Understanding client accounting options for letting agents

Assessing outsourcing requirements

Client Accounting solutions come in many shapes and sizes and agents need to decide what is the best fit for them before making any decisions. Key questions that an agent should ask themselves:

• Do we want to pass on ALL the administrative burden of client accounting or do we just need a ringfenced client money bank account?
• Do we need software?
• Is the outsourcing solution going to involve migration or is it seamless?

Banking only solutions

Some companies offer stand-alone electronic money accounts. If a banking solution is all that is required then this could be an ideal option, however, checks should be made with the agent’s CMP provider that the outsourcing company meets the scheme’s compliance criteria before committing. 

Another option is a banking platform provider who can offer a client account as an add-on to existing lettings software. However, if the software is already in place then check with the provider how the integration works in practice – as it could involve duplication of work and/or unnecessary upheaval with the agent still doing the work.

Another option is a banking platform provider where you would be required to switch to using their client account. However, if the lettings software and client account are already in place, migration will involve unnecessary upheaval and disruption to tenants. Check with the provider to establish whether this is fully integrated, whether an existing client account can be retained, and consider the duplication of work across two software platforms.

Client accounting service-based approach

For a completely hands-free solution look for a specialist company such as The Letting Partnership, which is powered by people not PropTech, and can provide a service-based approach offering maximum flexibility and support. A dedicated account manager will access and work on the agent’s own software using their existing client account, or they can even open a client account if none is in place. This solution provides support and expertise whilst keeping business interruption to a minimum.

Transparency of an outsourced solution

Having identified a solution which aligns with the agent’s vision and provides the desired benefit, how can business owners be sure that the reputation of their agency is safe in the hands of the chosen provider?

Due diligence is crucial and there are several key considerations:

• Do you have full visibility of your client money at all times – day or night – or is it moved elsewhere?
• Who’s liable if something goes wrong?
• Does the Client Account information provided meet your CMP scheme’s rules?
• Does your provider have adequate Professional Indemnity insurance cover?
• Does your provider have Client Money Protection insurance in their own right?

The benefits of outsourcing the burden of client accounting are well established, but understanding the options and choosing wisely could make it one of the best business decisions an agent makes.