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Janine Kennedy

Phone: 02 8355 4999 Mobile: 0401 743 011 Email: janine@realplus.com.au

Fee Auditing

With the downturn of the Real Estate market we look for ways to tighten the purse strings and cut costs with some agents looking at software and staff options.

But have we considered fees we should be receiving?

While all our fees have been set up in our trust system at point of receiving the Management Agency Agreement, are they ever checked again? What should we be checking for?

As we are moving away from paper/hardcopy files to soft files this is an opportune time while scanning in MAAs to check the fee set up in your trust account software.

Where to start? Pull out or open a Managing Agency Agreement?

Work your way down checking that the fees are correct in your trust account system.

GST

Ensure you know if the fees included on the MAA are GST inclusive or exclusive and if it is shown as GST inclusive or exclusive in your trust system.

Fees

Check all fees listed on the MAA are entered correctly in your trust account system. If there are some missing check if they need to be entered somewhere or just in the notes for when they are charged.

Automation

Is there a way to automate any of the fees you are currently charging manually? Can you set up recurring invoices or is there a new field for they fee that wasn’t there when the management was entered.

What to do if the fees are incorrect

This will need to be a decision made with your licensee and managing director. Should you back charge the fee or notify the owner of the incorrect charge from this month and amend.

Be sure to include any changes of fees on your forecasted budget for the financial year.

If you would like any more information on what to check and where to check for missing fees, feel free to call Real+ on 02 8355 4999.

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Risk Management

We are all aware of the common safety risks associated with the running of an office. However, we don’t often consider the risks associated with trust management.

From a recruitment perspective, trust accountant roles are quite rare with trust accountants staying in their roles for longer than an average Property Manager.

Whilst most offices will have one trust accountant, quite a lot of offices have no one manning the trust accounting desk and this task is largely delegated to an existing Property Management team member. This is, in some cases, a different skill set and the team member allocated to carrying out the trust accounting may not completely understand the requirements under trust accounting legislation and it’s guidelines.

It is imperative that whomever you choose to carry out those trust functions in your office understands the requirements and the potential risks associated with trust management.

Legislation

With high fines associated in the trust account legislation space, consider if your trust accountant is up to date and knowledgeable on the current legislation.

What is the best method for them to stay up to date and are they notifying anyone if something is amiss? Each state’s trust account legislation differs slightly and up to date versions will be available on your governing body’s website.

Processes

Trust accountants are usually (not always) a stickler for the process! They will learn the process and follow it month after month. What if there is an easier or quicker way?

Most trust accounting software has a wizard to process owner payments for mid month and end of month or they will certainly provide a checklist to follow.

If your software has these features and you are not using them, it is possible that could your process could be missing steps or be taking longer than needed.

End of month should be a smooth process using the software as it is intended for. Reviewing processes regularly will ensure that the most efficient processes are being looked at for your business.

Diversification/cross training

What happens when your trust accountant goes on holidays or is sick? Can they only take holidays after end of month? Is there anyone else in the office that can process these tasks? If not, this is a big risk to your company. While we are not suggesting training all your staff on all the trust accounting task, it may be useful to have a couple of team members know different tasks in the event the trust accountant is away sick or on leave so that they can step in and process those vital tasks if needed.

Reporting

Trust accounts are required by law to be audited once a year. Do you know the reports you are to provide to the auditor and the requirements surrounding them? Are you being given the correct reports to view. In the day to day processing of your trust account do you know if the account is reconciled and what the adjustments are there for? By not knowing this information, are you putting your agency at risk? Could you request a few daily reports to ensure that the trust account is running smoothly during the month and just not at the end.

At Real+ Outsourced we have considered all of the above risks when formulating our processes. Why not give us a call (02 8355 4999) to see how we manage these risks for our clients.

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It’s time to plan for EOFY

Before you know it, the end of financial year will be here. Scary thought, considering it just feels like yesterday that it was January!

We all know the importance of having the processes in place for End of Financial Year so that it all runs smoothly and we want to help you get organised, so there isn’t a last minute rush to get everything organised.

