Are you a startup Real Estate office looking for the right bank to open your trust accounts with? Or are you an existing Real Estate office and considering switching banks? This post discusses the considerations that need to be made when selecting the right bank for running the trust account.
Our Top 7 Banking Considerations
There are many things to consider when selecting the right bank to manage your Real Estate trust account, however only a handful of these banks are up to the task of creating efficiency and maximising the full capability of your trust accounting software.
It is imperative first and foremost that whoever you select must be an authorised deposit taking institution under the meaning of Section 87 of the PSBA Act 2002. To view the list of Authorised Deposit Taking Institutions approved by NSW Fair Trading click here.
You will need to ask your bank if they offer the following services:
- Business Banking Interface
- Token Password
- User Restriction Controls
- Multi-bpay
- Multiple Direct EFT payments
- No Limit on Transfers
- Auto-Receipting
Business Banking Interface
If you select the same bank as your personal banking, does the bank offer a separate login from your personal banking profile? This lessens the potential of confusion and the potential for making transfers from the wrong account.
It also excludes the personal accounts from full view if you wish delegate an employee from your office to manage the trust account on your behalf. You don’t want them having access to your personal accounting screen and knowing all of your personal affairs.
Token Password
This is a small portable electronic device issued to you by your bank which may also come in the form of a USB. It produces a series of numbers that you are required to enter when transferring money from the trust account. It just adds another level of security and restricts the ability to release funds if the bank account login details got into the wrong hands – 3rd parties would be unable to release money without entering the code that comes from the device.
User Restriction Controls
This is a simple user profile that can be set up within your business banking account. Not all banks will offer this function. It allows the Licensee or Director of the company to have control over who is releasing the trust funds. You may provide ‘read only’ access to your bookkeeper or Property Manager so they can download the bank statement every day but under this access they are unable to release any funds without further approval.
Multi-bpay
This is an electronic file which is created by your trust accounting software and contains all of the biller codes and reference numbers for each of the invoices that you are required to pay on behalf of your clients properties.
Why would you need this? As your portfolio grows ask yourself – do you really want to be writing 100’s of cheques at end of month? Multi-bpay facilitates the payment of your invoices in bulk by processing one file. There is no lining up at the post office. It maximises efficiency and cuts hours from your end of month processing time.
Multiple Direct EFT
This is another electronic file type which is created by your banking software. It contains the amounts, names, bsb and account details of all of your clients that are disbursed at end of month.
Why would you need to do this? It is huge time saver at end month plus it minimises the risk of keying in the dollar amounts that you’re transferring out of the trust account to the clients. If you accidentally key in the wrong amount when making the transfer then you run the risk of overpaying the client and overdrawing the trust account thus potentially putting the trust account in negative which is a breach of the Act.
No Limits on Transfers
There should be no limit on the amount that you can transfer from the trust account. Some banks set a daily limit of $20,000.
This only restricts the processing of your end of month payments and sales settlements. If you are holding $60,000 in your trust account, your Landlords don’t want to wait to receive their money over a 3 day period. They want to be paid now! You need to discuss this with your bank and lift the limits so that you can perform the necessary disbursements with ease and maintain a healthy relationship with your clients.
Auto-Receipting
Auto receipting is a daily banking file which is downloadable from your banking product and contains all of the credits and debits of the daily banking transactions.
Why would you need this? This is particularly useful as your rental portfolio grows and there are 100’s of daily transactions. How does it work? The trust accounting software matches the transaction by name, address, amounts and reference numbers to the credits on the bank statement and looks for matching debits in the software to payments that have been created in the program. It saves hours of time in receipting and daily reconciliation.
You may not require this at the initial start up phase of your Real Estate however it is good to know that your bank has this capability for when your portfolio reaches the right size for utilising this feature.
So which banks offer all of these features?
In our professional experience in dealing with banks and trust accounting, the following banks offer ease of use, the above features and sync with most trust accounting software:
- Macquarie Active Banking*
- ANZ Business Banking*
- Commbiz Version 5*
- Westpac Payments Plus*
- NAB Connect* (Bpay Not Released Yet But Coming Soon)
Did you know about these features? Are you already using these features in your office and if so what feature do you find saves you the most time? We would love to hear your thoughts.
*We are not affiliated with any of these banks. These recommendations come from experience and industry knowledge. You should make all enquiries and decide which product is right for you.
~ Jane Morgan is the Director of End of Month Angels, a consultancy firm specialising in Trust Accounting. Jane knows the legislative requirements of running a successful Real Estate office through her 18 years industry experience. Don’t trust just anyone with your trust accounting. Trust End of Month Angels and get back to what you do best – growing your business.