Each and every year we go through the same stresses and heartache of pushing uphill through another End of Financial Year period. Why is this time of year busier than others? We are generally completing our standard end of month so trying to get as much rent in the account as possible, mix that with end of financial year processing or close off procedures and not to mention our audit is just around the corner…HELP!
Don’t continue to put yourselves through these stresses when there are 10 simple things you can commit to this new financial year and incorporate into daily practice. We don’t need to just survive – we can thrive, it just takes commitment and a little planning.
Our New Financial Year Top 10 Tasks
- Reconcile daily
- Internal self audits
- Backup more often
- Adopt a risk management plan
- More training
- Account audits
- Review new & old management agreements
- Update policies & procedures manuals
- Keep better trust records
- Understand the regulations
Reconcile daily
If you’re using a good Property Management Software then you’re already on the way to achieving a successful bank reconciliation every single time but despite ease of use with your software, many agents will maintain that they will continue to do the reconciliation on a monthly basis because ‘its what the Act says’ or it’s how they were taught. This is generally how mistakes occur.
Here are 5 Reasons Why You Should Reconcile Daily rather than monthly.
Internal self audits
If there is ever a time that you could audited in your office, it will be when you’re away or totally unprepared. Safeguard yourself by simply carrying out regular file checks and by following our Audit File Test and also follow our list of 10 Steps for Surviving a Fair Trading Audit, applicable to NSW agents however it wouldn’t hurt to follow in other states across Australia.
Backup more often
You only have to experience backup failure to know the level of pain that it inflicts on an office or indivdual. Loss of data is enough reason to quit your job. Theft, power surge, technology failure or even something simple like accidentally unplugging a power cord can spell disaster. Avoid the tears & follow our 3-2-1 Backup Rule.
Adopt a risk management plan
What happens if your trust accountant walks out the door? If your only property management gets sick? How about if the licensee is sick? As the saying goes – if you fail to plan then you plan to fail. It’s a pretty straight forward concept. Arrange a meeting with your staff and collectively implement a risk management plan.
Remember, if it can happen – it will!
If you’ve never constructed a risk management plan there are many free templates available for download from the internet. You will consider all possible risks to the business while you or other staff are away and rate them according to likelihood and consequence. After this you will decide what the appropriate action is for each risk: Avoid, Reduce, Transfer, Finance or Retain. Also read about Licensees Taking Holidays: Can You Properly Supervise from Overseas.
More training
Earlier in the year NSW Fair Trading Officers conducted a blitz on 114 Real Estate agencies in the Cronulla and Sutherland Shire areas. 17 individual agents were fined $550 for not meeting the mandatory training requirements of their license and several agencies were also fined. Training is not compulsory in each state of Australia however it doesn’t mean that we shouldn’t keep up to date with what’s happening in the industry. Register for industry networking events, free webinars or structured in-house training are all good ways to ensure that everyone up to date with the latest rules and regulations. You can never have too much training!
Account audits
These differ from self audits as it is an audit that you conduct on the ledger accounts that are held by your office. It generally involves going through your holdover account (also known as suspense ledger and unidentified deposit ledger) and regularly clearing this out. There may be income sitting in these ledgers which belongs to on of your clients accounts. 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 and don’t leave it to build up for the next financial year. Also see our guide to Dealing with Unclaimed Trust Money.
Review new & old management agreements
Are your agency agreements current? If not then you may have to update the agreement between yourself and your client otherwise it could potentially disallow full entitlement to commissions. For NSW agents we must be using the latest version of the sales agency agreement that includes the important and warning clause.
Additionally ALL agreements are considered non compliant if they are not signed by all parties and MUST have the inspection report page completed (NSW).
If you run a large office with a high volume of listings and managements, you may want to dedicate one morning per month to checking all the new agreements for the prior month to ensure that staff are correctly completing as required.
Update policies & procedures manuals
Most offices we visit are using the same policies and procedures manual that they have been using since they opened their doors, with out of date policies or they don’t have one at all. It is practical to review your polices and procedures manual quarterly to ensure practices are current. For example, are all staff aware of cash/cheque handling procedures? Your policies and procedures manual is likely to change over time and as technology changes so it’s really important that you keep up with these changes and ensure that procedures appropriately match to the current days activities with using the latest processes and technology.
Keep better trust records
This is something that we can implement in our daily practice. Writing notes on that days bank reconciliation or bank deposit sheet will save us from remembering why we did something as at that point in time. For example you receipted rent to the wrong tenant and paid out that owner. You may not remember making that adjustment in the system so a note on that days reconciliation could great way of keeping a log.
You may be questioned tomorrow or in one years time but making notes on that day ensures that you’ll always remember what you did and there is less explaining that you’ll need to provide to your auditor or your regulatory body.
Understand the regulations
One perfect way to stay updated and across the industry changes is by subscribing to your regulatory body. For NSW agents this is NSW Fair Trading. Team meetings are good for all staff to be aware of your state regulations and how they apply to daily practice. Commit to reading one regulation per meeting. Have a group discussion around it’s meaning and how you can avoid a breach for non compliance.
Are you super organised and doing this already? How do you ensure compliance is met and maintained in your office? Do you have dedicated compliance staff conducting regular checks? Do you think that this is something that you need to implement? We would love to hear your thoughts. Comment below.
~ 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.