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hello podcast listeners it's Murray and Brittany from the property management show and a four and half today's guests Allison the sorrow from seacoast Commerce Bank we're gonna be speaking to Allison regarding property management trust accounts the difference between those accounts regular trust accounts red flags to look out for you might think you know everything you need to know but you probably don't so stick around and listen this episode is sponsored by p.m. gross summit it is the annual conference for growth minded property managers our 2020 conference is brought to you by four night a property management marketing agency in partnership with seacoast commerce bank the preferred Bank for property management trust accounts the next p.m. bro summit will be in Austin Texas for may 27 to 29 2020 go to p.m. gross summit com2 register just to get started Allison obviously you are the property management guru when it comes to property management trust accounts so we're gonna be picking your brain a bit and learning more about what makes that different or those trust accounts different from other trust accounts mistakes that people maybe could avoid and things to look out for but just to get get us started could you give us a little bit of a background into who you are how you got into the property management industry to get us going yeah sure so might be a little bit more hairs to know but I actually started at seacoast almost 10 years ago so early 2010 I started seacoast and at that time I started as just essentially a Business Development Officer so no disrespect nothing super fancy right not that what I do right now is super fancy but no real focus other vendors bring in deposits and we had actually had I know quite a few property management accounts at the bank and here's the thing about things a lot of things like business banks for instance they wand what's called in the saw the best word for the week we don't call them in the industry sticky deposits right because business banks all make their money on essentially my getting out to customers so you have to be able to be able to lend out whispers you have closets you want those city deposits again the lack of a better word which of course property management companies right so I started noticing that trend that those those companies that were already thinking just by default not because they've any specialty but just by default like most banks do we were making a couple lower will probably minima companies and I started noticing that trend if they were very very sticky so I actually had the advantage that I actually worked for a property management company Massachusetts years years prior to that so I had a good understanding of not necessarily made counting on the accounts but just the fact that he complained a loan on them are very tricky and that it was such a hot topic so I kind of took it upon myself I'd say probably for the first two to three years of my job there it was really just about figuring out and diving deep into these accounts it took a long time trying not the account itself at the type of account I'm trying to figure out you know what makes me so special how do we make sure that all eyes are dotted and T's are crossed and who are we really for lack of better praise praise afraid of right in the industry like are the management companies just afraid of the d-r-e it in probably real estate in their state or are they afraid of like regulate the regulatory home thing for us we want to make sure that we're meeting all Federal Regulations not just what state says and so I started noticing more and more that a lot of information was conflicting so it took meeting with auditors meeting with attorney deep ties in the FDIC rules and regulations to really figure out how to do this and so they we created you know it grew so so quickly and so strongly that we created an entire division related to this that's really cool so it wasn't just about offering the offering the capacity to handle the truck accounts it's about making sure that you're prioritizing the or I guess litigating the most important thing the most important that biggest opportunity risks making sure you're covering the basics instead of just kind of scratching the surface which i think is really important because it's money and that's actually a paper I'm actually baking their claims money so it's like not necessarily just my plate it's their clients as well and that's why I think it's so important you know so much of my job I'd say well over 50% of my job is yeah essentially it sails a relationship management boat what well over half of that is about education because a lot of people don't know what they don't know you know anybody can bank a property management company anything and and that's why any faith does I mean I'm sure if you walked into any bank it won't find on most banks if they really looked through their chart of the corporate profile client profiles they would likely find that they but that's not because they know how to or because they specialize in is because therapy and at one point the property management nobody needed a baker yeah yeah and that's a really great segue so you kind of mentioned something that I think a lot of people don't put a lot of importance in which is a trust account is basically an account wherein the money contained in it is being entrusted to you by someone else like somebody else owns it right a bunch of other people own it too it's not just a CLE it's not three parties it could be like thousand yeah exactly and that concept is so prevalent the most common type of trust account is you know family trust right like your entrust the money is meant for your beneficiaries or children and you know it's just held there and waiting for a trigger right to be released and that is applicable in property management and in other realms of banking which is like personal banking however why do you think a lot of people confuse like the property management trust accounts with the other types of trust accounts like give us a better idea as to like what the key differences are and why it's so confusing the problem is actually that that people as in bankers for instance or property management companies are not considering family trust accounts where they're looking at property and it just accounts I think that would actually be the issue note that just like bulb just kind of went off when you mention that if they had actually considered that they would probably have a little bit more guidance on how to set this up so what's happening in this in the industry to kind of you