How To Avoid Your Conveyancing Trust Account Becoming A Mess

Conveyancing is such a fast-paced and dynamic industry. I don’t know where my conveyancing clients get their energy from sometimes. I know they often work long hours in order to meet tight deadlines. I also know that they often absorb a lot of the stress from being the ‘middle man’ when dealing with banks, clients, mortgage brokers, real estate agents and other conveyancers.

One aspect of conveyancing that can cause a lot of stress for conveyancers is managing their trust account. It’s very easy for conveyancing trust accounts to get into a mess. No one intends it to get that way, but over time a few small problems add up and then you “blink” and your trust account has turned into a headache that won’t go away.

I’ve compiled a list of my 7 favourite ways to ensure a conveyancing trust account doesn’t become a mess.

1. Descriptions

Use the description field in your software well. Ensure your staff are taught to also enter accurate descriptions of all transactions entered into your trust accounting software. When you provide your conveyancing client with their trust account report, it needs to be clear how their money was spent. Your auditor also needs to see a clear audit trail of everything that has been entered into your software and why. If discrepancies turn up when doing your monthly trust account reconciliation, you don’t want to make it any harder than it has to be by having incomplete records to refer to.

2. Regular reconciliations

Trust account reconciliations must be done regularly. The longer any issue goes unidentified and uninvestigated, the longer your list of problems becomes and then those problems sit there rolling over month after month. The more time that has passed, the less chance you or your staff have of remembering what actually went on with that file.

3. Training

Everyone that has a log in to your software should have been trained in the basic principles of trust accounting and should also have been been trained in how to use the software. Not everyone has an eye for numbers or a mind for details. And not everyone is good with technology. However the ramifications from 1 person entering incorrect information into your software can be great. If this person is also responsible for reconciling your trust account – you may have even bigger problems than you realise.

4. Outsourcing

In many circumstances, it’s just not a good idea to keep doing your own trust account reconciliations. It’s not the best use of your time or your staff members’ time. When you rush or are pre-occupied you make mistakes, that then take even longer (and can be expensive) to fix. The time you spend on doing it yourself means less time spent building your business or managing your staff. Your staff may be overwhelmed and disgruntled because they don’t have the training or the knowledge. If you outsource to a bookkeeper, be sure to check if they have experience with working with trust accounts. It’s a specialised area of accounting and not all bookkeepers have been exposed to the nuances and regulations of the conveyancing or real estate industry.

5. Checklists & procedures

One of the most effective ways to ensure that a task is done consistently, thoroughly and correctly is to set up a good system. An easy way is to start with a checklist or series of checklists. Make sure that your checklists and procedures are kept up to date – it’s a good idea is to write the date of each update or version on your documents and to include the file path and document name in the footer so it’s easily found for updating each time.

6. Trust accounting software

Some trust accounting software is better than others. I know I have my favourites that I prefer to work with. Don’t be afraid to change if you need to – but ensure you’re not left to your own devices to set it up. A reputable software provider will make the process of changing easy for you and be readily available for training and ongoing support if needed.

7. Reports

Have a good system for saving reports. If you, your staff or your bookkeeper can’t get hold of any previous reports it can make it much more difficult to figure out how to fix problems. The harder it is to fix problems, the more likely they are going to be left in the “too hard basket” and keep rolling over month after month. Not to mention your auditor will need copies of your reports – and you don’t want to make the audit process any harder than it has to be.