There are multiple options when issuing a credit to a tenant in Buildium, and they all have unique features and applications. In this article, we will go over all the different ways you can issue a credit to a tenant in Buildium, how they differ, and the best uses of each in our experience as Buildium Experts.
This option is the simplest and essentially just reverses the charges to a tenant. It is basically the same as deleting a charge, but with the adjustment reflected on the ledger itself. The application of this credit does not result in any changes to the properties financials other than simply reducing accounts receivable. Examples of best use:
Unlike option 1, this credit does result in an actual change to the GL accounts the credit is applied to. It forces the user to select an expense account to offset the credit. It is essentially the same as receiving a payment as usual from the tenant, but then turning around and paying them as a vendor for a property expense (such as for repairs, supplies, etc), but without the need to actually exchange funds. Examples of best use:
Similar to option 2, this credit does result in an actual change to the GL accounts the credit is applied to. However instead of an expense account it forces the user to select an equity account to offset the credit. It is essentially the same as receiving a payment as usual from the tenant, but then turning around and making a distribution to the owner. When applied to a liability account, it can be viewed as a “conversion” of the owner's existing cash balance to the account the credit is applied to (such as security deposit liability), but without the need to actually exchange funds. Examples of best use are:
There is a 4th tenant credit option that is not exactly a “credit” according to Buildium but is useful in it’s own way, which is the management company actually paying the rent on behalf of the tenant. This would be recorded as a “receive payment” on the lease ledger as usual, but the payment comes from the property manager and is typically reconciled with a real transfer from the PM company’s overhead operating account to the owner trust account. So ultimately there is a deposit of funds in the bank to clear the undeposited payment, but from the PM company instead of the tenant. Examples of best use are:
If you need help with tenant credits, lease ledger clean-up, or ongoing bookkeeping services, please reach out to us at email@example.com. You can also reach out to us on our website or by calling (281) 949-8755!