One of the purposes of property management we was to provide accurate accounting for our Owners, and part of that is to provide them with monthly statements. As we mentioned previously, a property management firm must set up and maintain a “Fiduciary Trust” bank account for all of the monies for the properties it manages to flow through. In our company, we had the rent revenues as well as mortgage, HOA dues, maintenance and a multitude of other expense payments for over 320 properties flowing through this account. Keeping it all straight is paramount!
Regardless whether you manage one property for an Owner or five, you will need to provide all of your Owners with a monthly statement. This statement spells out all of the income, expenses, disbursements to or from the Owner, operating profit or loss, and the beginning and ending cash position for each individual property for each month. You will send out each statement, along with copies of all invoices paid for the period and the Owner’s check (assuming they have positive cash flow) or advice of deposit in their account.
Cutoff times and statement dates
This has been an issue that was a difficult one for us to get our arms around. We all have different needs, and while we were building the company, like any other fledgling small business, we attempted to accommodate everyone’s needs. Some Owners needed their disbursements by the 10th of each month and others were OK so long as they received it before the first of the month. Consequently, we set up two statement dates for our Owners; one on the 10th and the other on the 25th. This became very labor-intensive as we found ourselves always dealing with statements and statement issues. We later learned that if people want your service, they will adapt to your processes and procedures, so we changed to one statement date of the 25th for all of our Owners. OK, we still had some of our oldest clients, (some had been with us for many years and others had been on this earth for many years and others . . . both!) who we maintained a 10th of the month statement date for their convenience. Though that number continued to decrease!
We set up our statement date of the 25th of the month so that we could manage our clients’ expectations as well as exceed them. You remember I mentioned that most of our Owners needed their funds before the 1st of each month? Well, that is why we set up the 25th as the date we specify in our contract. We promised that they will always have their money by then. Now, to exceed their expectations; internally, we worked with a 20th statement date. Due to the calendar and the tricks it plays on us from time to time, we may miss that and go to the 22nd or so, but with few extenuating circumstances did we ever miss the 25th and nearly all of the time we exceeded it! Which of course kept our Owners happy!
It is all well and good that we talk about a statement date of the 25th. So what? What that really means is that behind the scenes we have to have a cutoff date for all transactions between the 15th and the 17th of the month, depending on where the dates fall on the calendar. That means all rents have to be in; all payments made including mortgages, taxes, HOA’s and even security deposit refunds. Otherwise, we will need to run a supplemental statement for that property for that month. If we don’t, there would be a gap in the information on the statements from month to month.
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