know paint a scenario it's a property management company could go to a baker and say you know what I want to open up a trust account from a property management business and as you mentioned Murray a banker's understanding and typical Baker's understanding of a trust account would be for instance of family trust account maybe for instance where an app's family you know he's myself - my husband Frank has an example we you know when we created our estate with our attorney and we had to open up a trust account at our bank which is not secret conferencing we had all of the documentation to to basically give to this paper which included essentially even though it's under our tax ID number it is essentially its own entity because the attorney drafted all of that documentation to make it look like it was its own entity and within that all the beneficiaries were named and you know of course with several other details as well but we have an entire binder I think I have it right next to me actually an entire bar either to give to the bankers of that included for instance a trust certification a bunch of um no directs trust document so they knew how to set when a bait when a property management company goes to a baker and says I want to open up a trust account for a property management company their first and initial odd of anchors is to ask for that type of documentation they don't really understand the property management they just know that it needs to be a trust account and I'm sure that you can attest that as a former man when they asked for that information and the property management which none of them will then it is been what the paper essentially does unless their which honestly isn't really that common then they essentially just open up the account with a nickname for instance so let's say it was a known John Smith anyway that would be the legal name business signature card in the vending aid would be trust account so the Baker management company owner whoever was the broker walks away thinking that they got a property management trust account wait essentially all they got was a business checking account on the nickname so the nickname provides zero protection whatsoever I mean you could essentially change that nickname tomorrow - you know brokers vacation fund and great would have been there's really no there's no distinction between the two so that's the issue whereas the way that you really want to set it up is similar to a family trust account so de prata same type of protection bankers don't know where to go with that nobody's trained on how to you know how to do that and I don't want to say no Baker but the majority of them yeah yeah and I do want to comment on that so yeah you're right not everyone is you know untrained in property management trust accounts but it's not part of the traditional training that they give to banker so I was in the making industry for you know four and a half years and I've had a retail banking I was opening business checking accounts and I was never approached by a property management company so my conscience exactly nobody come after Murray it alarmed me when I started working at foreign half and you know I would listen to these blogs and you know I would listen to you know talks amongst industry about all these um no issues with odd and all that stuff and I realized that a big reason there's a lot of issues is because there's a nomenclature issue like a trust account sounds like it's a single thing like oh I trust accounts trust account is trust account but it's not like there are different categories and when party a like the property management company owner goes to a bank and asks for a the banker might think you're asking for a B and because you're using the same word trust account that's where the confusion happens and then when you get audited or something happens you know that's the only time you realize it wasn't set up correctly and so given that how do you think property managers can sort of like know how how would they know or what are things they can ask to ensure that the banker they're dealing with completely understands that they're asking for a and not for be sure so but I would say take a couple questions back to your baker um I always always recommend that you put it in right I think so via email to the banker and reference the actual account number not the name of the account because the banker goes to look up the name they might just say a name again like I said if that just was to be taken a but it's actually Type B so I would reference the actual last four digits of the account number and ask a few questions so for instance couple initial questions I would ask I would say if if my bank were to go under tomorrow would this account assuming they only have one trust account or they have several they look at all those counts would use accounts how much do these accounts being short for because if they have more than 250,000 it might be getting a little ahead of ourselves but if they have more than 22,000 in those accounts then if those accounts are set up correctly then tax ID number Y database the entire tax ID number think how many packs they have will only be insured up to 250,000 but I would ask that question I would also ask in the event of a government entity mean or a lawsuit a judgment for instance what would these accounts be subject to the frozen at the bank those would be the two biggest months those are actually the more common than just many many many customers I will tell you go through a field audit I'm sorry go through a day have their state level and they pass at least a trust account side and that accountants not actually set up so if if it wouldn't it be insured for more than two hundred fifty thousand would that mean that they have the wrong type of account yes okay and so the same goes would would these accounts be frozen if the answer is yes then you you have the wrong type of account yes exactly so then I would follow up with an explanation of what types of accounts these are these are producer accounts they are acting as fiduciary for several beneficiaries you know we could be talking about a company with ten units or even for example with 4,000 units but with several beneficiaries the money does not belong to them and it has some trust you know the funny thing about us is that these a lot of bankers do actually understand the term ID Alta Murray you familiar with that term of the former Ranger it's been a long time I'm not familiar with okay so like if you are going through a lawsuit for instance or let's say let's say you go in a car accident and you're talking you're suing the insurance company