Key aspects of handling clients’ money

Written by Louise Roberts Friday, 28 May 2010 00:00

The Royal Institution of Chartered Surveyors Members Rule Book and Best Practice Guidelines are an integral part of providing a compliant and quality service to Landlords and tenants alike of both commercial and residential property.Louise Roberts is our Accounts Manager within the Property Management Department. Louise reports, “Miller Commercial adopt a rigorous approach to matters relating to clients’ money and have a comprehensive Quality Assurance Manual adopted for this purpose”.

Louise Roberts is our Accounts Manager within the Property Management Department. Louise reports, “Miller Commercial adopt a rigorous approach to matters relating to clients’ money and have a comprehensive Quality Assurance Manual adopted for this purpose”. It is fully understood that a system of regular checks and audits are essential to provide a 1st class service and, therefore, the key aspects of handling clients’ money are as below:-

A Firm, Partnership, Company etc shall preserve the security of clients’ money entrusted to its care in the course of its practice or business.

Aim

To ensure that clients’ money can be clearly linked to the clients to whom it belongs, and is protected on their behalf in the following circumstances:

• Insolvency

• Misappropriation by any party

• Death of a sole practitioner or [say] all partners

Managing clients’ money effectively should deliver an appropriate level of confidence to RICS, Firms’ clients, potential clients and stakeholders.

What is clients’ money?

Clients’ money is any money received and held by a firm that does not solely belong to that firm, partnership, company etc.

Examples may include:

• Tenants’ deposits

• Rents

• Service charges

• Interest (if in an interest bearing client account)

• Arbitration fees

• Fee money taken in advance

• Clients’ money held but due to be paid to contractors

• Money held by members appointed as a Receiver

• Sale proceeds

Key elements of best practice:

Client accounts

• Keep clients’ money in a designated account(s)

• Include the name of the firm and the word “client” – to distinguish the account from a designated office account

• Obtain bank confirmation of account conditions, including making sure the bank doesn’t combine or offset funds in your client account with any other account that firm etc. holds

• Advise client and agree terms of account handling in writing

• Ensure there are sufficient funds in the account to pay amounts owing to clients as they fall due under the firm’s terms and conditions of engagement

• Obtain clients’ written approval to make payments from their accounts

Controls in the firm

• Bank at the earliest reasonable opportunity

• The nomination of authorised staff to handle money

• If cash receipts are used to settle transactions by cash it is essential to make sure that bookkeeping records show all cash transactions

Systems

• Manage transactions using an accounting system appropriate to the business

• The system used should enable the firm to keep adequate records of clients’ money holdings

A suitable software package will enable the firm to manage money effectively.

It is recommended that client accounts, together with bank and cash balances, are reconciled at regular intervals in order to demonstrate control over the accuracy and completeness of accounting records.

To conclude, Miller Commercial in their property operations, take all possible steps to preserve the integrity of clients’ monies that they handle.

More generally, if the reader is either a landlord or tenant of property who would like more information relating to account procedures or property management issues, and would like a free consultation, please call our Management Department on 01872 247037.

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