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The concept of service charge accounting is quite simple: provide an accurate accounting of a block/estate finances, ensuring that the building is effectively managed.
I have worked within the property industry for eight years focusing on service charge accounting for the last five. In this time, it’s become clear how important good service charge accountancy is.
Service Charge accountants are behind the scenes in managing the building, but if they are not good at the job this can have a strong impact on the rest of the building management. You could have the best Property Manager in the world, but if you don’t have good service charge accountancy you will struggle. I have always worked with QUBE as working with good software is always an advantage so if you were thinking of getting a good piece of software, then we would recommend Qube.
A key aspect of good service charge accounting is making sure you understand what service charge is! Things like how a lease works and how to identify what is and is not able to be service charged are quite important. One thing a good service charge accountant should know is how to read a lease! It’s ok to be told what you should be charging etc. from the Property Manager, but you should always be able to find that information yourself.
Another strong skill you need is the ability to communicate – whether this is with the Property Manager, the Client, or Leaseholders. I have come across service charge accountants over the years who cannot explain what is going on at their building financially, and I personally believe that strong communication makes a stronger service charge accountant.
I have found on occasions when I have been involved in handovers from other agents that their accounting for the building has not been strong, errors had arisen and no one knew how or why. At any one time, any agent managing any building on behalf of their Client should easily be able to pull up the information on the building: whether this be creditors, debtors, bank balances, and even expenditure listings. Many a time have I heard how hard it is for clients to get hold of this information from their agents. You should always make sure that your systems are as up to date as possible, and always try and keep ‘Real Time’.
As you all know service charge requires annual accounts like any business, so having a clear understanding of accounts is also imperative. Service charge accounts are different from business accounts so it is important that any good service charge accountant understands the difference and why they are different. What makes service charge accounts different?
As above, a lot of legislation and guidance affect how these are prepared and if you don’t know about these, then you will really struggle! Keeping up to date allows me to provide accurate information to my Clients.
In an industry such as this, there will never be a case of knowing the answers to everything as things are forever changing. The key element to good service charge accounting is never to be afraid to ask if you don’t know the answer, as no doubt that at some point in your career somebody will come to you with that same question.
Contact MIH if you’re looking for a new service charge accountant.