See Also Open Credits Distributing the Payment Received Rent Received in Advance
How to PDF document #394 - Tenant Receipt - Distribute Funds
When a tenant pays rent, or any other charge, in advance, there are several options depending on your policy relative to the owner ledger.
The common practice is to post the prepayment as a tenant open credit which is considered as money received but held in a liability account until used. If the open credit is equal to or greater than a charge being posted, the credit will automatically be used to pay off the charge when the charge is posted – unless the automatic payoff is disabled in Setup, Processing Defaults, Database tab. If the charge is greater than available open credits you can use the Tenant Receipt function to draw down the open credits. To find out who has unapplied open credits use the Tenant Balance report filtered on open credits not equal to zero.
This method ensures that the rent and management fee on the owner statement shows up in the same month as the rent charge.
An alternative way to record the transactions is to post the receipt as an advance payment in the Tenant Receipt function. Everything is taken care of, effective the posting date.
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the rent is credited to the owner
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the management fee is credited to the Management Group
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when the rent charge is posted it offsets the prepayment automatically
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Since using the advance payment function gives the money to the ledger immediately, it is generally not used when a tenant pays for more than the coming month. Wheil the owner may want the funds, it is not a sound practice as circumstances may require refunds some of that money, which the owner may not have readily available. Also, in some states there are regulations prohibiting giving payments to the owner in advance.
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