Loading, Please Wait...

Glossary Of Terms

This is an accounting term that indicates that income and expenditure is accounted for in the period they are incurred. An example of expenditure on an accrual basis is, receipt of a purchase invoice. An example of income on an accrual basis is, a Service Charge that is issued in advance for 12 months. If this charge is for £1200, it will show as £100 per month.

This ages the debtor into different segments of time, i.e. if the due date of the charge is the 21st of January and the date is now the 1st of March and full payment has not been made, the outstanding amount of the charge is 39 days overdue. This will therefore show in the 31-60 days column.

This ages the creditor invoice into different segments of time, i.e. if the date of the invoice is the 15th of February and the date is now the 1st of May the invoice will be 74 days overdue. This will therefore show in the 61-90 days column.

This is an industry term for a debtor.

This is the accounting cash that your company has and sometimes can be referred to as your cashbook balance. This does not always tie into your bank account balances as it takes account of any un-cleared and or un-reconciled transactions. Examples; If we write a cheque from your bank account today, it will not show as cleared on your bank statement until the cheque has cleared. If we receive a payment directly into the bank account, if may not show in your accounting records (i.e. if a resident has not given us their account number it may be difficult to find out who has paid you!) There can be as many as four cashbooks (and therefore bank accounts) associated with your development; Service charge account; this is your companies Current account and is unique to your development. This is your companies main Bank Account. CPA (Central Payment account(s); as the UK largest managing agent we look after a vast amount of bank accounts. In order for us to pay your suppliers efficiently, we pay them out of one payment account. Cash is transferred from your bank account (service charge account) into the CPA in order to meet your company's expenditure where funds allow. CRA (Central Receipts account(s); when residents pay by Cheque or Credit/Debit Card, these amounts are deposited into a corresponding Central account for speed of processing. These amounts are then transferred into your bank account once cleared. From time to time there well may be amounts outstanding for processing on the above two accounts; however they are still your management company's funds. Ground Rent Account; Some management companies also collect ground rents on behalf of the freeholders, this account is the bank account that relates to the monies collected, but not yet paid across to the freeholder.

An estimate of the current financial year's expenditure, in some cases this includes reserve(s) amounts for future works outside the current year. This is also used to calculate the charges that should be raised to residents in advance. The Budget Comparison report will be for the period selected when running the report (see current financial year to date).

Person or entity that you owe money to.

This can be broken down further into three areas, although this is not the case for every Management Company / development; Creditors Control account; the total amount of unpaid invoices, i.e. the total amount development owes your contractors. Ground Rents Freeholder account; Some management companies also collect ground rents on behalf of the freeholders, this is the total amount owed to the freeholder. Prepaid Income - Income within the accounts is accounted for on an accruals basis, this basically means matching the income with the period it related too. I.e. a Service Charge that is issued in advance for 12 months. If this charge is for £1200, it will show as £100 per month in the Budget Comparison report. The prepaid income line is the opposite side to this. I.e. in month one the £100 will show in the Budget comparison and £1100 will show in prepaid income on the balance sheet. In month two, £200 will show on the budget comparison and £1000 in prepaid income on the balance sheet. This is done so we can match the income with the monthly expenditure in order to manage your development more efficiently.

This can be broken down further into three areas, although this is not the case for every Management Company / development; Creditors Control account; the total amount of unpaid invoices, i.e. the total amount development owes your contractors. Ground Rents Freeholder account; Some management companies also collect ground rents on behalf of the freeholders, this is the total amount owed to the freeholder. Prepaid Income - Income within the accounts is accounted for on an accruals basis, this basically means matching the income with the period it related too. I.e. a Service Charge that is issued in advance for 12 months. If this charge is for £1200, it will show as £100 per month in the Budget Comparison report. The prepaid income line is the opposite side to this. I.e. in month one the £100 will show in the Budget comparison and £1100 will show in prepaid income on the balance sheet. In month two, £200 will show on the budget comparison and £1000 in prepaid income on the balance sheet. This is done so we can match the income with the monthly expenditure in order to manage your development more efficiently.

The current financial period your development is in. This is in relation to its statutory reporting period, i.e. current period is April, Statutory period is January to December, the report will therefore included Jan-Apr income and expenditure.

An amount that is outstanding whether due for payment or not.

Person or entity that owes you money.

This can be broken down further into three areas, although this is not the case for every Management Company / development; Debtor Control Account These figures tie in with the aged debtor report. A debtor is a person or entity that owes you money. Debtors Ground Rent Control Account Some management companies also collect ground rents on behalf of the freeholders, this amount is the amounts that residents have not yet paid for ground rents Sundry Debtors From time to time other related parties can owe the management company money, i.e. if a contractor issues a credit note but works are fully paid, this can be deemed as a Sundry Debtor.

Any negative balance in income after expenditure including reserves, i.e. for prior years, Income £10,000 less expenditure £11,000 = £1000 Deficit. If this is the case supplementary service charge demands should be raised and or charges for future periods increased.

Expenditure is defined as invoices received. This means invoices may or may not have been paid. To see the unpaid invoices please see the Aged Creditor report.

If an invoice is for more than one period (month) the expenditure will all show in one period. This will be corrected at the end of each Financial Year, i.e. insurance invoices are generally for a whole year; say 1st June 31st May. If the company's year end is December, then an adjustment at the end of the year will be made for the 5 month that relate to the following year.

The party that owns land.

An amount of money paid to the Freeholder forthe rent of land, usually on which a property has been built.

An agreement that is created between the Customer and the Freeholder of a property. This document outlines the terms under which the property is leased, including the usage and responsibilities associated with that property.

A party using under lease an asset owned by another party.

A company that is set up and run by residents of a development that oversees the maintenance of the properties and communal areas within it.

A prepayment on the ageing debtors report is a payment that has either been made on account or has not been allocated to an individual charge on the residents account. This is taken into account in the total amount owed by the resident. If the total owed is negative, monies are owed back to the resident from the management company.

Retained earnings is what is left at the time the balance sheet has been run. It takes into account prior years surpluses and deficits along with this year's performance (income less expenditure = Profit/Surplus).

An amount of money collected by a Management Company to cover the costs incurred through the maintenance of properties and communal areas run by this company.

Annual Accounts are filed with Companies House on an annual basis for limited companies. The time limit for this is 10 months after the year end. Landlord and tenant developments are restricted under the terms of the lease and do not have to be submitted to Companies House.

Any positive balance in income after expenditure including reserves, i.e. for prior years, Income £10,000 less expenditure £9,000 = £1000 Surplus. (This can sometime be known as a reserve amount and could be used for future major works such as redecoration etc).

This is the amount that the actual differs from the budget, i.e. Actual expenditure for Cleaning is £1500 and budgeted amounts is £2000, the variance is (£500), showing a saving (favourable). If this is an income variance, it would be the opposite way around. I.e. Actual income of £5000 and budgeted amount is £6000, the variance is (£1000), showing a shortfall (adverse). Negative) variances on income are adverse but Negative variances on expenditure are favourable.

Click here for help

Need help?

Chat to us online