Monday, December 14, 2015

Property Management Bookkeeping: How to Watch the Maintenance Expenses

How to Watch the Maintenance Expenses

When managing properties for private owners, it is usually the property management company's duty to ensure that the property remains in habitable condition. This means handling maintenance issues for both occupied and vacant units, making certain each property is in good repair.

With occupied properties, the care for minor maintenance issues can be a negotiable part of the lease. This means either the property management company or the tenant can assume responsibility for handling minor repairs. In either case, the property management company wants to take on the repairs regardless of who's responsible. This ensures that the maintenance issue gets taken care of, preventing the possibility of a minor issue growing into a major issue.

In handling maintenance, the costs are usually covered by either the tenant or the property owner. This puts the property management company into an interesting dilemma. The company can either wait to receive the funds from either party to begin the repair or can have the issue resolved and bill the responsible party later.

With minor maintenance issues, it's best to handle the issue promptly and bill the responsible party after the fact. As I stated earlier, you want to prevent minor problems from growing into major ones. It's in the best interest for the property management company to incur the cost upfront and seek reimbursement later.

For major maintenance issues, it's a completely different story. When major repairs are needed, it's best to assess the situation and get an estimate for the cost of the repair. Once the estimate is received, determine if the tenant is responsible for the issue or if it was simply the result of extensive wear and tear over time.

If the tenant is responsible, then the tenant should be charged for the repair. However, it's best to consult the property owner on the situation before making a decision. While the tenant may be ultimately charged, the property management company and the owner may have to front the cost for the repair at first.

It's best that the property management company get some commitment from the owner prior to making the repair because it's the property owner that is responsible for the cost regardless if the tenant pays or not. While it is ideal for the property owner to cover the cost in full, the property management company may assist the owner in covering the cost of the repair with a promise of reimbursement.

Under no circumstance should the property management company proceed with a major repair without at least a partial payment for the work to be completed. This results in a loss of income to the company, especially if both the owner and the tenant choose not to pay what they owe. The property management company is in business to make a profit from renting not issuing loans.

By seeking handling minor maintenance issues promptly, getting estimates on major maintenance issues, and requiring an upfront payment from the property owner, the property management company puts itself in a great position to manage the costs of repairs.

Monday, November 30, 2015

Know the Difference Between Cash-Based and Accrual-Based

Know the Difference Between Cash-Based and Accrual-Based

When starting a business, you'll eventually have to decided on a method to record your transactions. The choices you have as a small business owner are cash-based accounting and accrual-based accounting. Both accounting methods have their pros and cons and it's best to discuss with your accountant which method will be right for your business.

Cash-Based Accounting

In the beginning, using cash-based accounting may work well for a small business to keep their financial records. In using this method, cash is recorded whenever it's received from customers for products or services or paid by the business to cover expenses. With cash-based accounting, the business owner is tracking the literal incoming and outgoing flows of cash.

Tracking these cash flows is the benefit of using cash-based accounting. At all times, you know how much cash you have on hand to pay bills and can physically see cash accumulate via sales.  It keeps the small business owner from spending what they don't have, especially if no money is coming into the business.

The drawback to cash-based accounting is the inability to see how the expenses help to draw in revenues. Cash spent in one period for inventory or other necessary expense for business operation may not create revenues immediately. Once the revenue is realized, it's difficult to go back to determine the exact source of its occurrence.

Accrual-Based Accounting

After some time, the small business owner may choose to switch to accrual-based accounting to better manage the financial records as the business grows. With accrual-based accounting, all transactions are recorded at the time they are recorded regardless of whether payment is made or not. The small business owner is tracking the revenues the business has earned, even if no cash has been received.

This is where accrual-based accounting falls short. The small business owner can complete many jobs and send out many invoices, but without any actual payments, the business is only profitable on paper. While the accounts receivable may be growing, so will the accounts payable. A business needs cash flow to remain viable, not promises of cash flow.

