We all make mistakes. It’s what makes us human.

But when you make a mistake whilst reconciling your accounts, it can just be damn right inconvenient.

The good news?

There are 10 basic mistakes that the majority of clients make at one time or another.

We detail them below as a heads-up so you can avoid them.

How many have you crossed off your list?

The top 10 reconciliation errors of all time

  1. Reversing the dishonoured rent payments in the wrong period

    Never dishonour payments in the ledger until they show on the statement as a debit at the bank.

  2. Opening the period when rent has dishonoured

    Once the period is closed you should not open the period again to dishonour the rent.

    Otherwise, you’re effectively altering the cashbook, ledgers, and trial balance that the Licensee has already signed.

    All dishonoured rent payments should be corrected in the new period.

  3. Reconciling the withdrawals in the incorrect period

    Sometimes batch payments created at end of month will be debited from the bank on different dates.

    Mark batch payments as ‘reconciled’ in the month that they appear on the bank statement.

  4. Not updating the closing statement up to and including the last day of the month

    The closing balance for the entire period must be taken up to and including the last day of the month.

    Even if the last day of the month was the weekend.

    This is so the entire period is reflected in the reconciliation and will capture any real-time payments appearing at the bank in the correct period in the software.

  5. Receipt cash and receipt it again as EFT

    Cash deposits may appear on your bank statement as “Deposit”.

    It is important that the cash is marked as ‘deposited’ in the reconciliation and not re-receipted as a new deposit. If done so, this will cause duplicate entries in your ledgers thus putting your reconciliation out of balance.

  6. Not banking cash payments in time

    All cash should be deposited within 24-48 hours from receipt of funds. Any longer than 48 hours may raise red flags in your audit.

    This is particularly important toward the end of the month with any cash deposits not banked as you’re essentially paying Owner’s money that hasn’t been banked into your trust account.

  7. Receipting with the incorrect payment method

    Any amounts paid by card in your agency should be receipted as a credit card in your trust accounting system and not via Direct Deposit.

    If the card payment is a ‘debit’ card this is still considered a card payment in the software, not EFT.

  8. Merchant banking doesn’t match reconciliation

    Any amounts taken via the credit card terminal must be entered into the system on the date the payment was received.

  9. Reversing a payment from a batch file that’s already been uploaded and approved at the bank

    Before reversing payments in the ledger, you need to verify that the payment wasn’t part of a larger batch that has already been debited from the bank.

  10. Processing debits at the bank before processing in the system

    Remember the golden rule of trust accounting ‘system first, bank second’.

If you do find yourself in a situation where your account is unreconciled. Contact our qualified team of Angels to discuss our support block solutions.

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 26 years’ industry experience. Don’t trust just anyone with your trust accounting. Book an appointment with an End of Month Angel today.