Property Management companies have two options when it comes to managing their communities’ accounts: a series of individual bank accounts for each community, or a single, central trust account in the name of the managing agent.
That’s interesting. James, which one of the mentioned options are preferred by larger property management businesses?
That’s a good question! Trust accounts are the preferred option for most larger property management businesses.
Why is that James?
Trust accounts provide property managers with a lot of processing efficiencies. By using a central trust account for all communities within their portfolio, managing agents can streamline their monthly processing using existing tools and pass those efficiencies on to their clients. However, it should be noted that modern trends have seen increasing numbers of trustees unwilling to accept a trust account solution, prompted by perceived fears of fraud and a lack of control in a trust account environment. So, more and more trustees are demonstrating a strong preference for individual accounts over a trust environment, as they’re seen as more transparent and secure.
What does that mean for property management businesses, James?
Unfortunately, when you’re managing more than a hundred communities, downloading and processing that number of bank statements and payments manually and/or individually is prohibitively time-intensive. But that’s not even the worst part. Managing agents have also been forced to open individual investment bank accounts for all sectional title schemes as of 7 October 2016 under the STSMA (Act No 8 of 2011).
Oh no! That sounds quite complicated, James?
It is! It has presented a huge challenge for large property management businesses, because running multiple accounts individually is so inefficient, and bulk administration tools have not been available. Even banks have been unable to handle bulk payments, processing or statement retrieval for the industry until recently. As a result, a lot of property managers have been caught between a rock and a hard place – disappoint their trustees or clients by declining to offer individual bank accounts or find a way to somehow shoulder the massive additional workload.
It can’t be all doom and gloom, though, can it?
While the shift in market preferences from centralised trust accounts to individual bank accounts has created many challenges for property managers, all is not lost in the quest for processing efficiencies. In an industry first, we have created a solution that effortlessly solves this challenge as part of our Community Management Software solution.
And how does WeconnectU solve this challenge exactly, James?
I’m glad you asked! We created a solution that allows managing agents using our platform to administer as many separate bank accounts as they need to with the same level of ease and efficiency as a central trust environment.
It really is a solution that combines the best of both worlds, enabling property managers to align their services with industry demands. Trustees get all the separation, transparency and perceived security of an exclusive community bank account, and managing agents get all the processing efficiencies of working with a consolidated, portfolio-wide financial environment.
That’s amazing, James!
Thank you! We are incredibly proud to be able to offer the first solution enabling property managers to effectively fulfil the needs of today’s – and tomorrow’s – clients.
Switch to the most advanced and only end-to-end Community Management Solution built for the Managing Agent.
Book a demo: https://weconnectu.co.za/book-a-demo/
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