INTRODUCTION
I recall writing a blog around 15 years ago about how I used to manage service charge accounts year-end routines when I worked for Block Managing Agents which started in the year 2000. I thought I would give it another go all these years later…
Without sounding too biased, I have always believed that the accounts department of a Managing Agent is the heart of the firm. It pumps the blood around in the body, in other words, it brings primary cashflow to the Blocks/Schemes and a secondary cashflow to the Managing Agent (of course you still need to be paid).
HOW IT WORKS
Generally speaking, the majority of the Block year-ends will be December, March, June and September to either coincide with the month end of the traditional quarter dates.
This is where the “4 WAVE APPROACH” idea comes into play. The idea is that a large volume of work falls due on the same day. The idea is to clear that work before the next wave comes crashing in so to speak.
I will try to work the example below as a 12-month cycle of how I used to operate the Accounts Department. This may be slightly repetitive but effectively the 4 waves are the same in essence. In this example below I will work through how I would have approached 2023.
1. Around the beginning of December 2022 I would send out all due demands/budgets that are due on 25th December 2022 and 1st January 2023. That way we can begin to chase in any due funds as soon as possible after the due date.
2. WAVE 1. This then clears the way for the first wave! December year-ends could amount to over one-third of your year-ends (guesswork from experience). I would allow a couple of weeks to allow for bank statements to be reconciled and purchase invoices to arrive and processed into the system. I would then start to work on the year-end packs and get these sent to the Accountancy firm carrying out the certification or audit. My deadline, I would set myself, is to get these returned and signed by around the 1st March 2023.
3. Around the beginning of March 2023 I would send out all due demands/budgets that are due on 25th March 2023 and 1st April 2023. That way we can begin to chase in any due funds as soon as possible after the due date.
4. WAVE 2. March year-ends could amount to over one-third of your year-ends (guesswork from experience). I would allow a couple of weeks to allow for bank statements to be reconciled and purchase invoices to arrive and processed into the system. I would then start to work on the year-end packs and get these sent to the Accountancy firm carrying out the certification or audit. My deadline, I would set myself, is to get these returned and signed by around the 1st June 2023.
5. Around the beginning of June 2023 I would send out all due demands/budgets that are due on 24th June 2023 and 1st July 2023. That way we can begin to chase in any due funds as soon as possible after the due date.
6. WAVE 3. June year-ends is usually a smaller year-end batch. I would allow a couple of weeks to allow for bank statements to be reconciled and purchase invoices to arrive and processed into the system. I would then start to work on the year-end packs and get these sent to the Accountancy firm carrying out the certification or audit. My deadline, I would set myself, is to get these returned and signed by around the 1st September 2023.
7. Around the beginning of September 2023 I would send out all due demands/budgets that are due on 29th September 2023 and 1st October 2023. That way we can begin to chase in any due funds as soon as possible after the due date.
8. WAVE 4. September year-ends is usually a smaller year-end batch. I would allow a couple of weeks to allow for bank statements to be reconciled and purchase invoices to arrive and processed into the system. I would then start to work on the year-end packs and get these sent to the Accountancy firm carrying out the certification or audit. My deadline, I would set myself, is to get these returned and signed by around the 1st December 2023.
SUMMARY
I love an analogy so here goes…
When the first wave crashes over your head you need to be able to stand up, draw breath and be ready for the next wave. If you have not been able to do this by the time the next wave comes it can soon become overwhelming, difficult to manage and not knowing which task to prioritise next.
This is the key…slight plugging of our services to follow…
In order for this to work the Accountancy firm you use needs to have good turnaround times. Having worked in the industry I can relate to having to wait a long period of time to certify figures that have been reconciled and presented well. I know all too well that balancing adjustments and LPE1’s (used to be Landlords Questionnaires when I was a nipper) need producing.
Your external accountant is an integral part of your team and offering to your clients. If you get this right you are half-way there.
CONTACT
If you like what you have read and think we may be able to work together please feel free to get in touch for an informal chat. If you are getting this level of service from your Accountant then I am pleased for you and we are always here in the future.
Graham Knight FCCA
[email protected]
01424 425113