Short answer: a property management company's month-end close has two jobs. First, prove the trust money is right: a three-way reconciliation of every trust account, owner statements and distributions, and deposits tied out. Second, close the management company's own books, separately, so the owner can see what the business actually earns. Most firms do the first well enough and skip the second. Below is what both halves should include, in the order we run them.
If you'd rather have someone run it for you, that is what our property management accounting & fractional CFO team does every month.
What should a property management company's month-end close include?
Here is the close we use, split into the trust side and the company side.
Part 1: The trust side (other people's money)
- Record everything for the month. Rent receipts, late fees, owner contributions, vendor bills and management fees posted through the last day of the month in AppFolio, Yardi or Buildium.
- Reconcile every trust bank account. Match the bank statement to the trust cash book, clear outstanding items and investigate anything older than a month.
- Run the three-way reconciliation. Bank balance, trust ledger balance and the sum of all owner and tenant ledgers must agree. No owner statement goes out until they do.
- Tie out security deposits and prepaid rent. The deposit liability should match the deposits held, by property, and prepaid rent should sit as a liability, not as owner income.
- Review owner ledgers for negatives. A negative owner balance means you have spent one owner's money on another owner's property. Fix it now, not at year-end.
- Issue owner statements and distributions on a fixed date, with the management fee and any other charges clearly shown.
Part 2: The company side (the business you own)
- Sweep fees to the operating account. Management, leasing, renewal and maintenance-coordination fees earned in the month should move out of trust and be recorded as company revenue.
- Close the management company's own general ledger. Reconcile the operating bank and cards, book payroll and software, accrue what is owed, and keep trust activity out of this P&L.
- Break revenue out by fee type. Management fees, leasing fees, renewal fees and maintenance coordination tell very different stories about the business.
- Report the door count. Doors at the start, new doors, lost doors and doors at the end, so revenue can be read per door.
- Deliver a short owner package. A few pages: company P&L, revenue and contribution per door, doors per staff member, a 13-week cash view, and confirmation that every trust account reconciled.
Our free monthly close checklist has the general version of these steps if you want something to print.
Why property managers skip the company side
Property management software is built to run properties. It produces owner statements, rent rolls and work orders very well. It is not built to tell the management company whether it is making money. So the trust side gets closed because owners and regulators demand it, and the company side waits until the tax return. By then it is too late to act on anything.
When both halves close on the same calendar, the owner gets something rare in this industry: a clear monthly view of what each door earns, where staff time goes and how much cash the company will have in three months.
How long should the close take?
For most management companies, owner statements should go out within the first ten days of the month, and the company's own P&L shortly after. Speed comes from routine, not heroics. In one engagement outside real estate, a healthcare group with 12 entities went from a six-week close to ten days once every entity was closed the same way, on the same calendar. Property management portfolios benefit from exactly the same discipline.
When does a property management company need a fractional CFO?
A clean close answers "are the books right?" A fractional CFO answers "what do we do now?" Property management companies usually bring one in when:
- The door count is growing but profit is not.
- A large owner or another portfolio is on the table and nobody can price it.
- Fee income is lumpy and payroll is not, so cash gets tight in certain months.
- A lender, partner or buyer asks for numbers the software doesn't produce.
We wrote more about that role in what a CFO advisor does for a property management company. Most firms need that judgment a few days a month, not a full-time executive, which is why the fractional model fits.
Where River Edge fits
River Edge Advisors is a CPA-led outsourced accounting and fractional CFO firm with a team of 75+, based in Cedarhurst, New York, and working with clients nationwide. Our property management accounting team runs trust reconciliations, owner statements and the management company's own books in AppFolio, Yardi or Buildium, and our real estate fractional CFO service adds per-door analysis, cash forecasting and lender reporting on top. If you'd like a second set of eyes, we're happy to review last month's books for free.
Common questions
What should a property management company's month-end close include?
A three-way trust reconciliation for every trust bank account, owner statements and owner distributions, security deposit and prepaid rent balances tied out, the management company's own books closed separately, and a short package for the owner: P&L by fee type, door count, cash and trust status.
What is a three-way reconciliation in property management?
It ties three numbers together for each trust account: the bank statement balance, the trust ledger (cash book) balance, and the total of all owner and tenant ledgers. All three should agree every month; any difference is investigated before owner statements go out.
When does a property management company need a fractional CFO?
Usually when the door count is growing but profit isn't, when you are weighing a new portfolio or an acquisition, or when a lender or partner asks for numbers the property management software doesn't produce. A fractional CFO adds per-door analysis, cash forecasting and lender reporting a few days a month instead of a full-time hire.
Do you work in AppFolio, Yardi and Buildium?
Yes. We work in the property management system you already run, plus the general ledger the management company uses for its own books.