Module 5. Lesson 3 - Managing the Financial Year

Module 5. Financial Management

Lesson 3 - Managing the Financial Year

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Managing the Financial Year

Service Charge Milestones

Invoice Approval

Credit Control

Three Key Financial Reports

Module 5 - Lesson 3: Complete

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INVOICE APPROVAL

Reactive Works

Reactive works invoices need careful attention before you approve them. First, always check that the works were genuinely required and authorised, supported by a works order or client instruction. Be mindful to check your internal procedures. Compare the invoice against the contractor’s quote, or if no quote was given, ensure the cost is proportionate to the task. Verify that the works have been completed to a satisfactory standard, either through your own inspection or reliable confirmation from site staff or residents. Always cross-check against the budget to avoid overspend. Prompt approval is key, as paying suppliers on time strengthens trust and maintains strong working relationships. But balance this out with strong supervision.

GETTING TO GRIPS WITH

THE FINANCIAL YEAR

During the course of a financial year there is a rythum to how things work. You will need to understand this rythum and the tasks that arise in order to do right by your clients. Invoice Approval: You'll need to approve invocies for your buildings and match the expenditure against the specific line items in your budget as you move through the year. Credit Control: You'll need to collaborate the staff/suppliers who manage the process of chasing any service charge debt owed to your clients. Budget & Cashflow Control: You'll need to be mindful of how your budget is performing. Was the budget sufficient to meet actual expenditure? Are you overspending in certain areas? Are any cutbacks requried? Being aware of your budget performance reports will be essential

INVOICE APPROVAL

Allocation of Costs

When approving invoices, be mindful of the exact budget line. Block management budgets often have multiple headings for similar services – for example, separate gardening or cleaning costs across different blocks. Some invoices may need splitting between headings to stay accurate. Misallocating costs can distort reports and make year-end accounts harder to reconcile. Take time to cross-check the schedule of costs and code invoices correctly before approval. Careful allocation protects transparency, builds client trust, and keeps budgets on track.

INVOICE APPROVAL

Routine Services

Routine Invoice Approval Contracted services such as cleaning and gardening are common invoice approval items. In can be wise to set up automatic approval for these items, depending on your company policy. Automatic approval for routine servicves can free up your time to deal with more controversial invoice approvals in more detail. In any event, it is wise to swiftly pay routine service providers where possible. Don't allow unecesarry disputes to build up. That being siad, be sure to check sign-in sheets, monitor performance and be mindful of resident reports to assess if payment may need to be witheld. This should however, be a last resort.

Key Financial Reports

Key Reports you need to work with:

Budget Variance Report: A comparison of budgeted v.s. actual expenditure showing how the budget is performing.

Expenditure Report: A report which takes each budget heading and breaks down each transaction of expenditure under the budget headings. This will give you more granular detail on the budget variance report.

Debtors Report: A report demonstrating a breakdown of service charge debt - including notes on any legal action.

Credit control

OVERVIEW

Credit control keeps the block running smoothly. Without regular income from service charges, you can’t pay for cleaning, gardening, insurance, or repairs. As a block manager, you may not chase arrears yourself, but you need to understand the process. Strong credit control protects the block’s financial health and ensures every leaseholder pays their fair share. The Managing Agent's Duty It’s important to be mindful of the duty of you or your employer. While we should all be socially responsible and treat people with empathy, failure to follow the lease and collect service charges swiftly can lead to being in breach of contract. Avoid agreeing to any payment plans you are not permitted to – even if it comes from a genuine desire to do good.

aPPROVING INVOICES

OVERVIEW

Approving invoices is typically a weekly task you'll be invovled with as a Block Manager. In most firms the Property Manager is the primary person responsible for invoice approval, while finance staff deal with the processing of invoices. Don't Push Invoices to the Bottom of the Pile! Don't fall into the trap of thinking that invoice approval needs to be constantly re-prioritised. While client matters are hugley important, you also need to make sure you're nurturing supplier relationships. It's going to be far easier to manage your buildings with happy suppliers who are paid on time. Take an Interest in Purchase Ledger Take an interest in how your supply-chain feel about speed of payments etc. In some firms invoice approval is out of the hands of the Block Manager. In these cases it's still important for you to understand if you suppliers are being dealt with in a timley fashion.

CREDIT CONTROL

Recovery Process

Issue Demand – service charge demand served in line with the lease (Day 0). Reminders Sent – polite chaser, then final warning (+14–30 days). Letter Before Action (LBA) – formal legal letter warning of court if unpaid (+60 days). Court Claim Issued – County Court or Money Claims Online, if no resolution (+70–90 days). Leaseholder Response – may admit, pay, or defend (response due within 14–28 days). Judgment – default CCJ if uncontested, or after hearing if defended (weeks–months). Enforcement – bailiffs, charging order, attachment of earnings, or forfeiture (+120+ days).