Common service charge mistakes (and how to fix them before year-end)

Service charge accounts have a habit of feeling fine month to month, then suddenly turning into a scramble at year-end. Usually it is not because anything dramatic happened. It is because a few small mistakes have been quietly building up in the background.

If you fix them early, you save time, reduce disputes, and make your year-end pack far easier to sign off.

Below are the most common issues we see, and what you can do now to tidy them up before the year closes.

1) Your coding is inconsistent (so the budget comparison is meaningless)

If contractors get coded differently each month, your actuals will never match your budget headings. That makes it harder to explain variance to leaseholders and can trigger unnecessary questions.

Fix: Align your chart of accounts and reporting headings to your budget, then lock in a simple coding rule for everyone involved.

2) You are mixing service charge costs with management company costs

This is a classic. Something gets paid from the wrong bank account, or a bill gets posted to the wrong property. It might be accidental, but it creates distrust quickly.

Fix: Reconcile bank accounts monthly, and do a quick “sanity check” on postings for any costs that sit outside the usual service charge headings.

If you need stronger month-end routines:

3) Accruals and prepayments are missing (so your year-end is a surprise)

If you only post what has been paid, your year-end numbers can be distorted. Big items like insurance, lift servicing, cleaning contracts, and utilities often need accruals or prepayments.

Fix: List your recurring contracts now, check what period they cover, and post accruals or prepayments monthly so the year-end is just a tidy-up.

4) Your reserves and sinking fund movements are unclear

Leaseholders usually care most about 2 things: what you spent and what is left. If reserve fund movements are not clearly tracked, you will end up re-explaining the same thing again and again.

Fix: Track reserves as a separate pot, show opening balance, contributions, spend, and closing balance, and make sure it matches the bank.

This is where clean reporting helps:

5) Your apportionments are outdated or not documented

Shares change. Occupancy changes. Mixed-use buildings get messy. If your apportionment basis is wrong, everything downstream is wrong, including demands and year-end reconciliation.

Fix: Check apportionments against the lease (and any formal variations), document the method, and apply it consistently.

6) You are leaving arrears to drift

Arrears are not just a cash flow issue. They complicate end-of-year balancing, and they can create tension between paying and non-paying leaseholders.

Fix: Run an arrears report monthly, act early, and keep communication clear. Even a small improvement in collection timing can make your year-end feel calm instead of chaotic.

Fix it before year-end: the simple checklist

  • Reconcile service charge bank accounts
  • Review coding and align to budget headings
  • Post missing accruals and prepayments
  • Confirm apportionments and document them
  • Tie reserve balances to bank
  • Run arrears reports and chase early
  • Draft the year-end narrative while it is fresh

If you want your service charge accounts cleaned up, compliant, and ready for year-end without the stress, speak to FHP Accounting. We can help you tighten the process, prepare clear statements, and reduce disputes before they start.

Ready to take the hassle out of your finances? Speak to FHP Accounting today — your trusted accountants nottingham for clear advice and fast, friendly support. Whether you need reliable accountant payroll services, specialist help from property tax accountants, seamless xero bookkeeping services, or a dedicated accountant for landlords, our team is here to help you stay compliant, save money, and grow with confidence. Get in touch now to book your consultation.