To understand how your financial data is tracked and reported, it’s important to understand the connection between Owner Statements, Trust Accounting, and Integrated Accounting within the system:
- Owner Statements provide a clear summary of monthly transactions, showing any owner related revenues you generated for each property and any expenses you have incurred on behalf of your owner. They do not take into consideration the actual movement of money, such as whether payments have been processed to your owners.
- Trust Accounting specifically monitors cash flow between you and each owner, ensuring an accurate balance of all owner funds.
- Owner Remittance Dashboard, under the Integrated Accounting, shows in one page any payable amounts from/to your owners. When linked to platforms like QuickBooks or Xero, this dashboard, also referred to as the Payout Dashboard, facilitates the payout process by pushing this financial information to your QuickBooks or Xero account.
Together, the above solutions, along with our Owner Contract Module, streamline and comprehensively cover the entire owner management process. In this tutorial, we will see how this is done.
TABLE OF CONTENTS
Where to find the Owner Statement?
What information can you include in the Owner Statement?
Other important factors impacting Owner Statements
2. Percentage-based commission
3. Cost-plus commission (Mark-up)
Sending Owner Statements and Invoices
1. Owner Statement vs. Owner Invoice
2. Customizing the Owner Invoice
Additional automated notifications for new bookings or cancellations
Lock Feature Update – November 1, 2024
Fixed Owner Statements with Unique ID Numbers
Trust Accounting vs Owner statement
How the trust accounting functionality works
Reconcile the Trust Accounting Balance up to date
Integrated Accounting – QuickBooks & Xero Integrations: Owner Remittance Dashboard
Owner Statements
The owner statement is a monthly report that details the revenues and expenses, including taxes and commissions, generated or paid on behalf of the owner. Its purpose is to provide a clear summary of the total amount payable to the owner each month.
In this section, we will cover the necessary information required in 365Villas to generate a comprehensive owner statement, along with the steps to input this data and send the statement to the property owner.
Property Owner information
Property owner information is required to auto-populate owner statements. The details of the property owner can be defined within the property profile.
- Go to Portfolio Management > Property Settings > Property Profiles by clicking on the home icon in the top right corner.
- Scroll at the bottom of the page and under Additional Information, select Owner Details
- Here you can define:
- Whether you are the Owner or Manager of the property
- Whether there is one or multiple owners (Owner 1, 2, 3) and input the necessary information. Here, you can enter the primary owner’s information. If more than one person owns the property, such as business partners, you can add additional owners.
IMPORTANT: for the Owner Statement, Invoice, and other similar documents, the system will use the Primary Owner (Owner 1) information. Additional owner details, for Owner 2 and Owner 3, will primarily serve as references for your staff. These owners will also receive any automated messages along with the primary owner.
Owner Statements overview
An Owner Statement is essentially a monthly report that provides a snapshot of the previous month’s activities. It includes:
- All the revenue generated on behalf of the owner.
- Any applicable commissions and taxes
- The total amount owed to the owner.
- Any expenses incurred on behalf of the owner (with applicable taxes)
Where to find the Owner Statement?
You can select what should be shown on the Owner Statements by selecting Owner Management (top right corner) > Owner Statements.
The Owner Statements report offers different options for filtering such as Owner, Property, Check-ins/Check-out/Pro-rate, Year, Months filters which will help you to display the right information based on owners/properties. Set the needed selection for one or more options and click on the Filter button to apply your choice.
What information can you include in the Owner Statement?
You can choose to display the following information in the Owner Statements:
- Rent: You can decide whether to display the rent received in each reservation or deactivate if you would like to hide the rent from the owner statement.
- Services: If a property has multiple services selected, they will appear under the Services section with multiple selection options. If you prefer not to display certain services, navigate to Services > Select Options and either hide or display them.
If a service, such as cleaning, is selected under Services, it will be reflected in the statement and included in the payout to the owner. If a service is not meant to be shown or paid to the owner, simply deselect it, and it won’t appear in the report. Nor will it be included in the financial data shown on the report. You can also choose to show the total amount for included services instead.
- Commissions: This option will display the commission settings defined under Portfolio Management > Property Settings > Commissions > Other Settings > Commissions. This plays a critical role in how payments are calculated and statements are issued. We will go more into detail in the section below.
