This year, you can expect to be breached if you have made any of the following errors in your 2020/2021 EOFY period.

  • Not closing your EOM period within the prescribed time frame
  • Backdating transactions by performing transactions at the bank and then entering them into the software retrospectively
  • Disbursing funds from the trust without holding funds in that Owners ledgers. E.g. paying a bill for a Landlord before rent has been paid for by the tenant
  • Paying cash from the Trust Account
  • Not reconciling the Trust within the prescribed time frame
  • Overdrawing the Trust Account

To help, here are our golden rules when it comes to Trust Accounts which will help you to avoid these costly mistakes.

Trust Account Golden Rules to Avoid Being Breached

  1. Software first, bank second

    Always enter the transaction in the software before the bank to ensure that you have enough funds.

  2. Can’t pay what you don’t have

    You cannot disburse funds from the trust unless you’re holding rental funds on behalf of that Landlord.

  3. You’re not an ATM

    If tradies can’t wait till EOM to be paid, then it may be time to find new tradies.

  4. A reconciliation a day keeps the auditors at bay

    Regular reconciliation demonstrates good business practice.

  5. Check twice, disburse once

    Always check your disbursements prior to releasing funds. As you can easily overdraw your trust account if you upload the incorrect bank file.

If you have made any of these errors and would like assistance in implementing new systems or correcting them prior to EOFY, talk to our team about our support packages.

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.