[GNC] Using GC for Property Management

[Adrien Monteleone]

This is an accounting question more than a GnuCash question, but I did 
notice something that trying to do this in GnuCash, may help with the 
caveat that you need to discuss this with a local CPA. This is not 
accounting advice, but a starting point for questions to ask the CPA.

I'll make inline notations below, but with Debit(Dr.) & Credit (Cr.) 
labels as those are more traditional and easier to follow, especially 
using GnuCash.

Regards,
Adrien

On 9/22/23 1:36 PM, Jediator wrote:
> Dear GC users,
> 
> I am trying to set up GC for a small property management business. There 
> are three actors involved:  Renter, Property Owner, and Property 
> Manager.  Renter pays rent on a monthly basis to property management, 
> and the manager pays the property owner after taking out certain 
> percentage of management fee.  Here is the workflow I came up with:
> 
> Renter(Customer) --> Invoice --> Accounts Receivable

This should be:

Dr. Assets:Accounts Receivable
   Cr. Income:Rent


> Rent Payment    ---------------> PM Escrow (Income Account) 
> ------------------

Usually you'd involve a bank or cash account here and AR, but since you 
have a pass-through collector for you (the property manager), you'd use 
an intermediary asset account, perhaps:

Dr. Assets:PM Escrow
   Cr. Assets:Accounts Receivable

This credits the Renter's AR balance due and shifts your asset from AR 
to the funds being held by the Property Manager. (which at this point, 
would be a liability on their books)

Think of that similar to a bank account. The funds are legally yours, 
but you don't physically possess/control them. (yet)

> 
>                                                        Check to Owner 
> Issued↓
> 
> Owner(Vendor)  ------>  Bill -------> Acct Payable (Rental Passthrough) 
> ------> Rent Passthrough (Expense Acct)
> 
>                           | (split)↓
>                           -----------> Acct Payable (Commission) 
> --------------> PM Commission (Income Acct)

If you know the commission in advance, I'd create vendor bill as soon as 
possible. (maybe the same time as the rental invoice)

That bill would look like:

Dr. Expenses:PM Commission
   Cr. Liablities:Accounts Payable

When the Property Manager remits a check for the balance minus their 
commission, you'll have this transaction:

Dr. Assets:Undeposited Funds
   Cr. Assets:PM Escrow

This reduces the amount owed to you via that escrow account, by the 
Property Manager.

You can then 'pay' the vendor bill from the Escrow account:

Dr. Liabilities:Accounts Payable
   Cr. Assets:PM Escrow

and then deposit the remainder to say, Checking:

Dr. Assets:Checking
   Cr. Assets:Undeposited Funds


Note, you *could* combine two of those, but that is more difficult to do 
with the business features. You can't do it via the 'pay bill' dialog. 
You'd have to create the transaction or import it, and then 'assign as 
payment' on the relevant split. The combined transaction would look like:

Dr. Assets:Undeposited Funds
Dr. Liabilities: Accounts Payable
   Cr. Assets:PM Escrow

The first Debit is for the balance remitted to you, the second is to 
cover the Commission bill (the one you'd assign as payment) and the 
third clears out the Escrow account balance. (for that period invoiced)

I'm sure there are plenty of other options for Escrow/Holding accounts 
and the transactions would be slightly different if you do any direct 
deposit from that property manager.

> Could anyone please comment on if this is workable?  Creating both 
> invoices and bills every month is kind of tedious.  Any suggestions of 
> how to simplify/optimize the process?
> 
> I really wished that GC would have the option to link Vendor/Customer to 
> a transaction without creating a bill or invoice.  Any future 
> development plans for this feature?

I don't think there are any plans to bypass the Business Features to 
facilitate other workflows.

You do have some options though:

1. Import bills & invoices, via CSV.

This will save some clicks and maybe typing, especially if the documents 
and amounts don't change except for dates. You could just re-import the 
same CSV each month and increment the invoice/bill numbers.

2. Use the Duplicate Transaction feature.

This would be handy for the payments and depositing transactions and of 
course, you can easily update the transaction date, num, and amount(s) 
but it gives you a 'template' type of effect to save some typing and 
remembering which splits to include. Of course, you still need to 
'assign as payment' as needed.

3. Use Scheduled Transactions

Similar to the Duplicate function, but it can fire on a schedule, with 
or without prior 'approval' by you and can include formulas for amounts 
that can use variables that you get prompted to input when they fire. 
This doesn't relieve the 'assign as payment' step, but might be more 
robust than simply duplicating a previous instance.

4. Some combination of #2 and/or #3, forgoing the Business Features 
entirely, and crafting your own special Saved Report Configurations 
where needed. (the Transaction Report has robust filtering ability that 
can likely duplicate most of what is in the Vendor/Customer Reports)