Getting through the standard End of Month in a busy Real Estate office can be tough on it’s own but throw the End of Financial Year into the mix and it becomes survival mode.
It really doesn’t need to be that stressful if we do just three simple things:
- Preview
- Reconcile
- Backup
End of Financial Year Statement Previews:
They are necessary because it prevents us from making mistakes that would otherwise not be detected without doing a statement preview. What things are you likely see when doing a statement preview?
- Missing addresses
- Poorly allocated expenses
- Poorly allocated revenues
Your software provider should give you the ability to preview the statements and amend any errors before running them.
Your clients will be expecting that these reports are spot on since it’s generally a service that we charge our owners for. In particular, commercial owners will be relying heavily on the income/expenditure statement to calculate their GST obligations so they definitely need to be correct.
Ask you software provider how to fix the statement by assigning the correct chart of account codes to the appropriate item. For example council rates is entered as an expense item rather than a revenue.
Avoid this process the next year by preview monthly rather than annually and fix the mistakes within each month rather than having it creep up at the end of the financial year and becoming a huge task, especially if you have a large rent roll.
Ledger Previews:
One of the other things we can do in our software is to perform ledger previews. This could involve going through the unidentified deposit accounts or holdover ledgers and clearing out as much as possible before EOFY.
After all there may be income sitting in the ledger which belongs to someone in the current financial year. Correctly assign it to the right account by reversing and re-receipting or journaling to the right ledger. Whatever the process is in your software then make sure it’s followed. ‘Clearing the account’ doesn’t mean that you put the funds into your own pocket.
Want to avoid doing this next year? Maintain the account more regularly and disburse the funds held. Do not allow the funds to accumulate to a point where it’s out of control.
Reconciliation:
The Regulations state that we must reconcile within 21 days after the End of Month but most Trust Accounting software available today make it so easy to reconcile on a daily basis.
Don’t create more stress for yourself by leaving to the last day or on the morning of EOFY to attempt to balance the account because it is a genuine nightmare. If you don’t balance then you can’t pay your Landlords and you’ll be sitting there all day trying to work it out.
Backup:
Section 22 (10) of the PSBA Regulations 2014 tells us that backup must be done at least once per month. In my opinion, this simply isn’t enough. You must backup your data daily. It’s so important. Imagine if you lost all of your trust accounting information on the morning of EOFY? This is one of the most stressful things that could happen to you.
Following our 3-2-1 backup rule is definitely one way to avoid ending up in the insane asylum.
How do you survive End of Financial Year? Lots of caffeine? Do you have some tips worth sharing? Do you think that statement previews are good or bad? Do you charge your clients for End of Financial Year Statements? We would love to hear your thoughts. Comment below.
Reminder: Have you booked in your trust audit?
The annual audit period is nearly here. Ensure you book in your audit with a qualified Real Estate auditor before the 30th September 2015. You can also follow our easy audit file test.
~ 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.