Earlier this month we discussed unpresented payments and how to avoid them. This week we go one step further with best practice when dealing with unpresented cheques.
The use of cheques has been declining in Australia and many other countries due to the increasing popularity of online banking.
According to 9news.com.au cheques will be completely phased out in Australia by 2030 but other banks may be phasing these out sooner so it’s now the opportune time to progressively transfer any of your Owner or Suppliers you have across to EFT transfers.
This may be easier said than done.
We all know the Old-School Owners. We all have at least one.
The ones who like to receive their End of Month payments by cheque instead of EFT.
However, we have put together a list of ways you can identify any unpresented items and avoid being breached for non-compliance.
Dealing with unpresented cheques
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Regular Reconciliation
Perform regular trust account reconciliations, preferably monthly. This involves comparing the trust account records with the bank statements to ensure that all transactions are accurately recorded.
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Identify unpresented cheques
Identify any cheques that have been issued but not yet presented to the bank.
These are referred to as “unpresented cheques” or “outstanding cheques” depending on which software you’re using.
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Record unpresented cheques
Maintain a list or ledger of all outstanding cheques.
This list should include details such as the cheque number, payee, date issued, and the amount.
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Monitor aging of unpresented cheques
Keep track of how long each cheque has been outstanding.
As cheques age, their likelihood of being presented decreases. It’s essential to monitor these to avoid potential discrepancies.
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Contact payees
Reach out to payees of outstanding cheques periodically to inquire about the status of the cheques.
Encourage them to deposit or present the cheques promptly.
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Update records
When an outstanding cheque is presented and cleared, update your trust account records to reflect the withdrawal of funds.
Ensure that your records are always accurate and up to date.
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Rectify discrepancies
If there are discrepancies or errors in your trust account related to unpresented cheques, take immediate steps to rectify them.
This may involve making necessary adjustments and documenting the corrections.
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Maintain a clear audit trail
Keep a clear and detailed audit trail of all transactions related to unpresented cheques.
This documentation will be essential for audits and compliance checks.
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Seek advice
If you encounter complex issues or technical questions regarding unpresented cheques or Trust Account management, seek professional advice.
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Stay informed
Stay updated on the latest regulations and guidelines related to Trust Accounting in NSW.
Compliance requirements may change, and it’s crucial to stay informed to ensure that you’re following best practices.
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Regular training
Provide regular training to staff members responsible for trust account management.
This will ensure that everyone understands their responsibilities and the proper procedures for dealing with unpresented cheques.
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Utilise Trust Accounting software
Consider using good Trust Accounting software or tools specifically designed for trust accounting to streamline the process and reduce the risk of errors.
Manual Trust Accounting is never fun for anyone.
It’s important to note that trust accounting is a highly regulated area, and non-compliance can result in serious consequences.
Therefore, it’s essential to maintain accurate records, follow best practices, and seek professional guidance when needed to ensure the proper management of trust funds in an NSW Trust Account.
As always, if you require assistance with cleaning your unpresented cheques, get in contact with the team at End of Month Angels to discuss our support options.
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.