that money then goes into escrow or trust with the attorney and in help in truck until the trust I'm sorry until the attorney cuts the check instead of it to you after you've won your case right it is essentially set up almost exactly the same way I'm gonna go a little small difference but almost exactly the same way and a lot of bankers know what type of account that is but they can't wrap their head around the real estate trust account robbery so could you ask that like if you're getting all of these and like horrifying answers from your bank and you're like you realize it's the wrong account could you what you say IOLTA am I saying that right okay yeah okay so would you say or could you say it sounds like I have the wrong account set up the account that I need should be similar to this and so anything yeah and that I give them a good starting point or would you or at that point would you just just call Allison oh yeah sure call Allison that's what you do I just like the balls of course I want to bang everyone right that's really that's nice of you but so at that point if they have all these red flow so let's assume for a second they don't they're not ready to switch banks or they or would you say at that point and they're getting those red flags should they try to get the right account set up or would you recommend that they find a different Bank that is more knowledge and knowledgeable yeah yeah you know I love that leave the room you're educated on how to set up your trust account you're in the wrong bank they're pointing to me moving banks is not a big undertaking at all but that's easier for me to say because I move companies over wait right yeah so that's easy for me to say it's not a software change for instance but a lot of people are hesitant to do it or maybe they're hesitant to do it because maybe they come in a 30 year relationship with their bank who knows so if initially they are really just all they care about is ensuring that they are you know compliant and they're not really worried about like even other credits or anything like that then I would say ask those initial questions I would only take it so far though I wouldn't you know like you said try and teach the banker exactly what they need to be doing I would take it only as far as you feel comfortable with if they're coming back as I know let me look into it and they feel like they get it right away and again it I really think it's important that you're talking to like maybe a chief risk officer and someone high enough not just a new advanced person we have a branch manager who can answer these specific questions for you and put it in writing then I would be comfortable with that if I were a property manager but if you're men especially answer ask more questions or you know say yeah yeah we got it then I would if they said yeah we got it I would follow up and say what exactly do you have but an indian bank writing on too long I mean I think you know to be very candid and I'm just very candi
Carson maybe maybe it's maybe it's the Boston me I mean I don't know I kind of mean it's a no-brainer you know yeah I think why wouldn't you in such a risky industry especially when it comes to managing other people's money why wouldn't you want to be beside who knows it no yeah why wouldn't you look for someone better yeah yeah there's a lot of people who pretend to know it there's believe me there are quite a few people every attempt to know I hope when it comes to you know like really digging in and getting all of it set up right and you'll find out you will certainly find out sooner or later that it wasn't enough yeah yeah and so we kind of talked about sort of like the things to look out for when you're trying to figure out if your accounts are set up correctly you mentioned that we were kind of getting ahead of ourselves so you wouldn't spend some time digging through like the actual regulations that affect property management trust accounts and sort of like the common pitfalls that people encounter yeah so first before most my biggest I'd say preached I would say is that everybody and I may have already mentioned this part but everyone is afraid of these ovens right so yeah I talk to people all the time say yeah you know I passed an audit or you know I like California presents I'm only big California but it's certainly my largest territory yeah because of our locations so they get audited all the time right all this and in many states they like you very rarely get audited like Texas it's like you get audited if there's an investigation but in California Princes there's articles right and anyhow important people say to me all the time you know yeah I was audited a couple times and I was trying that the only benefit to that is that they were audited a couple times each time that is really it so I always say to them you know well let's talk about the other risks that can happen besides a failed on it that actually happen more often sometimes so again like if there were governing entity mean or or a lawsuit that they you know they owed money on that's honestly boxers are very prevalent in the property management industry if that wouldn't happen and a letter of intent to being down to the bank for that tax ID number the bank can essentially look at those those accounts and let's say that that thing had an operating account and say they had a client trust account which is where all the Reds and operate properly operating sexes go through and the security deposit trust account if that first account didn't have enough funds to cover that mean then they can then go to the other accounts and if those accounts are not actually set up as trust and they doesn't mean really also understand what and deport then those accounts then can then be subject to being frozen because they need to freeze the fund under somebody Texan you know just because test accounts are set up under your tax ID number doesn't mean that you're you know you're liable for them if they're set up correctly yeah so I actually know somebody who has happened to don't put me on the timeframe I want to say it was like maybe 2013 or something um they were not a customer of ours they are now but but they the bank that they were with I don't see anything the bank that they were with that company had owed some back taxes for Franchise Tax Board and essentially they were audited by not by the d-r-e we just they were audited in the ended up owing extra taxes and whatever they did end up paying and their franchise tax the work she texts me and those trust accounts were frozen so not all of the money but a good portion of the money based off what they owed they