- Taxes: Here you can select between who should pay the taxes. The taxes can be paid by you (“You pay” option), by the owner (“Owner pays” option) or in some rare cases, they can be split (“Split” option).
- Customizing additional details: You can show or hide additional details such as the guest’s name, lead source, occupants and other information. These options are flexible depending on what you prefer to display to your owners.
Other important factors impacting Owner Statements
Commission Settings
Each property can have its own commission settings, which play a crucial role in how payments are processed and statements are generated. Below are the key components of commission settings that can be found under Portfolio Management > Property Settings > Commissions > Other Settings > Commissions:
1. No commission applies
You should use this option if you or your company owns the property. It can also be useful if you are subletting the property. In this second case, the rent payable to the owner should be included as a recurring monthly expense.
2. Percentage-based commission
Most users —around 95%— opt for percentage-based commissions.
This allows you to define commissions the following way:
1. As a percentage of the rent and, optionally, of services and taxes (paid by the guest). For instance, if a booking has a grand total of $1,000, the system will apply the commission calculation to this amount.
2. When applying the commissions on rent, you can specify if you want to consider the Gross Rent or Net Rent for commission calculations.
- When discussing Gross Rent, we refer to the total Rental Amount in the Booking Editor. However, in some cases, users may prefer to calculate their commission based on Net Rent, which subtracts the Channel Fee from the total Rental Amount.
- If the gross rent is $1,441 and the channel fee is $46,53, the commission would be calculated on the net amount, which is $1,441 minus $46,53.
- To configure this, go to Commissions and choose between Net Rent or Gross Rent for channel bookings. It’s important to make this selection carefully and consistently to avoid inconsistencies in reports.
Most properties will only have one commission rate, but if desired, additional commission rates can be defined. At the bottom of the page (as shown in the image above), you’ll find an option to specify what the system should consider as rent.
3. Taxes on commissions payable by the owner: when you select the option “The following tax applies to the commision” and specify a percentage, this percentage will be factored into the owner’s commission calculation for tax purposes. It is used in case you need to charge VAT, GST or IVA or any value added tax on top of your commissions.
3. Cost-plus commission (Mark-up)
There is a Cost-Plus Commission (Smart Cap) option, though it’s less commonly used.
It should be used if you agree to pay to your owners a fixed rental amount, where a fixed amount (e.g., $100) and any markup is yours.
Channel Fee
The Channel Fee refers to the amount paid to a booking channel (e.g., Airbnb) to secure the booking.
For a booking made through Airbnb, you will see a Rental Amount, a Grand Total, and a Channel Fee.
This fee is what the channel charges for securing the booking. Please note, it is also possible that the guest pays an additional fee directly to the booking platform.
This fee will be factored into commission calculations when using Net Rent configurations.
Sending Owner Statements and Invoices
At the end of each month, if everything looks correct, you can send an email to your owner by clicking the Send Email button at the bottom of the report page, in Owner Management (top right corner) > Owner Statements.
The system will prompt you to attach either the Owner Statement, the Owner Invoice, or both. The owner’s information is pulled from the Primary Owner’s details in the system.
1. Owner Statement vs. Owner Invoice
- Owner Statement: This is an Excel file that provides a detailed breakdown of each booking and expense.
- Owner Invoice: This document summarizes everything—rent, taxes, expenses, and commissions—into one total.
2. Customizing the Owner Invoice
The Owner Invoice, like all documents in 365Villas, can be customized with your branding (colors, logos, etc.). To customize it, navigate to Account Settings > Special Preferences > Brand Integration.
You can also update the Owner Invoicing Template content by clicking on the Owner Invoicing button at the top right corner of the Owner Statements page or by navigating to Owner Management > Owner Invoices. This allows you to customize what your owners see in the invoice.
Additional automated notifications for new bookings or cancellations
In addition to sending monthly reports to the property owner, you can also set up automatic notifications for new bookings or cancellations.
To enable this, go to Account Settings > Templates & Automation. Here, you can activate the Owner Booking Notification and Owner Cancellation Notification to keep your owners informed in real-time.
Lock Feature Update – November 1, 2024
The new Lock feature is built to protect financial data integrity by preventing unintended edits to finalized owner statements and accounting records.
