EPMEPM: Best Practice & Legislation

End of Financial Year: Stress Free

We all know how important planning is to our businesses, but sometimes when we are pre-occupied listing, leasing and selling we can pay less attention to keeping up with the paperwork. So along comes the looming end of financial year (EOFY) deadline and your trust accountant goes into a frenzy at the prospect of getting everything entered and up to date in time for close off. Best advice from our expert Natalie Hastings? Don’t panic – Prepare!

PREPARATION is the key to streamlining the End of Financial Year process required of every business and the more preparation you do in advance the smoother the process will run. With a working deadline you can get your paperwork in order before the 30 June cut off. Generally most offices use modern Real Estate based software so an EOFY process it is not dissimilar to running a normal end of month, with an additional few steps.

Follow this simple plan for a stress free EOFY close off.

Between 4 – 8 weeks before EOFY

  1. Notify all your creditors and give them a deadline when invoices must be received in order to be paid by EOFY.
  2. Keep up to date with entering all creditors invoices such as rates, strata, water and maintenance. If you currently only enter invoices once a week, perhaps increase to 3 times a week to keep on top of the task.
  3. Does your agency charge a EOFY reporting fee? This can add up to a considerable amount of revenue depending on the volume of your rent roll. An common agencies EOFY statement fee varies between $20.00 to $50.00, which means a portfolio of 350 properties could return $7,000 to $17,500 of revenue. Make the time to check those Managing Authorities and ensure the fee is entered into your system, ready to charge on the day!
  4. Some owners may be reluctant to accept the report fee, but you can reconcile this by pointing out it is likely that their own accountant would charge by the hour to collate and calculate each monthly statement.
  5. Consider engaging a reputable Real Estate Accounts Support expert to run a heath check on your accounts before you commence the EOFY. They know how to get the most out of your software package and create further business efficiencies, and you can even outsource the Trust Accounting to them. Or alternatively call your auditor, accountant or software support provider for help troubleshooting any problems that occur.

3 – 4 weeks before EOFY
If you attach copies of creditor invoices to your owner statements we suggest you start collating them now. This can be a time consuming job and needs to prepared in advance. Consider filing all paid accounts in alphabetical order of how your statements are being printed by property code or owner code. Administration staff can assist you with this process.

1 – 2 weeks before EOFY

  1. Run a report detailing any unpaid bills for every owner due to insufficient funds in the owners ledger. Consider forwarding the un-paid invoices directly to the owner to pay before June 30. (Remember to advise the owner that this invoice payment will not reflect on your agencies EOFY report)
  2. Ensure all agency revenue has been collected, such as letting fees, renewal fees advertising costs, etc. Cross check these accounts against all new tenancies taken for the month or even the whole financial year. If charges have not been made raise them in your system.
  3. Check if any tenants require overpaid rent refunds that must be withheld from the owner to be refunded to the tenant
  4. Complete a dry run of owner EOFY reports to check income and expense transaction codes and ensure they are correct. If not fix the problems to alleviate repercussions for the actual run. Don’t let those statements out the door until you have checked each one for 100% accuracy.
  5.  Do a stock take of office stationery so that you have ample supplies of paper, letterhead, envelopes, cheques, paperclips and staples.

Days before

  1. Run a training session with your Property Management team to ensure all relevant staff understand how to read the statements and can assist your landlords effectively, accurately and immediately should they phone seeking clarification of the statement content.
  2. With most software systems a personal message can be added to your statements. Considering providing the name and direct line phone number of the staff member to contact should your client have a query.

On the Day

  1. Try to complete your EOFY the first business day after 30th June as most online bank statements report up to the previous day and will only include transactions up to 29th June. (Always check with your auditor as different states have different requirements).
  2. Arrange to have other staff take your calls and emails for the day so you can give your undivided attention to the task at hand.
  3. RECONCILE your trust account, preferably without adjustments BEFORE you start the EOFY process
  4. Clear all cash and cheque banking before starting the process.
  5. If possible release all owner funds you are holding as at June 30 as most software systems EOFY reports will display rental income receipted during this financial year, even if the funds have not been released to the owner.
  6. If you print to a shared copier ensure all staff are advised not to use during this time
  7. Enlist the help of other staff members to assist you with collating and folding the statements so you can have them in the mail as soon as possible. Your Landlords will appreciate receiving their statements in the first week of July.
  8. Don’t forget to print your final bank reconciliation and audit reports as per your usual EOM. Ensure they are signed by your agencies licensee and stored away safely for your EOFY audit

Follow these steps and you will enjoy a smooth, efficient & stress free EOFY.

Show More

Natalie Hastings

Natalie Hastings is the Managing Director of Hastings + Co. For more information, visit hastingsandco.com.au.