However, accrual-based accounting trumps cash-based accounting when it comes to connecting the dots of revenues and expenses. Accrual-based accounting allows the small business owner to see a direct correlation between funds paid out for expenses and the effects on revenues. Also, the current period's performance can be easily compared to performance in prior periods.

Regardless of your choice, Equitable Bookkeeping can help you keep track of your finances. Just remember to speak with your accountant to determine which accounting method works best for your business.

Monday, October 12, 2015

How to Manage your Cash Flow

How to Manage your Cash Flow

Cash flow issues can lead your business to fail.

Let me say that again. Cash flow issues can lead your business to fail

If you cannot afford to pay your bills and suppliers, then it is going to be hard for you to keep your business’s doors open. Luckily, with proper cash flow management, you will give your small business a good chance for survival.

Improving your cash flow improves your chances for success. Be mindful of both sides of the cash flow equation: your customers and your suppliers. You will find your best opportunities for cash flow improvement in those areas.

For your business to stay afloat, you always want your customers to pay on time. What good is having a business without cash flowing into that business? When customers use credit, they are trying to delaying paying for a purchase. It is up to you as the small business owner to find ways to encourage them to pay you as soon as possible. Two ways to accomplish this is by providing discounts for purchases paid for promptly and by selling older merchandise at discounted prices, if you are a retailer.

You can also factor some of the older debt that you may have deemed uncollectible. Unfortunately, this may cost you money since factoring companies tend to by old accounts at a lower amount than what was originally due. However, it is about getting cash flowing in the door and getting those uncollectible accounts off the books. Check out Fundbox if you are looking for factoring assistance.

To your suppliers, you are the customer, so it is understandable that you want to pay your debt to them as close to the due date as possible. By doing this, you ensure your business has cash on hand and that said cash earns interest. Managing your cash flow with your suppliers requires you to review your financial obligations closely to find ways to reduce costs.

Negotiate with suppliers, shop around, and take advantage of the discounts they offer to accomplish this savings. The suppliers want your business, so there is nothing wrong with seeking terms that can be beneficial to both parties

While this is not an all-encompassing list of cash flow management strategies, using the strategies mentioned can help improve your business’s cash flow. Equitable Bookkeeping can help with this. We will help you see where you have been and determine where you are presently. With this information, Equitable Bookkeeping can help you decide what direction you would like your business to go. Give us a call today to schedule a consultation.

Monday, October 5, 2015

The Benefits of Outsourcing your Bookkeeping Needs

The Benefits of Outsourcing your Bookkeeping Needs

Equitable Bookkeeping is here to assist you in organizing your financial records and to save you time and money. Our services give you the peace of mind needed to focus on other aspects of growing your business.

How does Equitable Bookkeeping do this?

If you're currently managing your own books, that's an additional task taking up valuable time from marketing, managing, etc. for your business. You could hire a bookkeeper on staff, but then you have to worry about salary and benefits.

Allowing Equitable Bookkeeping to manage your books for you gives you the relief of having a well-qualified bookkeeper manage your finances without the costs of salary plus benefits of adding an employee.

And you will still have full control. When you want an invoice paid, it gets paid. You still make the decisions. You still sign the checks. Equitable Bookkeeping will keep things organized and ready for you or your accountant to review.

We want to help you from committing any of the Top 10 Bookkeeping Mistakes Made by Small Businesses.

Contact Equitable Bookkeeping today to get your books back on track.

Monday, September 28, 2015

Welcome to the Equitable Bookkeeping Blog

Welcome to the Equitable Bookkeeping blog.

Here we will discuss topics that will be beneficial to small businesses, ranging from organizing your financial records to preparing financial statements.

We will also look to dig a bit deeper into commonly asked questions about bookkeeping challenges that may arise for the small business owner.

Our hope is that this blog will prove a valuable resource for small business owners looking for a quick answer or simply wanting to know more about how to manage their books.

Please return periodically to learn new info and to leave your comments and questions.

Thank you for your support and consideration.

Equitable Bookkeeping

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