How owner distributions work in AppFolio and what causes negative balances
How owner distributions work in AppFolio and what causes negative balances
Owner distributions in AppFolio go through the Pay Owners function. Before you run it, you need to know what your Adjusted Cash Balance is. The ACB is the amount of money in your trust account that is actually available to distribute after accounting for uncleared checks, uncleared ACH batches, and unreconciled deposits. Distributing more than your ACB is a trust accounting violation even if the bank balance looks sufficient.
The Pay Owners workflow lets you distribute by property, by owner, or across all owners at once. You can pay by eCheck or by check through CheckSend. eCheck payments take three to five business days to process and cannot be stopped after they're sent. CheckSend has AppFolio print and mail a physical check for small feeper check, submitting before 1pm PST means next business day processing.
Negative owner balances are one of the most common findings in cleanup projects. They happen for a few specific reasons.
The most common is a bill paid before the income to cover it was collected. If a repair bill is paid from a property's trust funds but the owner's ledger doesn't have sufficient balance, the ledger goes negative. AppFolio allows this to happen, it doesn't block it. The property is essentially borrowing from the trust account float, which is a compliance issue.
The second cause is a receipt applied to the wrong property. If rent comes in for Property A but gets posted to Property B, Property A's ledger is short and Property B's ledger has an inflated balance. The trust account total may still balance but the individual ledgers are wrong, which means distributions will be off.
The third cause is a management fee posted before income is collected. If fees are run at the start of the month before rents come in, and the fee calculation results in a bill that exceeds the current ledger balance, the owner goes negative.
To fix a negative owner balance you need to find the transaction that caused it, determine whether it was a misapplication or a genuine timing issue, and either reverse and repost correctly or cover the shortfall from the next income cycle with a note in the owner ledger.
Run the Trust Account Detail report before every distribution cycle. It shows the running balance per property and flags anything that looks off before you move money.
How owner distributions work in AppFolio and what causes negative balances
Owner distributions in AppFolio go through the Pay Owners function. Before you run it, you need to know what your Adjusted Cash Balance is. The ACB is the amount of money in your trust account that is actually available to distribute after accounting for uncleared checks, uncleared ACH batches, and unreconciled deposits. Distributing more than your ACB is a trust accounting violation even if the bank balance looks sufficient.
The Pay Owners workflow lets you distribute by property, by owner, or across all owners at once. You can pay by eCheck or by check through CheckSend. eCheck payments take three to five business days to process and cannot be stopped after they're sent. CheckSend has AppFolio print and mail a physical check for small feeper check, submitting before 1pm PST means next business day processing.
Negative owner balances are one of the most common findings in cleanup projects. They happen for a few specific reasons.
The most common is a bill paid before the income to cover it was collected. If a repair bill is paid from a property's trust funds but the owner's ledger doesn't have sufficient balance, the ledger goes negative. AppFolio allows this to happen, it doesn't block it. The property is essentially borrowing from the trust account float, which is a compliance issue.
The second cause is a receipt applied to the wrong property. If rent comes in for Property A but gets posted to Property B, Property A's ledger is short and Property B's ledger has an inflated balance. The trust account total may still balance but the individual ledgers are wrong, which means distributions will be off.
The third cause is a management fee posted before income is collected. If fees are run at the start of the month before rents come in, and the fee calculation results in a bill that exceeds the current ledger balance, the owner goes negative.
To fix a negative owner balance you need to find the transaction that caused it, determine whether it was a misapplication or a genuine timing issue, and either reverse and repost correctly or cover the shortfall from the next income cycle with a note in the owner ledger.
Run the Trust Account Detail report before every distribution cycle. It shows the running balance per property and flags anything that looks off before you move money.
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