Is your Property Mgmt company paying for your owners' expenses?
Is your Property Mgmt company paying for your owners' expenses?
Here's a scenario I see too often. An owner's fridge dies. $2,500 replacement. The owner only has $500 in reserves. So your company fronts the other $2,000 out of corporate funds to get the job done ASAP.
Good customer service. Terrible bookkeeping.
Because here's what usually happens next: nothing. That $2,000 never gets properly billed back. It never gets tracked as a receivable. It just quietly disappears into your expenses and eats your margin.
Multiply that across 10 owners a month, and you're subsidizing your clients' properties with your own operating cash, which is already tight.
Most PMs don't even know this is happening because the money moves between Trust bookkeeping and Corporate bookkeeping without a clear process for tracking it. The repair is recorded on your corporate books as an expense when it shouldn't be. It should never touch your P&L. It belongs on your balance sheet as a receivable until the owner pays you back.
I ask about reimbursables in every discovery call with a new client. They have a vague sense that "owners owe us money," but no clear amount, no aging report, and no collection process. No bueno!
Reimbursable tracking is built into our workflow between Trust Bookkeeping and Corporate Bookkeeping because we saw it drain thousands of dollars from PM companies.
If you can't tell me right now exactly how much your owners owe you in outstanding reimbursables, you are subsidizing their business.
-Young LeeYoung Lee
Is your Property Mgmt company paying for your owners' expenses?
Here's a scenario I see too often. An owner's fridge dies. $2,500 replacement. The owner only has $500 in reserves. So your company fronts the other $2,000 out of corporate funds to get the job done ASAP.
Good customer service. Terrible bookkeeping.
Because here's what usually happens next: nothing. That $2,000 never gets properly billed back. It never gets tracked as a receivable. It just quietly disappears into your expenses and eats your margin.
Multiply that across 10 owners a month, and you're subsidizing your clients' properties with your own operating cash, which is already tight.
Most PMs don't even know this is happening because the money moves between Trust bookkeeping and Corporate bookkeeping without a clear process for tracking it. The repair is recorded on your corporate books as an expense when it shouldn't be. It should never touch your P&L. It belongs on your balance sheet as a receivable until the owner pays you back.
I ask about reimbursables in every discovery call with a new client. They have a vague sense that "owners owe us money," but no clear amount, no aging report, and no collection process. No bueno!
Reimbursable tracking is built into our workflow between Trust Bookkeeping and Corporate Bookkeeping because we saw it drain thousands of dollars from PM companies.
If you can't tell me right now exactly how much your owners owe you in outstanding reimbursables, you are subsidizing their business.
-Young LeeYoung Lee
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