05/13/2024
APPFOLIO PROPERTY MANAGEMENT SOFTWARE : PREPAYMENT BALANCE MISMATCH
Prepayment Balance Mismatch is a section on the Financial Diagnostic page of the Appfolio Property Management software solution. Also known as the Financial Diagnostic Report.
Items of Prepayment Amount on the General Ledger of the Diagnostic page are commonly caused by transactions that use the prepaid rent GL account for something other than a tenant receipt. These would be something like a charge transaction or using this as an offset account on a Journal Entry. We never want to create a charge with the prepaid rent GL and we never want to credit with the prepaid rent GL. Nevertheless, sometimes “things happen” and fortunately it is not too difficult of a fix.
As with most anything diagnostic within AppFolio the trick is to know how to manage the reports. Here are the steps that I take to clean up a Prepayment Balance Mismatch:
Pick a property line item to work on. Subtract the Prepayment Amount on General Ledger from the Prepayment Amount on the Delinquency Report. This may tell you the exact amount you are looking for or it may be a combination of amounts;
Click on the Prepayment Amount on General Ledger link;
This opens up a General Ledger and it is my preference to customize the report. I click on Grouping and Group rows by category, by the unit. Now you can scroll through the report looking for the amount that was calculated in step 1. Or to look for hints in the description. You’re looking for something like Prepaid Rent Income;
Once you find the culprit which involves a charge using the Prepaid Rent GL account, you’ll want to reapply the receipt. On the Reapply Receipt screen, you click on the box for to Make Prepayment and click on reapply;
Find that charge again (you can find it on the tenant ledger) and edit the charge to Rent Income.
Now you can refresh the Diagnostic page and the issue will be gone unless there were multiple issues on that property. In that case, you would go back to the General Ledger report and scroll through it looking for the next issue of prepaid rent being applied as a charge to a tenant ledger transaction.
ManagingYourProperties.net is a division of Ala Carte Bookkeeping with a focus on Property Management Trust Accounting. More and more property managers are taking responsibility for their Property Management Trust Accounting as is encouraged by the National Association of Residential Property Managers in their Accounting Standards educational material.
Call now to connect with business.
