There are four words that cause every property manager to have a visceral reaction...
End. Of. Financial. Year.
But it doesn’t have to be that way.
Preparation is the key to a stress-free end of financial year and we’ve got you sorted with our ultimate guide to end of financial year for property managers and trust accountants alike.
So what do all property managers need to do before EOFY?
According to our friends over at End of Month Angels, there are three things you must do in the lead up to end of financial year:
1. Preview EOFY statements
Errors in your end of financial year statements not only look unprofessional but can cause a headache for your owners when calculating their tax obligations. Not to mention, the mistakes that you’ve made will come back full circle and can impact your reputation.
To mitigate this, be sure to preview your statements and amend any errors or inconsistencies in addresses, expenses and income prior to sending them out. For example, if a landlord has advised that he has paid a bill himself and wants to see that reflected in his summary, you would go in and manually enter that.
Additionally, if you charge a statement fee, you should double check that you have charged the correct fee. In PropertyMe, you can set a recurring yearly fee for this so that it’s automated each year.
Moving forward, these errors should be fixed on a month to month basis rather than annually. This way you can avoid a backlog of mistakes and additional work during end of financial year.
If you’re a PropertyMe user, here’s how to create, preview, edit and send Financial Summary Reports (EOFY statements).
2. Reconcile your accounts
Never, ever leave bank reconciliation to the last minute. Reconciling your accounts is crucial to every property manager’s end of financial year process and failure to do so within the prescribed period can result to trust account breaches.
While each state has slightly different legislation, it is always best to reconcile your accounts daily rather than monthly. This way, you can avoid mistakes snowballing, ensure a smooth audit, easily spot fraud and mitigate end of month and end of financial year stress.
If you’re using a good property management software like PropertyMe, daily reconciliation should be a complete breeze. You have no excuse not to do it! PropertyMe has lots of automation around property accounting that allows you to minimise your workload e.g. simply import bank files and PropertyMe will do the balancing for you. Read more on how PropertyMe is different.
3. Backup your data
If you use a server-based system and don’t backup daily, be prepared to lose a whole day’s (or multiple days) worth of work. Just imagine working on receipting rent, paying bills and disbursing funds, only to have your software crash. Uh-oh. You definitely don’t need that additional stress during end of financial year. Or ever.
You can easily avoid this by upgrading your software to a cloud-based system like PropertyMe that automatically backs up your data to the cloud.
End of financial year checklist for property managers
Think of running end of financial year as you would end of month, except with a few additional steps.
Be sure to:
- Block out time in your schedule to run EOFY; this will largely depend on the size of your rent roll and the software you use
- Do a stocktake of your stationery (including cheques, ink and toner, envelopes, paper etc.)
- Backup your data if you use a server-based system
- Preview EOFY statements and ensure financials are up to date*
- Identify and amend any transactional errors on the EOFY statements
- Backup again (if you use a server-based system)
- Reconcile your accounts
- Do your disbursement as per usual
- Create EOFY statements (including tax pay summaries) and send them out*
- Backup a third time (if you use a server-based system)
*With PropertyMe, you can preview, edit and create EOFY statements at any time. Plus, everything is continually backed up in the cloud so you can skip those steps!
Hopefully this Ultimate Guide to End of Financial Year for Property Managers has helped you better prepare for and process end of financial year.
If you enjoyed this EOFY Guide for Property Managers, you might also be interested in 9 Trust Accounting Mistakes You Need to Stop Making Now and the Top 5 Forgotten ATO Real Estate Tax Deductions.
Did we miss an EOFY tip for property managers? Please let us know in the comments below.