didn't even go to the the operating account first the business operating I went straight for us this is the biggest account probably yeah there so they didn't have to worry about like freezing the you know part of winning because there was no difference on their end essentially like they're just like okay so to those funds were frozen and when they went back to them explain to the banker the banker side they under they then understood what it was it did for but nothing was no changes were made they then I just understood what they were so that's that client right now I had to then go in front of a judge to basically long stuff and you look at that point yeah okay now you've gotten the money back several months later you gotta like that but these lions are now gone exception you hey gray parrot detrimental to your business so it's not just about losing other people's money probably losing people's money not only are you going to be held liable but then you're going to lose your business right or I really love it and your hubby reputation every one of those Easter talks damn fine which is it well it does happen I mean like I I've heard stories about happening doesn't happen hopefully it doesn't happen all the time I mean you would know more more than we would but I get I feel like more more than we would expect well maybe not rain but that is I would say that's actually more common than like lawsuits in which makes sense yeah another one which is I actually have a horror story for that one too but another one for instance is lack of fjz so we talked a little bit about this so this in the last like six seven years started being more of a hot topic because what in in Allison what was that lack of what okay okay FDIC insurance yeah yeah yeah I did yeah so okay so with the FDIC insures a tax ID number of the bank and that's very important to mention that it's a tax ID number because no matter how many comes you out at the bank if it's under one times ID number which is how those property management companies set up their trust accounts most and that's definitely the industry trying to how you really should do it but no matter how many times they have set up that one tax ID number is it sure enough watching 50 best so if a company has a million two hundred fifty thousand in the or balances at their face and it's compromise of comprised of their business operating maybe a payroll accountant and maybe let's say to a trusting house as assuming that those types of pounds are just set up as essentially regular business they have and not really trust accounts then only 250 of a dozen shirts of the bank were to go under for instance which we all know has happened I started getting into the industry it was happening left and right the most recent crash only 2000 to go then those funds are now essentially lost right so if those trust accounts though and this is very said this is exactly the family this family trust right but each beneficiary within a family trust account so my husband and I have that trust account and our sons our beneficiaries each beneficiary is insured up to 250,000 i if the account was set up in their own name their own taxing but again it has to be set up correctly as a real truck right so the beneficiaries in this case on the trust accounts are the owners so 250 per owner and it is very very rare like I will tell you in my like decade of being at eco spanking property management companies I had one company automated say this mine had more than 250,000 in there in our trust account and that was because the crime stolen through a divorce and they wanted to some extra money yeah so it's very rare that they happen because essentially if you're getting that yeah so with that said it is an aggregate number so with that lets say go back to that scenario of those trust accounts right if that one stress account has or the thing yeah let's just stick to much less communities you look at that one track to have a million dollars in it there has to be at least for beneficiaries disclose so the combination have the information on the beneficiaries it isn't aggregate number so lady came in and looked at you know during the pain closure and looked at the account and said there are there is a million dollars missed account are there at least for beneficiaries yes we have that on record that it would actually go back to you to us County Manager to then show immediately based off usually reconciliation reports in your software that no one beneficiary within that account has so and then you're free / but again assuming the accounts are set up correct so a company that I know he only recently started working with me a couple years ago he actually we were talking about this one day and he said you know that's funny that actually happened to me and I can't remember the year that it was it was around 2008 2009 he was with a babe in Texas and the bank went under and he lost call all those funds he doesn't FDIC not set up correctly so he got to be 250 thousand and he didn't end up he why this so it's a little bit of a success stories I don't wanna you know said everyone you know I'm terrified but it was a little bit of story in the sense that he was able to work with the FDIC investigator for a representative and I'm sure the correct term in that scenario but work with them to prove that that money didn't belong to him but it took several months to get the money back and it was extremely cumbersome to go through the process with them and it you know how to basically do based essentially do a forensic audit on all of the accounts to ensure that really did it belong seven they were you know Wow well and I feel like that process probably and correct me if I'm wrong but the people that go through that process to give you the funds back probably have a lot of other things that they're working on - so is it like I don't know be he had a personal connection I don't he was very unfair exactly what it was so maybe a little bit out her but I think that he have a personal connection with the banker or the president of the bank who got him with the FDIC representative Bridgehampton lady receivership and how so how long do you remember how long that process did take I don't he told me several months okay and how like I'm sure he lost clients yeah it was a you and like even though it's kind of like a success story it's kind of like it's just yes that's the scary stuff though it's crazy how how important this is but how understand how misunderstood and how like likely it is that you could be making a mistake and and not know and to think that think that you're okay because you got audited twice or whatever but