Now, it includes flexible automated Lock settings, allowing you to set a custom lock period from 1 to 12 months, with a 12-month default if no setting is chosen. The feature locks past accounting data (e.g. owner statements, profit and loss, tax reports, etc.) once the auto-lock triggers, ensuring data remains secure, with any necessary adjustments managed through the Expense Manager. This flexibility allows you to align lock periods with your needs, securing data at the optimal time.
This functionality offers three methods: Unlocked, where statements are still editable and can be manually locked after remittances have been processed; Manual Lock, where statements are manually locked but they can be unlocked in case of errors until the auto-lock takes effect; and Auto-Lock, where statements lock automatically after the set period, preventing further changes.
Overview
Even for experienced professionals, it can be easy to take actions within the system without fully understanding their impact. In some cases, actions performed hastily in one part of the system (such as Expense Manager) could inadvertently affect past owner statements or tax reports, even those that have already been sent or have had payments processed. This issue directly compromises data integrity within the accounting system. Therefore, we started to put in place mechanisms to avoid this.
The lock for owner statements and accounting is designed to help ensure accurate and reliable financial data – a best practice for maintaining the integrity of your financial records. Once remittances have been processed, this feature prevents any changes to past statements, safeguarding your data.
Imagine you had a booking where the guest filed a complaint that took two months to resolve. If you decided to issue a refund of $100 after the statement had already been locked, you would perform a manual reconciliation. This way the refund is accurately recorded in your current/next statement period.
Adjustments after the statement has been locked, are done using the Expense Manager. Updates or reconciliations made through the Expense Manager will be reflected in the owner’s current statement period, keeping your records accurate and up to date.
1. NEW Lock Settings
In response to user feedback, we have removed the 30 days lock on October 25, 2024 and we developed a NEW Lock feature to give you greater control and flexibility over the lock period.
- The Auto-Lock feature, originally designed to support a one month cycle, allows you to set a lock period ranging from 1 to 12 months. This gives you the flexibility to determine how long you want the period to remain open before the lock is enforced. If you take no action, the default period by the system will be set to 12 months.
- The maximum lock period is 12 months. However, we recommend keeping the lock duration shorter to minimize the risk of unintended changes that could compromise data integrity.
- You can adjust these settings within the configurator tool, enabling them to align the lock period with your operational needs.
To access this feature, go to Business Management > Integrated Accounting (Tools) > Lock Settings.
Important Note:
All accounting data, based on your specifications above, will automatically lock, along with any related data such as owner statements and past bookings. Once locked, any necessary adjustments must be made using the expense and owner credit features in the Expense Manager, as direct changes to locked data are no longer possible.
Any changes to the lock period setting will affect both existing data that hasn’t yet been locked and future data. However, data that is already locked will remain so. Once locked, accounting records, owner statements, and bookings cannot be unlocked without billable support from one of our developers.
It’s crucial to select your locking period thoughtfully based on your specific needs. The minimum lock period is 1 month, while the maximum is 12 months but we recommend choosing no more than 3 months.
2. Manual Lock Settings
To further enhance flexibility, we also introduced the Manual Lock feature, giving you the ability to lock statements as soon as you are ready.
- The Manual Lock option allows you to manually lock owner statements before the auto-lock period takes effect.
- You can also unlock these statements up until the point the auto-lock period begins, giving them full control over the timing of their lock.
For example, if you set a three-month auto-lock period but finalize your owner statements within the first month, you can manually lock the statements immediately. This enables faster locking while retaining the option to unlock if adjustments are needed before the auto-lock period begins.
The Manual Lock setting is available in the Owner Statement, Accounting, and Bookings sections, allowing you to lock or unlock it manually. Help prompts are also provided to guide you through the process.
Three Lock Methods
The NEW Lock system operates in three modes:
- Unlocked method: The statements are still editable and can be manually locked after remittances have been processed.
- Manual Lock method: When a statement is manually locked, it can still be unlocked until the configured auto-lock period kicks in.
- Auto-Lock method: The statement is locked automatically once the set period expires, and no further changes can be made.
These methods provide flexibility and control, while also ensuring that statements are securely locked within the desired timeframe.
