Your conversion balances are basically a snapshot of your company's accounts on the date that you start using ShowHouse. These will define the state of play in terms of the various accounting balances on the new start date, e.g. the money in your bank account, the rent and charges due from tenants, the client monies held for payment out to landlords.
If you are a new agency starting from scratch your conversion balances will be zero so you won't need to worry about this.
You can set your conversion balances via the Settings menu via Agency Settings > Financial > Conversion Date. These balances can be obtained from your old accounting system as trial balances at the end of the day before you start using ShowHouse.
There are two steps to the conversion balance process.
- Set the conversion balances for your chart of accounts, obtained from your old trial balances.
- Provide a breakdown of the payments due to and from the agency on the conversion date.
Set bank account opening balances
Bank accounts are a special type of nominal code, and these are listed at the top of the accounting code list. For each account you can specify the opening balance as of the conversion date. Do not enter negative values; instead enter the balance as in credit or overdrawn.
Define the breakdown of money owed to and from the agency
Now that you have specified the totals owed to and from the agency you need to provide a full breakdown of the rent, charges and payments which comprise these balances.
Go to the relevant record, e.g. a property, and add details of the outstanding charges and/or credits. If a tenant has rent arrears the rent charges must be added via the relevant tenancy.
The distinction between rent and tenant fees and expenses is important since the system needs to be able to transfer rent income to the landlord's account, and charge a management fee if applicable.
Add rent due before the conversion date
If rent is due on a tenancy from before the conversion date, you can add a manual rent adjustment for the historic rent arrears. Either add individual records for each period which is outstanding, or enter a single rent arrears record. This tenant (and tenancy) will now have rent balances which can be paid as normal.
For example, on 1st August the conversion balance for the rent control account is £1000 and this is made up of £500 rent due from a tenant for each of the 2 months immediately prior to the conversion date, June and July. You can decide to either enter a single rent adjustment of £1000 covering "2 months outstanding rent", or you can enter 2 rent adjustments of £500 each for June and July. Both are equally accurate.
Add charges due before the conversion date
If charges are due from a tenant or property (landlord) from before the conversion date, you can add the relevant charges with the actual charge date. The system will warn you that you are adding an entry on a date prior the conversion date, but that's ok - that's what you are trying to do. Either add individual records for each charge which is outstanding, or enter a single charge record with a general description. These charges can now be paid as normal.
Add landlord balances from before the conversion date
If funds are available to pay out to the landlord in relation to rent collected prior to the conversion date, you can add this credit as an opening credit balance on the property. This opening balance will now be available to pay out as normal.
Add tenant balances from before the conversion date
If a tenant has made an overpayment on their account prior to your new system start date, but this money has not yet been allocated to rent or charges, you can define an opening credit balance on the tenant ledger.