Month-end close for property managers: a checklist

A month-end close is the routine that turns a month of charges, payments and bills into numbers you can stand behind. For a property manager it matters more than for most businesses, because the numbers go to owners, and because many managers hold money that belongs to other people. A consistent close catches errors while they are small and gives owners statements they can trust.

This checklist assumes accrual accounting, where income is recorded when it is earned and expenses when they are incurred, whether or not cash has moved. If you report to some owners on a cash basis, the same steps apply; the accrual entries simply do not appear on those reports.

Before the month ends

1. 1Confirm next month's recurring charges are set up correctly: rent, pet rent, parking, utilities billed back and any payment plans.
2. 2Review move-ins, move-outs, transfers and lease renewals so that every resident's charges match their lease.
3. 3Chase outstanding vendor invoices so they can be entered in the right month.
4. 4Agree with owners on any planned distributions or reserve contributions.

1. Receivables

• Post every payment received, including those that arrived by check, money order or through a third party.
• Post late fees according to each lease and the rules that apply where the property is. Late fee limits and grace periods vary by state and city, so check local law.
• Record returned payments and reverse any fees you should not have charged.
• Review prepaid rent. Payments for next month are a liability, not this month's income.
• Review the aged receivables report and note accounts that need follow-up, a payment plan or a write-off decision.

2. Payables and accruals

• Enter all vendor bills dated in the month, whether or not you have paid them.
• Accrue significant expenses you know about but have not been billed for, such as utilities or a completed repair.
• Record recurring expenses: management fees, insurance, service contracts.
• Allocate shared costs across properties using a consistent, documented method.
• Confirm approvals for any bill above your approval limit.

3. Bank and trust reconciliation

Every bank account should be reconciled to the bank statement every month. For trust accounts, many managers go further and perform a three-way reconciliation, which compares three figures that should agree:

• The bank statement balance, adjusted for deposits in transit and outstanding checks.
• The balance in your books for that bank account.
• The total of the individual ledgers the account holds money for: each owner's funds and, where held in trust, each resident's security deposit.

If the three do not match, find the difference before you send statements. Common causes are a payment posted to the wrong owner, a bank fee not yet recorded, or a deposit entered twice. Never cover a shortfall in one owner's funds with another owner's money.

4. Security deposits

• Confirm the deposit liability in your books equals the total of deposits held, resident by resident.
• Process move-out dispositions within the deadline that applies, with itemised deductions.
• Record any interest owed on deposits where required.

5. Owner statements and distributions

1. 1Calculate management fees and any leasing or renewal fees according to each management agreement.
2. 2Hold back the reserve each owner has agreed to keep with you.
3. 3Review each owner's statement for unusual items: a large repair, a missing rent payment, a fee that looks wrong.
4. 4Attach supporting documents that owners commonly ask for, such as invoices for larger repairs.
5. 5Pay distributions only from funds that have cleared, and record each one against the right owner.
6. 6Send statements on the same day each month, so owners know when to expect them.

6. Review and lock the period

• Run a trial balance and look for accounts with unexpected balances, such as a clearing account that should be zero.
• Compare income and expenses with the prior month and budget. Investigate large swings.
• Review the rent roll against the general ledger for rental income.
• Lock the period so that no one can post into it without reopening it deliberately.
• Keep reconciliations and supporting documents together, in a place you could hand to an auditor or regulator.

Make it a routine, not a project

The close gets faster when it is the same every month. Write down who does each step and by which working day, keep the checklist with the reports it produces, and review the process when something goes wrong rather than only fixing the one error. If you require a second person to approve entries or payments, build that into the timeline so approvals do not hold up statements.

A note on StrivBridge

StrivBridge includes a general ledger with accrual reporting, trust reconciliation, management fees, owner distributions and statements, with optional approval of bills before they are paid, all in the same system as leasing and maintenance. It costs $5 per unit per month with a $65 minimum, and you can try it free for 30 days.