that's not even the biggest risk yeah I mean it's just you know again another quick sort I was just talking to someone from Delaware he reached out to me one bank mean we were talking we somehow got into this discussion about trusted he'll not somehow event space but all they ever talked about and he said to me you know there's no requirements on trust accounts in the state of Delaware so I'm good and that honestly those comments either a lot and they irritate me more than anything else because I cannot stress enough I don't really care what your state says if you read up correctly you're gonna have to stay on it with flying colors anyway these in that regard but if you don't set these funds up as whether your state says that you need to or not which just one I will also clarify for anything Delaware got to me they do have rules on that understanding but if no matter what your state says those those funds still have to be protected because they don't belong to you so whether you're in power management or not you're acting as the juice URI for somebody else's money and you can't protect it yeah and that's interesting because a lot of times when property management company owners set up their businesses they have a billion things to think about they have to make sure that their company is filed correctly you know that you have the correct tax ID number and then they have to figure out the accounting and then a lot of times it boils down to like having a checklist right like I have the checklist on how to do all the stuff one of those items is to create a trust account and then a lot of times are like well do I need to have it according to the audit no then okay I'd rather like run off to do something else but what their failure to understand is it's not the audits are they're not because they just want to hassle you the audits are there to actually protect an industry right okay so even if your state says hey we're not really strict with how you set up your account so you have bigger fish to fry it doesn't mean you don't have to do it it just means maybe they haven't encountered as much issues with that specific checklist item as the other stuff that's why they're not putting emphasis in the audits but you as a business owner you still have to figure out like okay I am still an entity that can't be subject to lawsuits and yeah why not so I have to protect myself your reputation like Alison was saying earlier it's just it's a lot of stuff yeah right or if sometimes if they're being forced to change bank accounts for and then sometimes they're like oh let's just get it done because they're just that they have to move quick in it and they just want to just feel may hear you say yeah right yeah but I think I think it's getting a little I think you boys starting to get a little bit more especially you know at least in this industry but most of the time they're not really concerned like whether the bakers specialist don't know why thank you educate them right for to me somebody that's not in the banking industry or that hasn't that hasn't than ever I wouldn't know I mean hope I would like to think that I would do my research but it's still you I would hope that you talked to a banker and they would say oh no no that's not my area of expertise but that clearly isn't the case because they don't even know that sorry expects that they don't know what they don't know to say you know like can you kind of can you give me some instruction on how to open these accounts and I mean honestly no I'm not going to date it though my dad died of that I honestly feel like you know even if i sat here today and tried to train a banker on how to do it it would we wouldn't get this done in one day yeah it's a tutorial it's not like a video that's true yeah you know I just find it was kind of one of the things that I kind of it is one of the many things that I love about seacoast you know when our CEO came in don't quote me on this year I think he came in in 2008 oh I don't know but anyway when he came in he essentially he completely turned around and from like a small community bank to a business and he essentially said you know we're gonna make this a specialty bank and we're going to which is the best thing that he could have done this big neck he essentially said like we're going to hire industry specialists and having to do what they're good at right so our bank is a little bit different in the sense that like if you come to me for a loan today I'm not I'm not the person to talk to but alone I'm going to give you to somebody else I will be your biggest advocate and ally when it comes to the loan because I fear my friend but I stick just to what I'm good at I don't try and like stretch my arms out to everything else and we're very much like that you know we have SBA industry we have obviously management we have 1031 with HOA which is actually much different than property management trust accounts and we all just stick to what we're good at with them and that's what makes us really successful and I think that's really important for a property manager for instance or somebody in those other respective industries to ensure that you're with a specialist accident contribute to your success as well we can you know we can kind of bring far together and not just trust account setup but other things as well yeah and you know an analogy came to mind as you were talking about that when you go to the doctor you have a primary care doctor who's a generalist like knows a little bit of everything and then if something goes wrong that's kind of like outside a box they're like they know enough to be able to direct you to the specialist for that area right and so right like if you need surgery on on something you're not gonna go to your primary care doctor and say hey can you operate on me the doctor would be like I am NOT a surgeon like do not I'm not gonna open you up and it's the same like um as you were saying
