A client company uses a lettings agent to collect rent on a freehold owned by the company.
The lettings agent runs a bank account for the company, which is stated as a client account on the bank statements. This is used to collect the rents & distribute them to the shareholders.
How should the money in this account be shown on our client's balance sheet? Is it recorded as cash at bank or is it better to clasify it as other debtors?
Thanks in advance for any comments.
Replies (4)
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Cash at bank
Hi - it's effectively the company's money and won't appear on the agent's balance sheet so can appear as cash @ bank.
Agent managing the account
this is effectively the same as having your own deposit account but managed by someone else.
Cash at Bank gets my vote
Client account for this client only?
Is the lettings agent's client bank account for this client only or is it for multiple clients of the lettings agent?
If it is for multiple clients how can you or your client satisfy yourselves that there is sufficient in the bank account to cover the amounts due to all of the clients to whom it relates?
I have known lettings agents who 'borrow' from their client accounts to fund their own business and lifestyle! The client account may not be 'audited' by the lettings agent's own accountant.
David