Client Accounting Challenges

Client accounting is arguably the most important function in the lettings industry, as it involves tracking all financial transactions that arrive in your client account each day for your clients. You handle incoming rent to outgoing supplier payments whilst ensuring you are compliant with ever-changing legal and regulatory requirements. It goes without saying it a critical that it is all dealt with correctly and efficiently.

In this article, we will discuss some of the most common challenges in client accounting for the lettings industry and explore practical solutions to help property managers navigate these challenges effectively.

Reconciliation

One of the most important challenges we have encountered is when agents lose track of the balances in their client accounts. This can happen for several reasons, but, the most common is usually down to how often the agent is able to reconcile their account as the more time that passes, the larger the number of transactions and balances build up. With every UK Agent that we work with, we operate on the basis of reconciling daily as a non-negotiable when onboarding our services.

Software

Software is another key factor when it comes to ensuring the accuracy of client accounting. Transitioning to new software and automating the financial processes can seem like a daunting task to many agents and moving away from spreadsheets and outdated, manual processes is one of the challenges faced by many agents. Implementing new software reduces the risk of human error, ensures that historic data and transactions are recorded, and allows for more accurate and transparent reporting.

Many of the letting’s software currently available allow you to sync or directly upload your bank statement, eliminating the need to manually enter transactions, which is just one example of how software can automate the process to eliminate human error and become more time efficient.

Opening a Client Account

These are mainly internal challenges, however, one major factor that is currently impacting client accounting is the ability to open a client account. Many banks are threatening to close agents existing client accounts unless they open a separate account for each individual client. This is a time-consuming and costly process for agents, and this is set to be an ongoing topic of conversation about the best way to manage a client account. Agents who are trying to open a new client account are also facing challenges, as many banks are now refusing to allow agents to open new bank accounts, or are making the process increasingly complex and extensive.

The main reason for this is changes made to Anti Money Laundering legislation and the fact that the banks refuse to accept the risk unless there is a separate client account for each landlord. This is then having an effect on agents who are trying to expand into lettings and who require CMP to trade, as you must have a client account to obtain CMP. This is a vicious cycle that is troubling many agents who want to expand their business.

How can LoftyWorks help?

LoftyWorks has an expert team of highly qualified bookkeepers, client accountants and property managers with collectively 50-years experience.

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Interested in our help? Submit your inquiry to talk to an expert. Or message us on WhatsApp at +44 330 321 3500.