Trust Accounting is a safeguard implemented to protect your property owners and, by extension, your business. It assures transparency and ethical management of your owners' funds.
Typically, a Property Management Company manages two separate bank accounts: a Business Operations Account and a Trust Account. The Trust Account is exclusively designated for funds received from guests and property owners, while the business bank account is exclusively used for managing company funds. This clear separation ensures that company funds and client funds remain separate, preventing commingling of company funds and property owner funds.
Trust accounting ensures that the owner funds are appropriately managed, accurately reported, and protected. It fosters trust, safeguards owners, and ensures adherence to legal mandates, ultimately enhancing the professionalism and success your property management company.
This may sound overwhelming and hard to manage but it is actually very easy with the CiiRUS Trust Accounting Module. It is automated, robust and easy to use.
Quick Tip: After implementing Trust Accounting, many property management companies use it as a selling point to attract and onboard new property owners, emphasizing their commitment to financial integrity.
Trust Accounting Features
End of Month Assistant: Automate your end of month process and finalize monthly owner statements within a few steps.
Daily Reconciliation: Easily compare and verify that guest and owner payments successfully process and apply to the folios accordingly.
Trust Account Register: A detailed journal that tracks all transactions related to the trust account.
Vendor and Owner Payouts: Easy 2 step process to payout vendors and owners via ACH.
End of Month PMC Payout Report: A report detailing commissions, margins, and funds owed to the PMC for transfer from the Trust Account.
Trust Accounting Benefits
Peace of Mind: Both property owners and property management companies gain peace of mind knowing that finances are transparent, secure, and in compliance with regulations.
Owner Satisfaction: Property owners are more likely to be satisfied when they have confidence in the responsible handling of their funds.
Owner Protection: It safeguards property owners' funds from misappropriation, ensuring that their money is used solely for their property.
Prerequisites to Start
A dedicated bank account for owner and guest funds (trust or escrow account)
A starting bank balance (trust or escrow account)
Account balances for each owner
Enabling Trust Accounting ensures that individual owner accounts do not overspend or fall into a negative balance. This requires each owner's account to maintain a positive balance to utilize Trust Accounting.
If an owner's account has a negative balance, the system will decline any expense, preventing the property management company from overspending or using funds that belong to other parties.