Accounting and Payment Processing Concepts

WeconnectU provides a unique set of features that will enable you to process payments manually or automatically. Before we explain some of the primary concepts, let's take a look at some terms and definitions that you will regularly encounter whilst working in the WeconnectU environment.

Terms and Definitions

Accounts - An account is used to record debit and credit account transactions. The Account Balance is the SUM of all Debit and Credit Account Transactions linked to the Account. In RAMS we have the following predefined accounts:

  • Tenant Account - this account is used to record all tenant billings and payments
  • Tenant Deposit Account - this account is used to record all Tenant Deposit Transactions such as Investments, Interest Earned and Withdrawals.
  • Landlord Income Account - this account is used to record all Landlord Income Transactions such as Rent and Recoveries due as well as actual Rent and Recoveries received.
  • Landlord Expense Account - this account is used to record all Landlord Expense Transactions such as Billings for Commission, Taxes, Levies, Services, etc. as well as actual Expenses paid.
  • Landlord Deposit Account - this account is used to record all Landlord Deposit Transactions such as Investments, Interest Earned and withdrawals. 
  • Building Expense Account - this account is used to record all Building level Expense Transactions such as Billings for Collection Commission, Taxes, Levies, Services, etc. as well as actual Building Expenses paid.

Account Transactions - these are the individual debit or credit transactions that are recorded on the accounts and which represent billings, payments and account corrections.

Categories - Categories in RAMS are used to group Account Transactions that logically belong together. Examples would be Rent, Commission, Admin, Municipal, Body Corporate, Maintenance, etc. All transactions in RAMS must belong to a Category and the Category Balance is the SUM of all Debit and Credit Transactions linked to the Category.

Billing Rules - Recurring fixed and variable billing that needs to happen on monthly basis are defined in the form of Billing rules that are typically executed once in every monthly cycle. These Billing Rules are associated with a specific category. Typically a Billing Rule will create a Billing transaction on either the Tenant Account or Landlord Expense Account against a specific Category with a fixed or variable amount. For example, you will have a Rent Billing rule for every Tenant Account and a Commission Billing rule for every Landlord Expense Account.  You can create Billing rules for any Category supported by the system. Amounts for variable Billing rules will typically be loaded on a monthly basis such as Billing Rules for Municipal and Body Corporate Services.

Wallets - all money in and out of the Trust Account flow in and out of Trust Account Wallets. A wallet contains Trust Bank Transactions that are related to a specific Lease (Tenant) or Asset (Landlord). All credit Trust Bank Transactions received are mapped to a wallet and payment allocations or splits are done from available funds in a wallet. Provision has been made for the following wallets:

  • Tenant Wallet - every Lease has a dedicated Tenant Wallet where all monies from the Tenant is received and paid out from. 
  • Landlord Wallet - every mandate for an Asset has a Wallet where all monies from the landlord of the asset is received and paid out from.
  • Suspense Wallet - every team have a Suspense Wallet where monies can be received and paid from that have not been identified as belonging to a specific Tenant or Landlord.
  • Building Wallet - every building has a wallet where monies paid on unit level can be transferred to so that building level expenses can be paid before distributing funds to the Building Landlords.

Payment Instructions - all payments to beneficiaries are made via payment instructions that are allocated and approved before being sent to the bank for payment. Payment Instructions suggested by RAMS will attempt to pay the Beneficiaries linked to Categories the current Category Balance. For example if the balance on the Commission Category is R 1000 and the Beneficiary linked to the Commission Category is the Company Business Account, the system will create a Payment Instruction to pay an amount equal to R 1000 to the Business Account beneficiary provided that there is money available in the relevant Wallet.

Category based Billing and Payment Processing 

WeconnectU has been designed to automate most of the mundane Billing and Payment Processing activities required to manage Rental Accounts. In order to illustrate the concept we will be taking a look at two typical accounts and their associated account categories as shown below. 

With reference to the Tenant Account above note the following:

  • The Tenant Account have three billing (Debit) transactions namely one for Rent and two for Municipal Services
  • The total billed against the Rent category is R 5000, so the Rent category balance is R 5000.00. The beneficiary for the Rent category is the landlord, Jenny Smith for the example.
  • The total billed against the Municipal category is R 600, so the Municipal category balance is R 600.00. The beneficiary for the Municipal category is the landlord again meaning that the Municipal Services are recovered to the landlord when it is paid by the tenant.
  • The Tenant Outstanding Balance is R 5600 and it consists of the sum of the Tenant Category Balances in other words R 5000 (Rent) + R 600 (Municipal)
  • The Tenant category priorities indicate in what order category balances must be considered when money becomes available to make payments.

