Service Charge Reconciliation – Handling Accruals and Prepayments

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For our Europe, Middle East & Africa users, the term "Service Charge Budgets" is used, while our Asia-Pacific customers refer to this as "Outgoing Budgets", and in North America, you'll encounter "CAM Budgets." For more information on regional terminology, please refer to our Glossary of Regional Terminology.

This article provides step-by-step instructions for handling accruals and prepayments within Re-Leased during service charge reconciliation periods. Although Re-Leased operates as a single-entry invoice-based software without specific support for accruals and prepayments between service charge periods, the outlined process enables you to manage these adjustments effectively.

Expense Accruals

Follow these steps to handle expense accruals:

  1. Create an expense invoice with a line item per chart of account that requires an accrual in the service charge reconciliation. Use the description "SC Accrual" or a similar term, set the issue date within the service charge budget period, and select "Out of Scope" as the tax type.
  2. Tip: It can be helpful to always use the last day of the service charge budget period.
  3. From within the expense invoice, click Credit Invoice and change the issue date to be in the next service charge period.
  4. Tip: Consider using the first day of the new service charge period for consistency.
  5. Allocate the credit note to the invoice. This ensures the credit is applied in the new service charge period to reverse the accrual.

Income Accruals

Adjust income accruals by following these steps:

  1. Create an income invoice per Tenancy using their usual service charge income chart of account code. Set the issue date within the service charge budget period and include the description "SC Accrual" or similar. Select "Out of Scope" as the tax type.
  2. From within the income invoice, click Credit Invoice and change the issue date to be in the next service charge budget period.
  3. Allocate the credit note to the invoice. This properly applies the credit in the new service charge period to reverse the accrual.

Expense Prepayments

Handle expense prepayments with these steps:

  1. Create an expense invoice with a line item per chart of account requiring prepayment. Set the issue date in the next budget period and include the description "SC Prepayment" or similar. Select "Out of Scope" as the tax type.
  2. From within the expense invoice, click Credit Invoice and change the issue date to be within the current service charge budget period.
  3. Allocate the credit note to the invoice. This places the invoice in the upcoming service charge period for prepayment reversal.

Income Prepayments

Manage income prepayments with the following steps:

  1. Create an income invoice per Tenancy using their usual service charge income chart of account code. Set the issue date in the next budget period and provide the description "SC Prepayment" or something similar. Select "Out of Scope" as the tax type.
  2. From within the income invoice, click Credit Invoice and change the issue date to be in the current service charge budget period.
  3. Allocate the credit note to the invoice to place the invoice in the new service charge period for prepayment reversal.

Additional Considerations

  • Create a dedicated contact called "Accruals/Prepayments" for these transactions to streamline the process. Alternatively, use the Owner or another contact.
  • Ensure the tax type remains consistent between the invoice and credit note to avoid affecting VAT/GST/Tax reporting. These adjustments should not impact your VAT/GST/Tax position.
  • Create a separate ledger for these adjustments if you prefer they not appear on Owner Statements. Using a statement format with a sheet per ledger allows easy management and tracking of adjustments.
  • If managing a large number of adjustments, you can save time by using the Import Invoices option from the Income & Expenses screen. Note that credit notes cannot be imported, so this step will require manual completion.

See these related articles for further assistance:

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