AppFolio's 9 financial diagnostics explained: what each one means and how to clear it
AppFolio's 9 financial diagnostics explained: what each one means and how to clear it
AppFolio runs nine financial diagnostics that flag accounting errors in your books. They live under Reports and most PM companies either don't know they exist or see the flags and ignore them. Each one signals a specific problem. Here's what they are and what to do.
Non-Zero Security Clearing Account. This account should always sit at exactly zero. If it doesn't, something went wrong in a move-out workflow: a reversed move-out bill, a reversed receipt that touched the clearing account, or a transction posted to the wrong GL. Find the non-zero transaction in the General Ledger for that account and trace it back to the source.
Security Deposit Funds Mismatch. This compares the GL balance for your security deposit account against the Security Deposit Funds Detail report. When they don't match, the usual causes are non-resident transactions posted to the deposit GL or past tenants who still have a balance in the system. Run the Security Deposit Funds Detail report, find the line items that don't correspond to current residents, and work backward to the source transaction.
Escrow Cash Account Balance Mismatch. Your escrow cash account should equal the sum of all GL accounts that offset to escrow. When it doesn't, either a receipt was posted to the wrong cash account, or there are pending move-outs with deposits that haven't been processed. Check the Bank Account Association report to confirm which cash accounts are tied to which properties.
Positive or Negative Balance on Additional Fee GLs. A positive balance means a fee was charged but not collected. A negative balance means a fee was collected and then waived or refunded after the fact. Neither should sit open. Positive balances usually self-correct when the fee is collected. Negative balances usually need a journal entry to zero out.
Tenants with Unused Prepayments and Open Charges. A tenant has a prepayment sitting on their account and also has open charges that the prepayment should be covering. AppFolio doesn't apply these automatically in all cases. Use the Apply Credits task to connect them.
Unused Prepayments for Past Tenants. A former tenant has a prepayment balance that was never resolved at move-out. Either complete the move-out flow properly, use Apply Credits, or enter a charge to zero it out.
Bank Reconciliation Lapses Over 60 Days. A bank account hasn't been reconciled in over 60 days. This is an audit risk flag. Find the account, reconcile it, and set a reminder to reconcile monthly at minimum.
Unused Prepayments on Non-Prepay GL. This happens when the key prepayment account was changed in settings after prepayments had already been recorded. The prepayments are sitting on the old GL. Use Reapply Receipt and select Make Prepayment to move them to the correct account.
Prepayment Balance Mismatch. The prepayment GL balance doesn't match the Delinquency Report. Usually caused by a non-receipt transaction posted to the prepaid GL, such as a journal entry. Find it in the GL for that account and reverse it.
Check these every month before running reconciliations. They surface problems that won't show up in the bank rec until they've compounded.
AppFolio's 9 financial diagnostics explained: what each one means and how to clear it
AppFolio runs nine financial diagnostics that flag accounting errors in your books. They live under Reports and most PM companies either don't know they exist or see the flags and ignore them. Each one signals a specific problem. Here's what they are and what to do.
Non-Zero Security Clearing Account. This account should always sit at exactly zero. If it doesn't, something went wrong in a move-out workflow: a reversed move-out bill, a reversed receipt that touched the clearing account, or a transction posted to the wrong GL. Find the non-zero transaction in the General Ledger for that account and trace it back to the source.
Security Deposit Funds Mismatch. This compares the GL balance for your security deposit account against the Security Deposit Funds Detail report. When they don't match, the usual causes are non-resident transactions posted to the deposit GL or past tenants who still have a balance in the system. Run the Security Deposit Funds Detail report, find the line items that don't correspond to current residents, and work backward to the source transaction.
Escrow Cash Account Balance Mismatch. Your escrow cash account should equal the sum of all GL accounts that offset to escrow. When it doesn't, either a receipt was posted to the wrong cash account, or there are pending move-outs with deposits that haven't been processed. Check the Bank Account Association report to confirm which cash accounts are tied to which properties.
Positive or Negative Balance on Additional Fee GLs. A positive balance means a fee was charged but not collected. A negative balance means a fee was collected and then waived or refunded after the fact. Neither should sit open. Positive balances usually self-correct when the fee is collected. Negative balances usually need a journal entry to zero out.
Tenants with Unused Prepayments and Open Charges. A tenant has a prepayment sitting on their account and also has open charges that the prepayment should be covering. AppFolio doesn't apply these automatically in all cases. Use the Apply Credits task to connect them.
Unused Prepayments for Past Tenants. A former tenant has a prepayment balance that was never resolved at move-out. Either complete the move-out flow properly, use Apply Credits, or enter a charge to zero it out.
Bank Reconciliation Lapses Over 60 Days. A bank account hasn't been reconciled in over 60 days. This is an audit risk flag. Find the account, reconcile it, and set a reminder to reconcile monthly at minimum.
Unused Prepayments on Non-Prepay GL. This happens when the key prepayment account was changed in settings after prepayments had already been recorded. The prepayments are sitting on the old GL. Use Reapply Receipt and select Make Prepayment to move them to the correct account.
Prepayment Balance Mismatch. The prepayment GL balance doesn't match the Delinquency Report. Usually caused by a non-receipt transaction posted to the prepaid GL, such as a journal entry. Find it in the GL for that account and reverse it.
Check these every month before running reconciliations. They surface problems that won't show up in the bank rec until they've compounded.
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