ight like most most banks are set up to accommodate businesses period and most banks don't have like specialists inside the branch who understand a specific industry inside and out they may have higher up right they're the ones creating the products but if you walk up to a brand banker in a branch they may know a little bit about different businesses but that's mainly from experience dealing with customers but like trust me I went to banker training and you know I I knew a little bit about many things but I would not say I was an expert in creating business accounts for a property management company versus you know smoothie company versus you know so I think that's just something to keep in mind like if you have a long term relationship with your family banker right like then you can feel comfortable asking these questions and hopefully that banker is comfortable to admit whether he/she is not that familiar with how you need this set up but yeah I just wanted to share that little ania that sense and so going back just a second for the people that have kind of figured out that they don't have the right account you you have you did mention earlier that it is pretty easy to transfer over to a new bank like what would you do to initiate that process like it yeah so I mean I can only see from the Seacoast and yeah requirements we like seacoast in regards to B but sex would you still be nice to documentation right so great um the very first thing of course first step get a proposal we're now not just talking about trust accounts you also start there if they wanted to make the switch then you have to really come up with the transition timeline and that's what I do so I always say you know if they came to me for instance and they said saw the proposal everything looks great you know want to move over as soon as possible where are we now we're at December right we're in first week December so really we're going to create a timeline based off of the first of a long really December to January 1st is really not something of an unreasonable timeline but it's your kind of your post pushing it a little bit too much because the only we can we talk about the first of a month is because we talk we're talking about the date the bread cycle that we want to be right but you really have to be live and transitioned and set up and operating from those accounts about a week to two weeks prior to that so really that's why we kind of pushing it to being December 2nd say tell me on December 2nd when do I get one because really we're gonna update you live within two weeks and the bank part is not that hard but we can work with your software company so we have to make sure that everything is set up for payment payment processors for software companies typically take the know which software is typically take anywhere from like three business days sometimes 10 business days and that's difficult and of itself and that with all the respect software company kind of such their relationships with that way I love most of them it can always get you know the bank change and again the reason for this is because the customer may not be communicating what they need correctly to the software company but I'm back so 15 days is tough so essentially I kind of went off tracker but essentially if somebody is saying you say they want to go live for we will likely you must there was a specific reason to rush we will likely just make it easy for them be focusing on a February one transition and choosing a date for that so for instance let's say they do their owner draws on the 10th they would basically do their owner draws on the 10th of January and then we do the final switchover mid January let's just say in front of me let's just say was January 15 switch over that day which many things such as Big Mike reconciliation and you know doing the final switch within the software as well but that is like the end day right that's like the final right day we have to essential during our transition timeline top take that day and then work backwards from that and working the baculum snow cut is really just first of all the bank during our job right in the collecting any documentation collecting st. your cards agreements and setting on the accounts and then we we had to do a lot of stuff on the back but we then work with you management company to communicate the correct information to the software companies so they have more than enough time to get these accounts already so that on for instance January 15 we can do the final transition day and you can do it smooth and you're done at that point then at that point you're operating out of your new baby comes not just from the bank but also through your software and you know you're ready for that early early wrench cycle so a lot of times even though we focus on the first of the month right a lot of times tenants pay early so they may be paying on like the 27th of the month and you want to be like that so we have a small window in a month based off of the first of all the industry timeline in general which is pretty standard and then also when those companies do their owner draws that's always important some companies do them on the 10th some do them on the 26th right so it's really very customized to the client but we go through that whole transition timeline based off of their needs industry needs also like vacation means you know schedule and it's just making sure it works I mean like for instance January's a tough time for property management companies to make a switch and that's because they're working on tonight nice so there's land right I always say it's really like a bank switch to the right bank rate lot of banks will just see like we'll just say like sure here's your here's your account numbers and here's a check scanner and figure out they have no idea when you're moving but we create that timeline so that you know exactly what you need to do and even though we're stretching it out like sometimes 30 days or 45 days from the beginning of the conversation it's really only takes like it's really only takes up like three days worth of the property management companies time of work it's just a matter of making sure you do very specific things on very specific days yeah that's interesting because as you were saying as you were describing the whole process what you started that with oh it's not that hard you know this is and then I started going off and it's driving huh I'm Lance and I started palpitating I'm like this is so much stuff to remember did you say this is so much stuff or so much tough stuff okay I know she said so much tough at first I'm like yeah girl it is so much and so and so imagine if you're right if you did switch to like a bank that didn't really understand your industry you open your bank accounts they have you send the signature cards you have your checks you have your new account numbers and then you're alone kind of figuring out okay when do I deposit what late everyday bank is not gonna know all of those things that you list it out so I think just that in itself is a prime example of the reason you want to make sure that you go either start with or move to a bank that knows the industry cuz I know I mean a property manager of course could sit down and take the time to map out all of those things but like you know either your Maricha said it's like that's another