Past bookings
When an owner statement is locked, any associated bookings will also be locked. This means that once the statement is finalized, those specific bookings that are past cannot be changed.
However, you will still be able to amend active bookings that extend into a new month even after the owner statement is locked. In such cases, changes you make—whether they result in a positive or negative adjustment—will be automatically reflected in the owner statement for the following month. These adjustments will retain the same booking number, making it easy to track any modifications alongside the original booking.
Past owner expenses
Past owner expenses associated with locked owner statements will also be locked:
- Owner expenses will lock simultaneously with their corresponding owner statements. Once locked, no changes can be made to the expenses. However, you can still use accounting tools to create any necessary offsetting reconciliations.
- Recurring expenses will have a slightly different message: “This expense is part of a previous owner statement. Only the end date can be changed.” This means that while you can update the end date for future instances, you cannot modify the expense for any past periods where the owner statement has already been locked.
Reconciliations
Use the Expense Manager to make any adjustments after the auto-lock period. This feature allows you to easily handle reconciliations. Once you’ve completed the reconciliations, changes will be reflected in the current owner statement period.
Owner Credits
Owner credits added through the Expense Manager have a separate section on the Owner Statement.
This ensures that owners have complete and accurate insight into the credits owed to them.
Fixed Owner Statements with unique ID numbers
To support the new features—such as the Owner Statement Lock, integrations with QuickBooks and Xero, and improvements to the Owner Remittance Dashboard (Payout Dashboard)—a few important updates have been made.
Each owner statement has a unique ID number for better tracking and organization of remittances. There will be one statement per owner per month, each assigned its own unique ID number. This change will make it easier to reference and manage individual statements.
The new ID number format is structured as follows:
- Year: the last two digits of the year (e.g., 24 for 2024)
- Month: represented by the month number (e.g., 5 for May)
- Owner number: the owner’s unique number (e.g., 100)
- Owner Statement suffix: “OS” for Owner Statement
Here’s an example of what a complete statement ID might look like:
#245-100-OS (where 524 stands for May 2024 and 100 is the owner number).
Additionally, this monthly fixed-period and unique ID system will also apply to Trust Accounting. The ID format will follow the same pattern, but with a TA suffix (Trust Accounting). This consistency will make it easy to pair owner statements and trust accounting reports during audits and other financial reviews.
Trust Accounting vs Owner Statement
The “Owner Statement” provides a snapshot of what happened during the previous month. It shows how much the owner either owes or is owed, but it doesn’t reflect the actual movement of money—whether payments have been made or received. The detailed cash flow, which tracks these transactions, is found in the report located in the “Trust Accounting” section of the system.
Trust Accounting
The Trust Accounting functionality allows you to keep track of owner funds in separate ledger accounts. It helps manage and check the balance of owners at any time, including details in the account statements. It essentially serves as a cash flow check, tracking the balance between payments made to the owner and the income received.
How Trust Accounting functionality works
Trust Accounting is based on owners, not individual properties. This means that if an owner has multiple properties, the system will present a combined view of the revenues and cash flow for all of their properties, rather than showing the details for each property separately.
To correctly analyze the data that this feature provides, you will need to consider the following:
- On the right side, the feature includes the sum of all the amounts that you owe to the owner, indicated under Balance.
- On the left side, you will find the Owner statement balance, which can be a credit or a debit.
Trust accounting is designed to manage cash flow between you and the owner.
Retainer requirement
The retainer requirement refers to a reserve of funds that the property manager keeps on hand for any unexpected or urgent expenses. For instance, when a manager begins overseeing a property, they might request the owner to provide, for example, $1,000 as a reserve fund. This reserve is set aside to cover any unexpected or urgent expenses that may arise while managing the property. For example, if a sudden repair is needed, like fixing a leaky roof or a broken appliance, the property manager can use the retainer funds to pay for it without having to wait for the owner to transfer money.
The retainer requirement should be set for each owner and this is why it is located in Trust Accounting. Even though the amount will be next displayed under the owner remittance dashboard, under Business Management > Integrated Accounting, it won’t affect the amounts under balance.
To add a retainer requirement, follow the below steps:
- Go to Owner Management > Owner Statements > Trust Accounting
- Enter the amount for your retainer in the Retainer requirement field.
- The Retainer is calculated by being subtracted from the Balance.