With reference to the Landlord Expense account above, note the following:

  • The Landlord Expense Account have three billing (Credit) transactions namely one for Commission, one for Municipal account and one for a Maintenance account.
  • The total billed against the Commission category is R 500, so the Commission category balance is R 500. The beneficiary for the Commission category is the Business Account.
  • The total billed against the Municipal category is R 1600, so the Municipal category balance is R 1600. The beneficiary for the Municipal category is the City of Cape Town.
  • The total billed against the Maintenance category is R 850, so the Maintenance category balance is R 850. The beneficiary for the Maintenance category is Handy Andy Contractors.
  • The total Landlord Expense balance is R 2950.00 and it consists of the sum of the Landlord Expense Category Balances in other words R 500 (Commission) + R 1600 (Municipal) + R 850 (Maintenance)
  • The Landlord Expense category priorities indicate in what order category balances must be considered when money becomes available to make payments.

Let's assume that the Tenant now makes two payments of R 5000 and R 500 towards his outstanding balance. These amounts will come in on the integrated Trust Bank Statement and be mapped to the Tenant Wallet which is the pocket of the Trust Account allocated to the Tenant. Once the payments received have been mapped and submitted for processing, the Tenant wallet will have a balance of R 5500 consisting of the two payments received. The Wallet balance is now available to pay Landlord Expenses, Landlord Rent and Tenant Expenses other than Rent.

With reference to the discussion above, it is clear that all the information required to auto suggest payment instructions when the next Tenant payment is received is available. From the information above the system can now automatically derive and suggest the following payment instructions:

  • R 5500 is available for allocation in the Tenant wallet of which R 5000 can be allocated towards the Rent category balance as priority 1. This needs to be paid to the landlord beneficiary (Jenny Smith). The landlord however has instructed the agency to pay some expenses on his behalf from the Rent received. So before making a payment to the landlord, the system will consider the Landlord Expense Account category balances and suggest the following payment instructions in order of priority as shown on the priority field:
    • Pay the Business Account an amount of R 500 for Commission which would leave R 4500 left of the Rent
    • Pay the City of Cape Town an amount of R 1600 for the Municipal Account which would leave R 2900 left of the Rent
    • Pay the Handy Andy Contractor an amount of R 850 for Maintenance which would leave R 2050 left of the Rent
  • The amount left of the Rent after paying the Landlord Expenses namely R 2050 can now be paid to the Landlord Jenny Smith. This would now leave R 500 in the wallet to pay other Tenant categories that have balances over and above the Rent.
  • The system can now consider the next priority 2 category on the Tenant account and pay the Landlord Jenny Smith an amount of R 500 for the recovery of Municipal Services. Although the Municipal category balance is R 600, there is only R 500 available in the wallet and the system will only pay until the wallet is empty.

Once the Payment Instructions have been submitted, reviewed and approved for payment, they will be sent off to the bank for payment. This process will auto complete, reconcile and update the related accounts as shown below:

With reference to the updated Accounts above, note the following:

  • The Tenant Outstanding Balance is R 100 that is the result of the short payment on Municipal Services. This outstanding municipal category balance will be considered together with any other billings on the Tenant Account when the next payment is received into the Tenant wallet.
  • All landlord expenses have been paid and all landlord expense category balances have been cleared.

Another Account that does not specifically play a role in the payment allocation process, but which is kept up to date by the system is the Landlord Income Account. The income account for the example above is shown below:

With reference to the updated Landlord Income account, note the following:

  • All rent and recoveries due are recorded as debits on the Landlord Income Account when they are billed on the Tenant Account.
  • When rent and recovery payments are made, they are recorded as credits on the Landlord Income Account.
  • The Landlord Income Account category balances indicate what Income is still due to the Landlord. In this example it is the R 100 for municipal services that has been short paid by the Tenant.

Landlord Income and Expenses

The Landlord Income and Expense Accounts can now be used to calculate the Landlord Account Balance as well as the Landlord Operating profit for a period as follows:

  • Landlord Account Balance = Landlord Income Account Balance (Amounts due to Landlord) - Landlord Expense Account Balance (Amounts due for payment by the Landlord)
  • In the example above the Landlord Balance will then be R 100 - R 0 = R 100. This is what will be due to the Landlord when the Tenant Account balance has been settled.
  • The Nett Operating Profit = Income Received - Expenses Paid for a Period
  • In the example above for Feb 2019 the Nett Operating Profit will be R 2550 = R 5500 (Operating Income Received) - R 2950 (Operating Expenses Paid)
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