NSW Interpreting the ledger

Hi, this is probably a question for the property managers.

I'm looking through my ledger that the agent has provided me and I see a column that is called "In Hand". I think this is money that the tenant has over paid so that the account is in credit. The question is, is this money kept in the agents account or is it paid out to my account?

 

Most Trust Accounting programs give an option of calculating rent to the day or payment period (being weekly, fortnightly, monthly).

Rent to the day will calculate rent to the day, it's annoying because tenants try and pay daily rent rates and this isn't a motel...

Rent to the payment period will only advance the "paid to" date when a whole payment period (eg. one week/fortnight/months' worth of rent has been paid), and record any amount less than that as "rent in credit", however this is confusing as the Tenant sees their ledger and thinks they literally have rent sitting in credit, completely disregarding their non-advanced paid-to date. Arrears are still calculated to the day, and all monies are still disbursed to the Owner as per normal. (No Agent wants trust money just sitting in their trust account longer than it has too..)

 

Yes! I think this is what has happened to me.

There is money sitting in the "In hand" column, however, the tenants has paid me short of that amount.

So say I am expecting say $500 rent but the tenant only paid $400, I see in the "In hand" column $400 for every single week for a year. The tenant is claiming they have $400 in credit. @Michael Mitchell , is this actually confirming that the tenant is in arrears rather than in credit?

 

Can you post the ledger but blank out the personal information of course? If it's multiple pages, just print it out, then white out tape or black texta etc the bits to redact then scan back in. If it's just one page, it's easy to photoshop the redacted bits out and then screen cap + ctrl v into here

 

These are the entries



Line 2 is the one in question.

Thanks

 

Why is there not $100 in the amount due?

 

I'm not sure, but I think its because for that week I gave the tenants a $100 discount but it doesn't seem to be itemised in the ledger. Potentially just netted off by the agent.

So in these three entries, the amount paid is correct. I'm expecting $500, $400 and $500. But on week 2 and 3, the "In Hand" column says $400. Initially I thought it was credit amount but it can't be because the tenants never overpaid. I think this is the behaviour @Michael Mitchell was describing where the system thinks the tenants underpaid (because of the discount i gave).

 

The PM should have made some notation that there was $100 credit given so the rent would have still totalled $500 rather than making it look like this is shortpaid.

 

Yes I think so too. This is causing so much confusion. Particularly with the "In hand" column.

 

ugh, is the PM using excel for ledgers? run....

*nb. nothing wrong with excel, but in this day and age, if you're PM is using excel, it's not for a good reason... :/

 

No i just copied the related entries into excel, it was quicker than blanking out all the personal info.

@Michael Mitchell does those entires confirm that it is what you described? That its not actually in credit but just payment made less than the rent value?

 

The use of excel for trust accounting is a breach of the PSBA Act (NSW) as there is no audit trail as required.

 

If the file was kept in a document management/capture system like HP’s Trim, it would keep a record of changes.

 

@Joynz - the only places where I have worked which have had TRIM or similar systems have been councils and govt departments and would be well out of reach/not a consideration for an independent agent.

It would require the auditor to have access to TRIM to review the audit trail. It's much more efficient and cheaper to use a specialist property management program (eg REST) to so all of the functions required and is accepted by the OFT as an approved system. If need be, they would still use Quickbooks or Xero etc for their business accounting.

 

The term "in credit" is misleading. You can have an amount 'in credit' or 'in hand' and still be in arrears.

It refers to the rent paid which does not amount to a full week. Most trust systems don't like partial weeks for some reason and list them separately.

e.g. tenant has lived in house at $350wk for exactly four weeks. They make three $350 payments and one $300 payment. There is now a $300 amount 'in hand', but the tenant is actually one day in arrears.

 

It always does unfortunately! As @Michael Mitchell pointed out the key piece of info is the paid to date. It hasn't advanced because the whole rent period hasn't been paid. In hand is just another way of saying "paid to X date with a partial contribution to the next rent period held in hand/in trust".

The solution is for the agent to simply apply a $100 rent credit. This is very easy in most software platforms. It will be very difficult to explain it to the tenant until this is applied.

- Luke

 

Sorry I missed the actual question. There are always two separate folios or accounts, one for the owner and one for the tenant. When you are disbursed your payment your account/folio - assuming no withholds for pending bills etc - will be disbursed to zero so yes all funds are paid to you. As above, the "in hand" is providing a financial representation of payments as they relate to a rent period, it has no bearing financially on what you are paid come disbursement.

Hope that helps.

- Luke

 

Correct. The agent hasn't dealt with this correctly in his/her trust account software. If it were me, I would have receipted the full $500 on the first line of the payment receipt, and deducted $100 on the second line of the payment receipt so the paid-to date of the tenant advanced correctly.

You, as the landlord, will have still received all the money the tenant paid.