- You have the option to Save this for a single owner, all owners, or a specific group. If an owner has multiple properties, consider adjusting the retainer amount by multiplying it as needed to cover the additional properties.
Ensure your Trust Accounting Balance is up-to-date
If you’ve never used our Trust Accounting report for some or all of your owners, it is very likely that your Trust Accounting balance is quite high. This is the system showing the cumulative amounts you have owed over time, without any inputs from you to record off-setting payments to your owner.
To address this, we recommend the following steps:
- Review the total balance for each owner.
- Navigate to the “Action” column.
- Enter an outgoing payment for the Opening Balance to zero it out by clicking on the “-” sign.
Once you’ve completed these steps, you’ll be ready to fully utilize the new Payout Dashboard.
QuickBooks & Xero Integrations: Owner Remittance Dashboard
The Owner Remittance Dashboard, under Business Management > Integrated Accounting, allows you to view and manage all cash flow in one convenient place, for all your owners.
The Remittance is calculated as the sum of the Balance and the Retainer. To determine the Remittance, the system subtracts the Retainer from the Balance.
The dashboard includes the trust account balance, the retainer requirement, and the amount that needs to be remitted to each owner, significantly simplifying the process and reducing the amount of manual work. The Integrated Accounting functionality under Business Management, will display a new tab named QuickBooks/ Xero if you enabled the integration, or Payout Dashboard if you are not using any of these tools.
The dashboard is especially useful in two scenarios:
- First, if you’re not using a platform like QuickBooks or Xero, you are still able to see the total amount to pay for each owner without needing to check each owner statement individually.
- After the payment is recorded, no automatic changes will be possible and any reconciliation should be added manually through theOutgoing/Incoming payment button.
- Second, if you are using QuickBooks or Xero, the amount due to each owner is seamlessly transferred there. From there, you can finalize payments, and the system will automatically record that the payment has been made.
- Remittances you make on QuickBooks or Xero will automatically appear in your trust accounting as debits or will show as credits.
- After the payment is recorded, no automatic changes will be possible and any reconciliation should be added manually in the Expense Manager
Integrating with Xero / Quickbooks
To activate the integration with Xero or Quickbooks:
- Before starting the configuration in the PMS, you need to make sure you have a Quickbooks or Xero active account.
- Next, go to the Account Settings > API & Integrations page
- Select either ‘QuickBooks’ or ‘Xero’ and follow the instructions. Please note, this is an add-on feature that costs $29 per month.
- Once connected, you will then find a new tab in your accounting tools page (Business Management > Integrated Accounting) labeled “QuickBooks” or “Xero”.
Owner Remittance Dashboard
Under your new “QuickBooks” or “Xero” tab you will find the Owner Remittance Dashboard with owner payout information and edit controls for changing or pausing amounts payable:
- Edit controls allow you to pause payments as needed, giving you greater control over your payment process.
- For even more control, you can adjust or override payment amounts whenever necessary, allowing you to make changes on the fly.
- Once you’re ready, click ‘Submit’ to send your payout instructions to QuickBooks (QB) or Xero. You can submit payouts individually or all at once, depending on your preference.
- Once in QuickBooks or Xero, you will need to approve the payments before they are processed.
Once a payment is processed via QuickBooks, the system will update the trust account automatically, and the payment will be recorded in the accounting system.
It’s important to note that this update will not appear in the owner statement, as the owner statement and trust accounting records serve different purposes. The owner statement provides a snapshot of the previous month, while the trust accounting handles ongoing cash flows and payments.
If you don’t use QuickBooks or Xero, you’ll still see the tab labeled as “Payout Dashboard”. Even without the above referenced third-party accounting solutions, you can still view all your payout information in one place, provided you have the accounting bolt-on included in your subscription.
Please note that in the “Remittance Amount” column, once the remittance is completed, the field will fade to indicate that the process is finished. You can view the most recent payment record by selecting “Details.”
In the details section, a “+” or “-” sign will appear next to each record, meaning a payment in (credit) or payment out (debit). From the “Action” column you can manually add an in or out payment directly for each owner.
Note: For users who do not use QuickBooks or Xero, incoming and outgoing payments will still need to be recorded manually. This can be done in the Trust Accounting page.