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Client accounting - what, when, how and who

Tuesday 17 July 2018

As a principle, partner or director enthusiasm and good software are not the only requirements when it comes to you operating a successful lettings business. With constant changes in landlord and tenant legislation, amendments to rules and regulations regarding the handling and protection of client money, keeping up with the workload can prove difficult.

Collecting rents from tenants, paying landlords on time and safeguarding deposits plays an essential part in the success of any letting agency. It is also a job that, in many cases, is being carried out by someone other than the owners of the business.

It’s said that we learn from our mistakes, but what would happen if you weren’t aware that mistakes were being made or things were going wrong with client accounting?

If there are delays in paying rents to landlords your reputation will inevitably suffer. If tenant deposits are not registered in time you face the possibility of being fined and in the worst case if client money goes missing you could very well end up losing your business.

Let’s be honest, client accounting is hardly the most glamourous of tasks! But it is without doubt the keystone of any lettings business and it is essential that you understand the basics of what, when, how and who when it comes to the ways in which your business handles and protects its clients’ money.

WHAT

  • is client money and what’s not – holding fees, application fees, rents, deposits, overseas tax etc?
  • policies/practices are in place to protect client money - is client money being collected, held and processed through a ring fenced client account?
  • checks are carried out to ensure correct payments are being made – do payments need authorisation?

WHEN

  • are rents being collected – on the rent due day, before the rent due day?
  • are landlords/contractors being paid – how many days is it taking to process payments?
  • are tenant deposits being registered – are they being registered within the statutory time limit?

HOW

  • are rents being collected – by standing order, direct debit etc?
  • is client accounting being carried out – is the process documented?
  • often are accounting records fully reconciled – do agency records reconcile to bank account(s) and deposit protection scheme records?

So now we’re just left with the WHO. More often than not the person or persons dealing with your client accounting have no previous experience in the industry and have never undergone any specific training for the job.

Sending your new and existing employees on client accounting training courses run by your software provider or by recognised trade bodies such as Propertymark will always be money well spent.

Alternatively, with the ever-increasing changes and amendments to the legislation in respect of the handling and protection of client money outsourcing your client accounting to a reputable client accounting service provider (CASP) may well be worth considering.

For more information about The Letting Partnership and the services they offer: call 01903 477900, email info@thelettingpartnership.co.uk or visit their website