Time to Get Busy

With End of the Financial Year ticking ever nearer, we look at ways you can start to get your Trust Account in order.

This will not only put your Account in great shape but also avoid an EOFY freak out.

Having a streamlined Trust Account will both put you in good stead for the new financial year and upcoming audit. Your auditor will appreciate seeing an organised Trust Account. When they see the opposite, it projects a sense of laziness, disorganisation and a lack of processes and understanding of industry regulations.

Not quite the scene you want to set pre-audit!

Last month we discussed audits and how best to prepare. This month we look at cleaning up your accounts, making sure they stay tidy in preparation for the new financial year.

Trust Accounts can accumulate a lot of old data over time. From staff changes to just everyday clutter.

So let’s look at how we can get them into shape.

Ways to declutter your Trust Account

  1. Keep on top of your reconciliations

    It is so important to keep on top of your reconciliations and make sure you close your months correctly. Here are the closing dates per State and Territory for your future reference:

    – NSW – within 21 days following the End of Month.
    – VIC – within 14 days following the End of Month.
    – QLD – within 5 days following the End of Month.
    – WA – within 10 working days following the End of Month.
    – SA – at the end of each month.
    – TAS – at least once in each calendar month.
    – ACT – within 10 business days following the End of Month.
    – NT – keep records in a timely manner so they can be conveniently and properly audited.

    Keep your due date handy as, after all, the end goal is to avoid breaches and save time.

  2. Allocate all unidentified funds

    If you followed our previous guidelines to avoid unidentified deposits, you have nothing to worry about.

    If you have unallocated funds and they cannot be allocated (and they meet the state’s required time frames for lodgement), send them to OSR or Public Trustee (depending on state guidelines).

  3. Allocate or refund tenant deposits where possible

    If you are holding tenant balances in tenant deposit accounts, it’s time to sort them out. Work through each of these, allocate as required and aim for a zero balance by June 30.

    Reports such as trial balances show a record of funds held in trust and allocations to Suppliers, Tenants and Owners. Check any held funds for Tenants. Are they to be refunded to the Tenant or apply to outstanding rent/invoices?

    If so, allocate them and release them from the Trust.

  4. Archive properties, tenants and suppliers that are no longer active

    Keep your contacts and accounts clean and up to date by archiving any properties/Tenants/Suppliers that are no longer active. This way you can keep track of arrears, managements and outstanding bills must easier. This alone takes a load off your shoulders and instantly cleans up your database.

    Once a Tenant claims a bond refund, make sure invoices are ready in the system to apply funds. This way you will avoid missing any charges the Tenant is due to settle.

  5. Check all holds on owner funds

    Are your current holds on Owner funds required or can you now release them?

    For example, was there a large bill due and you placed a withhold on the account? Check these are still current.

    It can be easy to pay bills that you were holding funds for and forget to remove the owners withhold.

    Remember all funds withheld must have a reason in writing from the Landlord. You can store these instructions in the document storage for that property in your cloud software.

  6. Check adjustments and remove if possible

    There is no need to have adjustments in your accounts. It is lazy accounting and an auditor will pick up on them.

    If you can’t avoid entering an adjustment, try and fix them as quickly as possible.

    Maintain a close eye on them and aim to have them cleared by the end of each month. Above all, aim to clear these down to $0 by June 30.

  7. Check Owners disbursement frequencies are correct and up-to-date with owner preferences and their payment details are up-to-date

    Check Owners’ disbursement frequencies are correct with owner preferences and payment details up-to-date. Get in touch with your Owners and check their contact and payment details haven’t changed.

    Plus, it’s a great way to reach out and build extra rapport.

  8. Ensure all funds held in suppliers folios have been disbursed

    Ensure all funds held in suppliers folios have been disbursed. Do note, some may have been set up without payment details.

    Your suppliers are just as important as your Owners and Tenants. Make sure you keep their details up to date, check the invoices & quotes they send through to ensure you are paying funds to the correct account.

  9. Bond Audit Health Check

    Review your Tenants’ bonds and make sure all bonds are lodged to the corresponding bond boards for your State.

    Keep and update Tenant bond references. This will avoid any issues and eliminate bond theft.

By working through each of these points one by one, you will drastically clean up your Trust Account, ready to wrap up the End of the Financial Year in fine form.

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.