mistakes after all, and your firm and fund financials are certainly not where you want these mistakes happening. The biggest gains aren’t in posting JEs — they’re in reducing review time and rework.
How automatable is this part of the job today (out of 5 stars): ⭐⭐⭐
How much time do accountants save (again out of 5 stars): ⭐⭐⭐⭐
2. Audit project management
Own the PBC list and timeline; coordinate internal owners (asset management/finance) and third parties (admins, operators/PMCs)
Maintain audit support repository, version control, and review notes log
Manage auditor requests and follow-ups
Coordinate valuation committee sign-offs collection and storage (sometimes this is finance)
Admittedly, I have more experience being the auditor than helping with the client side of the audit. That said, enhancements in AI and spreadsheets in the last few years would have been game changers.
Version control used to be a pain in my a**. I remember creating “Capital Tracker v5.2.1.xlsx” “Capital Tracker v6.1.3.xlsx” and so on. Not having to do version control with modern cloud storage is remarkable. A huge time saver, and a relief from headaches of trying to remember what was stored in which version.
I also remember being a pro at knowing where X files lived in Y file tree. Like a speed demon, I’d whiz through my alt+arrow keys to find the right file. Now, if an auditor asks for a specific file, you could simply type in a description of the file into your drive search and it would likely find the right doc. I do this all the time with Google Drive at work today. In the same way that we no longer memorize a map and instead outsource that part to Google Maps, we now can outsource the part of our brain that memorized file trees to Gemini or your drive’s AI-powered search.
As far as task management both internally and externally, it never ceases to amaze me how few CRE professionals have heard of project management software like Trello, Asana, Jira, etc. You can even create your own version of this with Replit, Cursor, etc. quite easily these days! And you could create your own automations with this tool, like daily overviews of what’s outstanding sent to key people’s emails. Why rely on Excel when you can assign tasks and manage projects more efficiently? While project management software isn’t necessarily an AI tool, it can improve your processes dramatically if you’re still using Excel for PBC file prep and management.
One last thing to point out on auditor communications. Having been an auditor for a number of years, I always appreciated it when my clients responded kindly to me. I was, after all, a human being with real emotions just like them. So even if you’re pissed at your auditor for asking you to provide yet another BOV, please, type what you want to say to them into your favorite LLM. Kindly ask your LLM to rewrite your email in a way that Dale Carnegie would approve of. My former auditor self thanks you.
Last but not least, valuation committee sign-offs won’t be automatable with AI until we completely outsource valuations to robots. For now, sign-offs will require humans. At least most firms have moved away from handwritten signatures.
Accountants still have to communicate with auditors. We are not yet to the age where you can have your PE real estate firm’s AI connect with the auditor’s AI to exchange relevant information. Until then, this part of the job will remain manual.
How automatable is this part of the job today (out of 5 stars): ⭐⭐
How much time do accountants save (again out of 5 stars): ⭐⭐⭐
3. Property-level accounting review
Bank recs and cash controls
Review property financials for completeness and correct coding
Balance sheet integrity checks (payables, accruals, intercompany, reserves)
Loan statement tie-outs; interest expense reasonableness
AR aging monitoring for accounting accuracy
Enforce accounting rules requested by fund (capex capitalization thresholds, required GL accounts)
For some firms, much of this work falls under the roof of asset management. For others, accounting manages all of it.
Bank recs are worth repeating, so I’ve snipped below the relevant pieces from my previous post on AI in asset management.
So technically, the bank reconciliation review is part of the monthly reporting package. At least typically. Why am I repeating it here?
Because this is one of the many areas where things could go very badly if you’re not doing your fiduciary duty for investors.
If you’re a PE real estate firm, your operator or PM team will prepare the bank reconciliation. All you have to do is review it to make sure it’s right and reasonable. But each property has several bank accounts, and you have a lot of properties to manage. Sure would be nice to automate this somehow, right? And with a bit of upfront work, I think you can.
Claude, ChatGPT, Gemini, etc. are all pretty good at reading and interpreting standard documents (or images of documents) now. If you stored in your database what the starting and ending bank balance should be for that month, then (working with the APIs, not in chat) you should be able to have your AI tool extract those balances and compare them to the appropriate GL accounts for each bank. This will require you to have solid records of each bank account at each property, and to have documented it appropriately in your database.
Most of you probably won’t want to do the fairly significant amount of upfront work to set this up, and knowing how crazy your job can be, I don’t blame you. But I found bank recons to be one of the most tedious parts of the job, and if you can put in the hours (or have your intern help) to have AI do the first look here, I’m sure that would save your sanity. It would have saved me more hours than I care to admit!
In summary, if your firm is comfortable using API-based AI tools in a secure environment, an internal AI workflow could extract beginning and ending balances from bank statements and compare them to GL balances automatically. This requires clean data architecture and internal controls — which few have — but in the right environment, it can be achievable.
For property financials, I would have my favorite LLM compare current month to prior month GL details, specifically looking for any changes from ending past month to start of current month (post-close entries). I’d have it review current to previous financials and ask it to sanity check, identifying any balances that seem to have increased or decreased significantly, identify new or removed accounts or groupings, and use its general knowledge of real estate accounting to tell me if anything appeared off. Do this both for the financial statements and the GL detail.
Your favorite LLM can also help automate loan statement tie-outs. We used to have part-time employees and interns reviewing loan statements to ensure they tied to balance sheets. AI excels at document reviews and comparisons. Send this to them and repurpose your intern, or promote them to reviewer ahead of your review.
Similarly, you can have your LLM review AR aging schedules from month-to-month to identify variances or flag items that seem long outstanding and should be written off.
Lastly, as a PE real estate accountant, you get to create certain accounting rules for your operators’ and PMCs’ accounting teams to follow. For example, at what dollar threshold should they capitalize groups of expenses? How should they account for equity (all in one account or break out contributions, dividends, capital distributions, etc. altogether or by entity)? Again, your favorite LLM can help draft these procedures. Don’t you love solving writer’s block and benefiting from the wisdom of the masses!?
Accountants could save a ton of time by automating or enhancing their property-level financials and accounting documents review. This is where AI can really shine.
How automatable is this part of the job today (out of 5 stars): ⭐⭐⭐⭐
How much time do accountants save (again out of 5 stars): ⭐⭐⭐⭐
The real benefit to PE real estate accounting isn’t fewer journal entries. It’s fewer mental tabs open. AI is strongest at scanning for anomalies, comparing periods, and surfacing exceptions — not replacing your accountants’ judgment.
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I love the phrase 'spreadsheets are sweating', it perfectly captures the shift we're seeing. The era of manual 'spreadsheet heroics' is definitely ending. I've found that using an AI-native system like Runeleven really helps bridge that gap; it handles the heavy lifting of the data so we can actually focus on the interpretation and advisory work you’re talking about. Great piece!