Like any business, short-term rentals require careful financial management. This is particularly true during tax season. When you use property management systems (PMS), you need to ensure they match up with all of your various accounting tools. This blog post will discuss PMS reconciliation for vacation rentals and guide you on how to stay on top of your business’s financial health.

Host Tools provides an automated, unified calendar for short-term rental hosts, allowing you to seamlessly list on all major channels. Start your free trial today!

What is PMS reconciliation for vacation rentals?

Basically, it’s making sure that all of the financial transactions you have within your property management system match up with all of your external records. You’ll want to check items like your reservations against your online travel agencies (Airbnb, Vrbo, etc.), bank accounts, payment processors, taxes, and fees. etc. You want all of your members to match up between your PMS and everything else where financial records are kept.

Why does this matter?

Well, a couple of reasons. First, you want to accurately know how well your properties are performing. However, it’s particularly important to have accurate financial transactions when tax season comes around. You want to be sure you’re maximizing your deductions and aren’t over- or underpaying your taxes. If you’re underpaying, you could be in a world of hurt when it comes time to reconcile, and you owe thousands of dollars in taxes.

Common reasons for a disparity between platforms

If you stay on top of things, the reasons for a disparity between your financial records are usually minor. Below are a few examples of a few reasons you should first investigate on why there might be a disparity between platforms:

• Different platforms have different payout schedules. When you get paid from Airbnb may be later than Vrbo, and certainly different from your direct booking website.
• The service fees that are taken out may vary between platforms, and you may have forgotten to account for that. i.e., Airbnb may charge a 3% host fee while Booking.com may take a 10% commission.
• There may be a delay in the timing of getting your payout. Bank holidays could affect this as well.
• If you’re manually entering financial transactions into a spreadsheet, there is a lot of room for human error. This could be something as simple as mistyping or entirely forgetting to input information.
• Perhaps you haven’t properly integrated your PMS with your accounting tools.

What items do I need to reconcile?

With so much going on, it’s easy to forget all the moving pieces of running a short-term rental business. Remember to consider the following and ensure they are all add up:

• Your property management system
• Bank accounts
• Data from online travel agencies
• Payment processors like PayPal, Venmo, etc.
• Information from your accounting software (QuickBooks, Xero, etc.)

Easy steps for PMS reconciliation for vacation rentals

Luckily, things don’t have to get too messy and complicated. Follow the steps below to help get your accounts in order:

• Make sure that every reservation on each online travel agency matches the reservations you have recorded within your PMS
• Confirm that your gross revenue matches each booking, and flag any inaccuracies from the get-go.
• Check all service fees, cleaning fees, management fees, etc.
• Ensure that your net payouts match across the board.
• Check on all of your pending payouts and account for time zone differences.
• Document any discrepancies you find, and look for the reason why, so you can reconcile them.

If you still can’t reconcile a transaction after diligent review, flag the transaction, document your findings, and follow up with the platform or a bookkeeping professional before finalizing your books.

Best practices for your PMS reconciliation

There are a few best practices you can follow to help keep your financial records in tip-top shape:

• Reconcile monthly. Don’t wait until April 14th to do this. Having a regular pulse check on your records will help you catch discrepancies early and resolve them.
• Automate as much as possible.
• Write yourself a checklist that you have as your guide every month for your self-audit.
• Keep your records so organized that they’re always in an audit-ready position.
• Don’t ignore small discrepancies. Small issues could grow to become big ones.

Final thoughts

PMS reconciliation isn’t glamorous. But it’s a necessary thing we must do as hosts. Keep your books up-to-date, and you’ll be in a far better position come tax season and if any audits arise.

Host Tools provides an automated, unified calendar for short-term rental hosts, allowing you to seamlessly list on all major channels. Start your free trial today!