Trust accounts are one of the most vital parts of the business of any property management company as they allow you to receive rent payments and fee transfers from both property owners and tenants and disburse the funds however necessary.
While these particular accounts are often managed by trust accountants, when it comes to real estate, most property management companies will either hire their own accountants or train their property managers in order to allow them to handle every part of the rental agreements.
This is beneficial since having only one person handle every aspect of a certain task eliminates any confusion and simply allows the property manager to complete the tasks without any distractions.
There are however a few common trust accounting mistakes that are likely to arise and which might cause some serious problems during an audit if they aren’t taken care of as quickly as possible.
Not enough training
The property managers that are going to be serving the role of trust accountants are going to need to know how to allocate funds properly. Luckily, if you have even semi-decent accounting software, then all of the necessary tools will already be provided and all you have to do is know how to use them – but for that, every agency needs a good training program
Property management software like Console Cloud will have a dedicated section for webinars and blog posts, and a good knowledge base that explains everything about their accounting tools down to the most overlooked features.
Assigning a reliable leader
To do trust accounting without any hiccups, there has to be someone experienced in charge. This should either be a trust accountant or a more experienced property manager that will oversee the daily reconciliations and make sure that there are no mistakes. If your agency doesn’t have the personnel to spare, then the next best option is a checklist that’s handed out to the property managers that still aren’t used to the program, which contains all the necessary steps that they need to do.
Most property management software has reconciliation menus that are designed for efficiency and speed, so they should be easy enough to master in a very short time. As long as at least a few property managers develop a better understanding of the software, there shouldn’t be any reason why they couldn’t instruct the other members of staff in how they should use it more effectively or which common mistakes they should avoid. However, this is not us saying that employees helping each other act is an alternative to good formal training in any new software the company adopts.
Doing your reconciliations should become as much of an everyday activity as brushing your teeth or washing your face in the morning. Regardless of how much you’ve got going on and how much work is piled up on your desk, make sure that you take the necessary time to balance your accounts every day.
This will ensure that all of the necessary funds are disbursed on time and that all of your records are always organized and up-to-date. This goes a long way to assure both the property owners and the law that the timely way you handle the procedure is a sign that everything is above board and done professionally.
Fixing your mistakes early
Speaking of daily reconciliations. Another benefit of doing them on time is that they will make it easier to spot any issues that might have accidentally happened. If you catch a mistake early then it’s easily fixable, but if you are late by even a few days then it becomes much more difficult to even find any immediate issues, let alone be able to correct them on time.
Proper time management and taking care of all of the necessary daily tasks is a sign of a top-notch property management company and a professional property manager, so make sure that that’s exactly the impression that your clients get when they work with you.
Sometimes the main reason that so many trust accounting mistakes are happening isn’t going to be due to any lack of training or flaws in the software, but rather the person that’s doing the accounting.
While most property managers are going to get the hang of the process relatively quickly, there are going to be others that will need a bit more time to learn how.
We can’t really advise you on what you should do in these sorts of situations as different companies will have different policies. Some will assign the reconciliations to another property manager in order to help the one that’s struggling, others will allow a bit more time for them to master the procedures, and there are also going to be those that will consider such a property manager to be expendable.
Naturally, there are also going to be those property managers that intentionally steal funds from the accounts. It’s rare, but foul play can happen in any field of work. In such cases, it’s incredibly easy to identify such individuals, since a quick look through the reconciliation records will have the accounts that they’ve tampered with stand out like a sore thumb.
While an agency’s strategies for handling employees that are less than savvy when it comes to learning new skills is entirely up to the company, the way that intentional sabotage or theft should be handled is very clear. A willing breach of the company’s and the customer’s trust deserves nothing less than immediate termination of contract, and even an appointment with the local police if the culprit in question was successful in their scam.
Organize your files better
Your paperwork needs to always be in order, for legal reasons as much as for management reasons. Admittedly, the legal reasons are quite a bit more compelling since trying to justify misplaced funds to the authorities is much more difficult than fixing your mistakes before they snowball into more significant issues.
Keep all of your records in one location so that you can easily find and open any documents if there’s ever a situation where you might need quick access to them. Also, when it comes to things such as files on transactions and funds, then it’s always better to be a bit paranoid and always make a few extra folders in order to sort them out better, since that could help you out in the long run.
The easiest way to stay on top of things is to make multiple backups of all of your records. Most software will automatically backup all of your processed documents, especially things such as reconciliations. This means that all you have to do is go into the location where the record logs are stored and make a copy of them.
Any worthwhile cloud-based property management software will allow you to download the records as many times as possible, but if you’re working on a server-based one, then it might be a good idea to store a few backups on an external hard drive.
Using your system to the fullest
Regardless of which software you’re using, every one of them will offer a lot of tools that are designed to make the job at hand easier. Certain tools will be more useful for some companies rather than others. Automated email and bulk processing options will be vital for large commercial property management rather than small or mid-sized companies that don’t have as many clients.
However, that is not to say that smaller companies can’t enjoy the benefits that these options can provide. In fact, as long as you know how to use it to the fullest, almost every tool in any commercially available software can increase worker productivity and make the tasks that they need to complete a lot easier.
Time for a change
The last point that we’d like to bring to your attention would be the property management software that you’re currently using. While you may have been using the same software for an extended period of time and are very satisfied with the service that you’ve been getting, there may be some benefit in trying out a different system.
This is particularly true if you were using a server-based property management software and are hesitant to switch over to a cloud-based one. While there may be a slight adjustment period at first, any good cloud-based software will offer a seamless migration of all of your files, which makes the transition much easier than you might expect.
Not every property management software is the same and there will be options that are available on software like Console Cloud that might not be on your current system. Even if all of the features are the same, sometimes just the layout of the menus can be a great help in optimizing some tasks.
Sometimes you may find that features that you didn’t think much of can make a larger difference than you could imagine. Additionally, seeing as how many companies offer free demos of their software, there’s really no reason not to try out different systems and get a better feel for which would suit your company the best if you do decide that an upgrade is needed.