Overview

In partitioned properties, outgoings funds are separated from the owner’s funds and are used specifically to pay property outgoings.

However, a shortfall occurs when:

• There is a vacancy

• A tenant has a gross lease (outgoings included in rent)

• Certain outgoings are specially allocated to some tenants only

In these situations, the outgoings collected from tenants are not sufficient to cover the actual expenses.
The owner’s partition must fund the shortfall so the outgoings partition can pay the expenses.

There are two ways to manage this.

Method 1 – AR Journal Transfer (Simple Method)

1. Create an AR journal periodically (usually monthly).

2. Transfer funds from:

   • An owner income account, or

   • An owner balance sheet account

3. Post the funds to the outgoings income account.

Result

Funds are moved from the owner’s partition to the outgoings partition to cover the shortfall.

When to Use

This method works well for:

• Small portfolios

• Properties with few vacancies

• Situations where adjustments are occasional

Method 2 – Recurring Entries (Recommended for Large Portfolios)

This method automates the process and improves reporting accuracy.

Step 1 – Allocate Vacancy/Gross Lease Costs in the Budget

When creating the property budget:

1. Allocate all costs related to:

   • Vacancies

   • Gross leases

2. Assign these costs to the MISC lease (Owner’s cost).

Step 2 – Calculate Tenant Outgoings Charges

Use the budget to calculate outgoing charges for:

• All tenants

• The MISC lease

This ensures the full cost of outgoings is allocated.

Step 3 – Create Recurring Outgoings Charges for the MISC Lease

Set up recurring outgoings charges against the MISC lease.

Requirements:

• Create one charge for each vacancy or gross lease

• Link the MISC lease to a unit with 0 lettable area

This ensures:

• Correct tenancy schedules

• Accurate outgoings reconciliations

Important Notes

• A tenant invoice will be generated when standing charges are processed.

• Charges must be updated whenever occupancy changes.

• The MISC lease can contain the owner’s name, but the invoice should not be sent to the owner.

Helpful Tips

• Set the lease type to Residential to avoid GST on the invoice.

• Use an outgoings income code excluded from management fee calculations.

Step 4 – Create a Recurring AP Invoice

For each property with a MISC outgoing charge, create a repeating AP invoice.

Setup details:

• Creditor code: Use the creditor linked to the trust bank account
  Example: AGENTTR

• Invoice amount: Must match the MISC tenant invoice

• Frequency: Monthly

• Invoice date: Typically 1st of each month

Notes

• Update the amount whenever lease charges change.

• If using automated invoice services, this step may be automated.

Step 5 – Pay Property Expenses Normally

Continue processing property expenses as usual.

This includes paying the recurring AP invoice created above.

Accounting Effect

The transaction will debit and credit the trust bank account, maintaining balance.

Step 6 – Process the Bank Receipt

When the transaction appears on the bank statement:

1. Receipt the credit.

2. Apply it to the outstanding AR invoice generated from the MISC lease.

Final Result

After completing these steps:

• Budgeted outgoings income equals outgoings expenses

• Owner reports show accurate outgoings income vs budget

• Bank partitioning works correctly, meaning:

  • Funds move from the owner’s partition

  • Funds are added to the outgoings partition

This ensures the outgoings account is properly funded even when vacancies or gross leases create a shortfall.