The accounting cycle is a series of general things that property managers do each and every month. Use these steps as a guide on how to use Buildium and to make sure you're not missing any "standard" steps.
(And so it's been said, Buildium offers much more functionality that you may need from time to time, from general journal entries to budgets to recurring checks and bills. If you need it, we've got you covered.)
Check out our video tutorials on the accounting cycle on Buildium Academy!
Charges
A charge is a financial transaction that represents money owed by a resident.
Synonyms include accounts receivable or A/R.
For example:
- For every payment in Buildium, there is usually a charge to balance the resident's ledger.
- When a charge for association fees is entered into Buildium, this says that I am owed money by a resident.
- Charges can be used to explain why a security deposit is being withheld once a resident moves out.
Most charges, like rent and association fees, are added automatically each month with recurring charges that are created with the lease or ownership account. Late fee charges are usually added automatically, as well.
From time to time, though, it may be necessary to add an additional charge throughout the month such as charges for repairs associated with a move outs and utility charges.
Payments
Once a charge has posted, it's time to receive a payment.
A payment represents any time you are given money by a resident.
For example:
- When Manny gave me a check for his balance due for the month, I entered a payment in Buildium to reflect this transaction.
- The payment that I received from Sasha will balance her ledger since she owed me money for trash pickup.
- I love receiving payments! It's my favorite way to generate income!
Payments can be received manually (tenants & association owners), uploaded through an import file, or made online using Buildium's epay service.
Bank deposits
A bank deposit is money placed in a bank and held on the depositor's behalf (given certain conditions), at which point it can then be withdrawn by the depositor.
For example:
- Once Francine pays her rent, I will head over to the bank to make a bank deposit.
- Now that I've made my bank deposit, I no longer have to worry about keeping track of all that money.
- If not for making monthly bank deposits, I would surely have trouble keeping track of how much income my properties make.
After payments have been received, you've got to deposit it into the bank.
Make a bank deposit.
Pay vendors
Paying vendors is your next step. It's common for costs to come up during the course of the month.
The two primary ways to pay vendors in Buildium are checks and bills.
Not sure which to choose? No worries!
- If you're using accrual basis accounting, use bills.
- If you're using cash basis accounting, use checks. The only exception is if you want Buildium to tell you that there's an upcoming expense. If you need that reminder, use bills instead.
Buildium offers many ways to streamline expenses. For example, we have features to speed up recording management fees, recurring checks, recurring bills, and our epay feature, which allows you to pay vendors online.
Pay rental owners
After all of the vendors have been paid, it's time to pay your owners.
An owner draw is the paycheck to a rental owner. An owner draw is an equity transaction.
Synonyms include disbursement and owner payments.
For example:
- Charlene looks forward to receiving her owner draw every month from her property manager.
- The investor receives an owner draw once a quarter.
Buildium automatically calculates the amount of money that can be paid to a rental owner as you work through the month. For example, when you receive a payment, the available cash goes up. Pay a vendor and the available cash and suggested owner draw amount will reduce.
Owner draws can be made by check or electronically. In addition the money, rental owners might also want to see a rental owner statement, delivered on paper or online.
Bank reconciliation
A bank reconciliation is a comparison between a company's banking records in Buildium against your "real world" bank statements. Bank reconciliation is a great way to find typos, missing transactions, and duplicate transactions that could lead to inaccurate reports.
For example:
- It's the end of the month; I'd better perform a bank reconciliation to make sure my records are accurate.
- I'm not sure why my accounting records don't match the bank's records. I wish I had performed a monthly bank reconciliation!
- The very first thing the Department of Real Estate in my area looks for in an audit is my monthly bank reconciliations.
When those bank statements have come in the mail, Buildium is ready to help you reconcile your bank account.
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