While a lot of you are thinking its just another report to run after end of month at June 30, now is the time to review your data and ensure it is correct for when the reports are run. Most real estate agencies charge for these reports so if they are not correct, it’s difficult to justify that fee.

Here are some items to look at:

  • Fees – Check owners are set up with the correct fees especially if you are charging an income & expenditure fee.
  • Lost Managements – Properties that have been lost are marked as lost and archived so that we don’t send an EOFY reports to owners who will not be paying the fee.
  • Creditor Invoices – Advise your owner if there are not enough funds to pay outstanding invoices in June. They may want to transfer funds so they can claim the expense in this tax year.
  • Rent increases – Check that any rental reviews that have been approved this year have been updated in the system.

By doing these pre-checks you are ensuring a smoother EOFY process and will minimise the amount of changes needed to these reports after they have been sent.

Need some help? Give us a call on 02 8355 4999.

Our Outsourced team are here to help you with your Trust Accounts. Click here to see some of the other services we offer.

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How to choose the right trust accounting software

With the demographic of Real Estate Agents, Property Managers and Trust Accountants ever-changing, many offices are looking to update their trust accounting software.

There is a lot to consider when reviewing all of the options and, while we won’t be comparing the different products available, we want to help you with an outline of the items to consider before making your decision.

Firstly, the new trust account software will not be an exact copy of your current, so you need to look at what the pros and cons are. What are the existing elements or key tasks performed that you couldn’t live without?

What else should you consider?

Is the software Cloud or Server based?

Clients are expecting quicker answers and updated information at their fingertips, with cloud software you can access the database anywhere any time. Server based software requires space in your office for the server technology and restricts access without use of a VPN.

Is it user friendly?

Make sure when considering the new software that it is user friendly and intuitive. A better user experience will enable you to use the software more. If you aren’t the person that is using the software every day, it might be a good idea to get your team involved in the decision.

What training is on offer?

Most new software has quick and easy videos with step by step tips, but other training options are available? Does the new software come with training and how is this delivered moving forward?

Do the reports give you the info you want?

Think about what reporting features you are using in your current software? Is there a similar options, or maybe an improved version? Make sure you check if the reports are included, an add on feature and if they can be modified?

Does it help streamline your processes?

Is the new software going to streamline these processes for you or make it lengthier? What automation features does it offer? Of course, all new trust accounting software should be compliant with your states legislation; however it is always good to check!

What are the benefits for your client?

Remember, it’s not just about you! If you are thinking about moving software what added bonuses is this going to give your owners and tenants? Make sure you look into these benefits and the impact they will have on your clients. One comes to mind – ownership statements – do they make it easier for your owner to understand?

Moving software is definitely not an impulse decision, and it’s important you do your own research. There will be an impact on your whole business. So, when looking at the options remember to keep in mind the above tips and work out what’s right for you and your business.

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Trust Accounting – The Basics

Trust Accounting – The Basics

The money in our Real Estate trust account or accounts does not belong us, we hold the money “in trust” for our clients until it is distributed. Funds in a trust account must be accounted for, which is where Trust Accounting comes in.

What is Trust Accounting?

To uncomplicate the wording, Trust Accounting is basically bookkeeping of trust accounts in accordance with state legislative requirements. Requirements will differ from state to state, but there are a few rules in common. Maintaining accurate records is a must.

Trust Accounting has some very specific auditing requirements, which are used to maintain accurate information for the client and the real estate. Trust Accounting requires:

  • Tracking of all deposits and payments made through the account.
  • A detailed ledger that notes every transaction for each client being, Owner, tenant, creditor, vendor, buyer or Agency.
  • An account journal for each account, tracking each transaction through the account.
  • Monthly reconciliation of the trust account (at a minimum).

Trust Account Funds

A trust account is not the same as a general business accounts and only certain funds should be placed in or taken out of your trust account.

Types of trust account funds:

  • Rent deposits
  • Sales Deposits

Trust account funds should never be used for:

  • Personal income
  • Wages
  • Slush Fund

Janine

For more information on Trust Accounting & how we at Real+ can help you, check out our Outsourced page.

We’re here for all your Property Management Training needs…contact us anytime team@realplus.com.au

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