Your monthly closing is approaching but your bank balances do not match your ledger. For many property managers this is an ongoing weekly problem. You know your system works perfectly; however, your financial statements continue to be inaccurate. Dirty or “messy” accounts seldom occur due to software bugs. They normally occur as a result of people (employees) causing issues with how transactions move through the accounting process. Utilizing AppFolio Payment Processing can help minimize the time spent trying to collect paper checks. However, running payment processing on auto-pilot without specific guidelines will create problems with your accounting report.
In order to effectively safeguard your business, you must understand where things go wrong. Here are five common errors that hurt your property books and how to fix them.
Key Takeaways: Chaos vs. Clean Ledgers
- Ban Paper Money: Do not take cash or money orders at the desk. It causes typos and bank mistakes.
- Wait for Payouts: Never pay owners on the 2nd or 3rd. Wait for tenant checks to clear first so you do not send fake money.
- Fix Portal Settings: Do not let tenants pay a fixed amount. Force them to pay the full balance so utilities get covered.
- Separate Deposits: Keep security deposits away from rent money. Put them in different bank accounts to stay legal.
- Pay Vendors Weekly: Stop saving bills for one big monthly check run. Pay contractors twice a week to keep books accurate.
1. Eliminating Office Cash with AppFolio Payment Processing
Paying in cash can be a hassle and very unsafe. Paper cash can easily get lost, miss-counted or forgotten about when things get busy in the office. Without an automatic digital trail, your staff spends hours acting like bank tellers.
To illustrate, an agent may place a tenant’s rent cash in their desk drawer during the middle of the day due to being so busy they forget to log it on the computer until Friday. This delay leads to typos, and your bank deposit will not match your software.
- How to Fix This: Use AppFolio Payment Processing to activate Cash Pay. Cash Pay eliminates the need to handle physical cash. Your tenants will receive a barcoded voucher they will use to make the payment for rent at a store such as CVS or 7-11. The money uploads and posts to the ledger on its own, wiping out human errors.
2. Missing Bounced eChecks and Ignoring Alerts
When you process an online payment via eCheck on the first day of the month, everything appears to be fine. However, an eCheck is nothing more than a digital promise. If the tenant account does not have the required funds, the bank will reverse the eCheck within 3-5 business days. If you pay your property owners on the third of each month, you are essentially paying them with fake money that never existed.
How to Fix This: Change your user profile settings so that you receive immediate notifications for failed online payments. Being able to identify and capture a reversed eCheck the same day it reverses allows you to stop owner payouts before the money leaves your bank. The system then adds the NSF fee and updates the ledger automatically.
3. Letting Tenants Set a Fixed Autopay Amount
Autopay is great, but letting residents type in a fixed dollar amount creates small unpaid balances. For example, if a resident sets their autopay to exactly $1,500, but you add a $30 utility charge later, that static limit leaves $30 behind. The system then issues an unfair late fee, leading to an angry phone call.
- How to Fix This: Change your resident portal settings to require the “Outstanding Balance” option instead of a fixed number. This tells the system to read the ledger dynamically each month so you can simplify rental accounting using AppFolio monthly reporting. It pulls the true total amount due, covers variable utility bills, and keeps your books clean.
4. Mixing Rent Income and Security Deposits
A security deposit belongs to the tenant and must sit in a separate escrow account. Mixing this money with rent cash can cause you to fail an audit and lose your real estate license. This error happens when a tenant writes one big check for both rent and deposit, and your staff applies it to the rent bucket without splitting the lines.
- How to Fix This: Use transaction mapping rules on the backend of your AppFolio Payment Processing setup. Train your team to split mixed payments at the point of entry. Tag the rent for your operating account and the deposit for your escrow account to keep the funds isolated automatically.
5. Saving Up Vendor Bills for a Monthly Check Run
Piling up paper invoices on a desk and paying them all on a single day destroys your cash flow data. It creates sudden, steep drops in your financial reports. A property owner who logs in mid-month sees a false picture of their cash health, only to watch their balance plunge during your month-end run.
- How to Fix This: Use online bill approvals and switch to same-day ACH vendor payments on a twice-weekly schedule. Contractors get paid faster, owners see a realistic cash flow picture, and you never miss early-payment discounts. This approach helps you get the most out of your AppFolio payment processing tools.
Reclaiming Your Financial Security
Clean property management accounting is all about putting in place simple office controls that will prevent humans from messing up your financial reporting. If your staff is spending its days manually matching bank statements to tenant records, then it is time to get your workflow in order.
For over 20 years, Outsourced Bookkeeping has been managing the back end of 10,000+ lease agreements for US property managers. With 75+ CPAs on OBB’s team and a 95%+ client retention rate, we process rent income, deposits, and vendor payments with precision. This means your property manager’s accounting mistakes never make it into your financial reports.
We are also an ISO 27001-certified partner for data security. We assure you that your trust accounts for property management and banking information remain completely secure.
Ready to clean up your ledgers and stop chasing mismatched entries? Book a free consultation today to see how our team of expert AppFolio bookkeepers can help you streamline your AppFolio payment processing and reclaim your valuable time.
FAQ
Q: Does AppFolio accept cash payments?
No, you cannot take physical bills at your desk. Instead, tenants use Electronic Cash Payments (ECP) through AppFolio Payment Processing to pay cash safely at local retail stores like CVS or 7-Eleven.
Q: What happens when a tenant’s online payment bounces (NSF) in AppFolio?
The software automatically reverses the failed eCheck payment on the tenant’s ledger and updates their balance. It also alerts your team and can apply an automated NSF fee to the resident’s account right away.
Q: Can tenants set up autopay for the full balance due in AppFolio?
Yes, tenants can choose the “Outstanding Balance” option in their portal. This pulls the exact total amount owed each month, including variable charges like utility billbacks, so no unpaid balances are left behind.
Q: How does AppFolio keep security deposits separate from rent?
The platform uses backend General Ledger (GL) codes to route funds. When your team tags an entry correctly, the system isolates security deposit liabilities from regular rent income automatically to keep you legally compliant.
Q: How do I approve and pay vendor bills in AppFolio?
You upload invoices directly into the software for digital review and approval. Once approved, you can pay contractors electronically via ACH or print checks directly from the system, creating a clean digital paper trail.
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