Now you have made the effort to reconcile daily (hoorah!), are you finding you are making the same mistakes over and over again?

Never fear. There is a solution for everything.

The good news is, we see these mistakes happen over and over again. Even better – we have the tips and tricks you need to implement to put a stop to them.

Top 10 reconciliation mistakes in Trust Accounting

  1. Incorrect receipting #1

    Receipting funds into ledgers that are not on your bank statement.

  2. Incorrect receipting #2

    Receipting more funds into ledgers than what appears on the bank statements. This can be as simple as entering $350 instead of $340. A simple error with bad consequences.

  3. Receipting into cashbook

    Not receipting funds into cashbook if a tenant file is not yet created. This leads to money being overlooked and not receipted toward that tenant at all.

  4. Writing cheques

    Writing cheques from your trust chequebook without entering them into the correct ledger folio.

  5. Double handling

    Double handling such as receipting an entire day of transactions on the bank statement. This can result in double payments to owners at end of month.

  6. Incorrect month

    Presenting entries in the wrong month. Such as debits on the bank statement from May present in the June reconciliation. Make sure your debits and entries stick to their own lane.

  7. Withdrawals

    Processing withdrawals from the bank without entering them into the software and the relevant owner’s ledger record.

  8. Management fees

    Paying management fees twice in the same month for the same day.

  9. Double payments

    Such as receipting $500 cash to the tenant ledger, proceeding to deposit the funds at the bank. Then, instead of presenting the funds as cleared in the bank reconciliation, you receipt them again to the same tenant when funds appeared as a credit on the bank statement. This will make Owners appear to be paid more than they actually receive.

  10. Receipting unknown funds to unidentified ledger

    When you locate the correct tenant, a receipt is entered against the correct tenant record without reversing the original unidentified receipt. This leads to a surplus in the cashbook.

No doubt as you read this list you’ll be thinking – yes – I do that! Well no more. Check out our list of handy fixes to obliterate your reconciliation errors to the wind.

Ways to fix your reconciliation errors in your Trust Account

  1. Training

    Conduct staff training on receipting and reconciliation using your software, onsite, with staff in the room. All the lessons to learn with no place to hide.

  2. Reconcile daily

    Although we all know you do this now after our last blog, right?

  3. Create a Policy and Procedure Document

    Nothing says ‘error-free’ better than a Policy and Procedures document. Include cash handling, cheque writing, withdrawals and banking of funds and run through it with new staff and on a yearly basis when you review staff performance. Run a pop quiz! Whatever works to have the knowledge sink in.

  4. Allocate dedicated staff to your Trust Accounts

    Delegate dedicated staff to manage the TRust Account. It will help to minimise errors and encourage accountability.

  5. Define staff roles

    This will help everyone know exactly who is responsible for what – and will help you pinpoint where errors are being made.

  6. Demonstrate leadership

    Cross-check the Trust Accounts to always keep a hand in the business. Whilst you want to encourage autonomy, it is important to know what is happening in your Trust Account.

  7. Get in Early

    Identify any errors or problems early to avoid them becoming bigger ones.

Your Trust Account requires qualified, experienced and knowledgeable staff to manage it. It is one of those aspects of your business that you just need to get right. Take the time to find the right staff. Where you need to, outsource to the professionals and take the weight off your back.

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