task at hand like everything on top of the stuff that you're doing why not just talk to somebody that knows all of those steps that's just a lot yeah yeah right what did I miss yeah it's so funny because like you know again obviously I'm in sales right that is the job again and I've been very successful in that but I have noticed that the sales I guess process have shifted for me in the last I was like five four or five years where's now like a lot of companies are calling me yeah they know what we doin like the credit side and they love that but a lot of them are now calling me for the education part you know like okay tell me what do I need to be know what do I need to know and during that conversations especially when they say okay you know great but it's really just all about education any if you need to call if you're calling a banker and they're just like answering your questions like yes yes yes and they're saying that they know your industry I don't want to say that they don't but anyone can say yes like can you notice it I'm a conversation with not just your banker any of your vendors and talk about property management specifics when it comes to their you know their services yeah and I don't know what this says about me but I can talk about property so I I find it very interesting and I love it and I'm not that boring I do like other things too but I'm not boring at all yeah that's great and so we had been talking a lot about the compliance side of property management banking and then you started talking about how you would get phone calls from people initially asking about the credit so just for the benefit of our listeners do you mind sharing more about what those credits are what you can do with those credits yeah I'm like what it would look like I would say what it would look like at a normal trust account versus like a trust account with seacoast it's just specific to the bank account in general yes so like you know for an house it's like it's not it doesn't have to be trust accounts but the reason why you can't see such a benefit from it is because the trusting MOUs are the ones that are holding not just a significant amount of money but the money is staying there right yeah I'm especially the security deposit the money city right I mean essentially yes you have friends and they come in and they go right back out yeah like security deposits reserve funds is that factored into that okay yeah yeah yeah so okay so any man can offer this program it's called analysis thinking many banks choose not to especially these days when rates are just low and and many banks do but it is just not beneficial to the customer at all so so maybe they even some will market it and some wolf right so essentially analysis banking allows all of your accounts together so let's say let's go back to that example that we talked earlier about one company who has to trust accounts of payroll account and operating all those accounts while they remain separate all those monthly average balances work together and to what's called a master analysis right so let's say just for conversation purposes let's say that there was a million dollars in monthly average balances that million dollars is going to work with a rate the rate calculation against the average balances is exactly like in the word interest area so if you're earning 1% interest on a million dollars the calculation is exactly the same as it for a 1% analysis rate against your average present balances but then here's the difference in that comparison interest versus analysis essentially ends here but let's say that that credit that's your gross credit maybe you know we're talking about the interest comparison then your interest rate with an interest bearing account you're just given that interest you don't need to offset anything you're just giving that interest with analysis credits that quote-unquote interest but really what we call it rose credit has to first go towards all your banking at the bank so that's like any transaction that you might come across that the bank actually charges for so a lot of people it'll come from like free small business technique house for instance and they kind of freaked out about that one comment they then say well I don't see anything fees now well if I didn't have a good analysis program I say say where your eye or let's put you in a free small business checking program but I have a fantastic analysis program so the difference here is even though you're getting charged essentially for each transaction that you do at the bank that we charge for that's important to note there's a lot of annual charge for things that other things don't but if you're being tarts if you're earning it can grouse credit that gross credit after offsetting those fees if you have excess leftover now you've essentially earned a net credit which kind of like interests so we can pay two is interest we can't call it interest but that neck credit can be paid towards third-party invoices so like for instance or inhabit moist is right so that we now because this is recess how many of the a mystic how much of the industry knows this but we now can pay for enhancing voices they're now considered eligible invoices other eligible invoices more cards to be like software and like CPA invoices something thank you accounting related but when the thing is that the difference between you know what let me back up side but with those credits here's the thing even though what angles invoices we can't reimburse you because that is considered can't trust we have to pay directly to the vendor that's it like yeah if it touches your hands at all it's considered agents and then there's many other you know requirements to the account federal regulation requirements not just requirements or industry requirements um and reasons why we can't we shouldn't be paying you interest but essentially you've now not only offset your thing so you're banking essentially do still have a free making you're now burning that net credit Africa so now the reason is so different compared you know depending on what's thank you with is really just because based hard for different things right so the nice thing about our analysis program is not only do we have a great rate but we have such minimal pricing and I always say you know and now spending is really smoking yours and I'm just like I said I'm a very candid person but so I try to be as transparent as possible but I mean really the reason for that is just because with like hundreds of clients you really don't want to like you just meet someone and then have a big headache right so not not only for the client but for