Andrew Schaefer from the Trafalgar Property Group emphasises the critical importance of receiving and reviewing and especially making time to review detailed monthly management reports. Certainly, the chairman and finance director or trustee should take at least an hour a month to review in detail the monthly management reports, if these are not provided in full and consistently on time that would be a red flag in terms of effective property management.
At least 80% of the success of managing and running a complex is effective financial management, considering cash flow, mitigating variances to budget and making sure that levy arrears are well controlled. The monthly management report should be circulated to all the trustees and directors certainly by mid-month for the prior month, providing the accounting teams time to check and reconcile and process accruals from the prior month results.
Important things to look out for in the monthly management pack would be number one: the bank statement or surplus report for the building, this would show the levy income collected, all the expenses made and the closing bank balance as of the prior month and would be very important for the stakeholders concerned to make sure they in agreement with the movements and balances concerned. Secondly: a careful review of the income statement would be highly recommended, looking for material variances to budget and making sure that these are interrogated and managed because this would have an impact in terms of the budget and levy income if not carefully reviewed.
The balance sheet is a critical report which needs to be closely analysed, what you need to look out for there would be the month on month movement of levy arrears, bank balances and investment account balances, also reserve account balances for bodies corporate, as well as then creditors balances outstanding and credit levy payments.
Then the levy role, very important in the levy role will be to check that the correct charges have been raised including services, electricity and water, and then importantly going through the levy arrears and understanding what has been done about those levy arrears.
Certainly, a comprehensive management report should also have a debt collection component which clearly shows what has been done for each levy arrear account and ideally accounts in arrears over three months should be handed over for prompt legal collection so this can be escalated quickly.
Trafalgar offers its management reports online in real-time so any of these reports can be checked online at the convenience of the stakeholders concerned, checking real-time balances for all of those reports.
I cannot over emphasise enough the importance of making time to go through these reports, making sure there is awareness and making sure that any queries are quickly identified, swiftly resolved and that all the trustees are very aware of the important financial implications.
A building with a positive cash flow is typically a happy building, and effective financial management goes a very long way in terms of building and growing both the lifestyles of the residents and positive asset value of owner’s properties.
To see a sample monthly management report from Trafalgar, please click: http://www.trafalgar.co.za/sample-property-management-reports/