End of the month and bank not reconciling?

Freaking out and wondering where to start looking?

It can be really stressful not being able to reconcile your Trust Account. Especially if it happens on the last day of the month.

So where do you start?

This all depends on the Trust Accounting software you use. However, generally, the principals for reconciling are the same, irrespective of your software.

Here are some helpful hints to guide you through the process.

  1. Check your closing balance

    Ensure the closing balance is correct and you’re not entering another balance from the bank statement. Sometimes the bank statement will show two closing balances ‘Available’ and ‘Current’. Always use the ‘Available’ balance as at the date you reconcile to.

  2. Check presented withdrawals

    Verify the presented withdrawals in your software match the debits for that day’s banking. Do not present any items that do not form part of the closing balance. If you accidentally present a withdrawal, you will need to unreconcile the amount to return it to the reconciliation total.

  3. Check Receipts Report

    Run a receipt report from your software for that day’s banking and match all entries in the software with the credits on the bank statement.

  4. Check Dishonoured Payments

    Depending on the method your tenants pay rent, there may be dishonoured rental payments which need to be reversed in the ledger. The reversals will be shown on the ‘Debit’ column of the bank statement. If the dishonoured payment has already been released to the landlord, you may need to create an adjustment for the particular entry. You can read more about our best practice tips on managing dishonoured payments.

  5. Check Adjustments

    Check your adjustment list and ensure items haven’t been removed in error.

  6. Check Reversals

    Check your cashbook for reversals in the ledger. You or someone in your office may have accidentally reversed an entry from a previous day’s banking. This could be throwing out the current balance.

  7. Check Presented Deposits

    Ensure cash/cheque bank deposits have been marked as presented and not duplicate receipted.

  8. Bank Fees

    Your bank should never debit fees from the trust account. However, in reality, they do get this wrong on occasions. If this happens, you may need to create an adjustment temporarily for the difference that is owed to the Trust. Read more about best practice with adjustments.

Remember, best practice is to reconcile daily so you stay on top of it. This makes it much easier to locate errors if you do make a mistake. It is much easier to cross-reference one day’s worth of information as opposed to an entire month.

Tried the above but still cannot balance?

If you’ve tried the above and still cannot balance your trust account? Contact the Trust Accounting experts at End of Month Angels to assist.

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