them me as well so I always make smoking mirrors because any banker can say to hey you know one and a half percent on your balances and that sounds great in you know a great climate like this but with analysis you have to first offset those fees so really the more important question is what am I going to be charged for and you want to see like an exact mirror pro forma I should say about what you currently do in your bank and what they are going to need to offset before giving you that net credit receive your groceries one and a half percent what is the net rate no one really cares about the gross rate because you're gonna have transactions right it's not like you don't special a this industry there's always transactions that we accountable so we not only have that great rate our pricing is so so so minimal and on topic we don't even charge for many of the things that other things you charge for so like if you were looking at like Wells Fargo analysis for example there but their consumer banks are a little different but their analysis program is like page after page after page of charges and so it's also hard to compare our like our performance for essence to others because of stuff like they were just copying on earth and they want to see what we charge for but they could easily be charming for other things that would actually apply to you but they don't know that because they don't have that information off the analysis statements so anyway so we I always say like again back to that word no brainer right it's sort of a no-brainer you're not eliminated by any kind of it but you're going to get this monetary benefit as well and almost every state allows them you analysis benefit the only statement well something they don't but they ask that you just slows it and we provide the disclosure information it's California actually so California just accepted you and not the princes the company can't earn interest off the trust accounts or like you can't earn credit card benefits it's kind of hard without disclosing it so as long as you're disclosing it you can do it and I've spoken to the DA we have in writing we have approved verbage means the letter yeah yeah so we collect money and offset their bottom line so again
it's pretty much a no-brainer to me yeah do those credits expire ever well while you're talking to me right again everyone treat their analysis it differently Amy um we actually do we allow each month monthly balance for all over so for instance if you had two thousand dollars available in credit and we paid a thousand dollars to pour in half and five dollars to that whole deal for instance you have typos somewhere that will roll over to the next month we do not allow deficits to roll over so if for instance we paid you got a four and a half thousand and to the operating patent the first is the next month when we ask you to use all of your leftover credits whatever your carry forward is when we ask them to use them all before they drop down to zero is right now actually so like tonight I'm going to send out a blast you know yes that's fine we're just going to create a storm like does every perfectly every year here and there but basically just saying hey we need all of your invoices by twelve twenty that's gonna be our date it's always the first second or third week of December for us and you have to use your credit your today from November from your November statements so anything you earned in December will go to Jamie okay don't actually calculate till the end of month so those will January but anything carry four has to be used twelve twenty in you know what did you does mighty um and then it resets to zero when they start they start over but makes a lot of sense yeah so tonight that you know although out and it always starts like weeks I've everyone just say how do I get a couple emails to I feel like I I don't know if it's happened this year yet maybe people like prepping but I remember last year there are at least a handful of people that were like hey I need to use my seacoast credits like yeah sign me up for all this stuff and we're like they're like yes last December almost or like second to the last week like hey what why can't I buy what can i buy from you guys and we're just um why like or or we're like you have everything but yeah yeah but you Ximena and because you know it's not my job to make sure you don't use your credit I want to encourage you to see the benefits and you know not be baking on table yeah yeah and that's a it's good to that you shared about you working with the diri because we had gotten you know some people do ask questions have some questions about like hey like I don't think this is legal and I'm like it's Allison believe me I'm like yeah that's awesome and well any any closing statements from you anything you think that like you want people to know you know we talked a lot about like risks and things like that there's so many so yeah I would be very visually if anyone wants to discuss this further and really dive deep in on a specific level ice and like their accounts and their bank and the history of their bank or whatever it may be just reach out to me and I'm happy to talk of course I'm happy to talk but you know I just think it's I think the most important thing is that everyone stays really vigilant and and starts taking this one seriously doesn't matter what state you're in it doesn't matter if you know not daughters got a long time that's not what I'm trying to say but it doesn't matter if for instance you're a state entity things that you're okay if something like those more common federal risks and what I would call them if those happen you're safe auditors not gonna come in and save you yeah so yeah well and just because same reason I do try and do everything yeah well because Eddie and you guys you know the puppy man to help you find out certainly don't want it because they certainly have enough right so yeah just just try and get ahead of it judge pick a time and get ahead of it sound like it's a big undertaking but you'll feel good oxygen yeah I was very good advice I think I'm excited for people to watch this I think they'll they'll get a lot out of it so we really appreciate you educating us I learned so much too and I'm always I mean always learning more every time I talk to you so I really appreciate it yeah you guys this was great I nobody talk too much yeah we have any questions and to our podcast listeners as Allison said please reach out to her she knows her stuff and like she said get ahead of the get ahead of the curve so if you have questions reach out to her reach out to us we would love to hear from you
