Appfolio Expense Tracking Walkthrough: Mastering Your Property Management Finances

Appfolio is a powerful property management software, and one of its most valuable features is its robust expense tracking. Accurately tracking expenses is crucial for understanding your property's financial performance, making informed decisions, and ensuring compliance. But navigating the system can sometimes feel overwhelming.

This walkthrough will guide you through the essential aspects of Appfolio's expense tracking, from initial setup to generating insightful reports. We'll cover key functionalities and provide practical tips to help you streamline your expense management process. Let's dive in and unlock the full potential of Appfolio's expense tracking capabilities.

1. Setting Up Your Chart of Accounts

The foundation of effective expense tracking is a well-organized chart of accounts. This is essentially a categorized list of all your expense types. Appfolio comes with a default chart of accounts, but you'll likely need to customize it to fit your specific needs.

  • Accessing the Chart of Accounts: Navigate to Accounting > Chart of Accounts.

  • Reviewing Existing Accounts: Take a look at the existing categories. Common examples include:

    • Repairs & Maintenance
    • Utilities
    • Property Taxes
    • Insurance
    • Management Fees

  • Adding New Accounts: To add a new account, click the "+ Add Account" button. You'll need to specify:

    • Account Name: Be descriptive (e.g., "Landscaping - Common Areas").
    • Account Type: Select the appropriate type from the dropdown menu (e.g., "Expense").
    • Account Category: This helps group similar accounts together for reporting purposes.
    • Account Number (Optional): While not mandatory, using account numbers can improve organization, especially for larger portfolios.

  • Editing Existing Accounts: You can edit existing accounts by clicking on the account name. Be cautious when editing accounts that have existing transactions associated with them, as this could affect your historical data.

Tip: Consider breaking down broad categories into more specific subcategories. For example, instead of just "Repairs & Maintenance," you could have "Plumbing Repairs," "Electrical Repairs," and "Appliance Repairs." This level of detail provides a more granular view of your expenses.

2. Entering Expenses Manually

Appfolio allows you to enter expenses manually, which is useful for situations where you don't have a digital invoice or need to record a cash transaction.

  • Navigate to: Accounting > Enter Bills.

  • Select Property: Choose the property the expense is associated with.

  • Enter Vendor: Select the vendor from the dropdown menu. If the vendor is not in your system, you can add them by clicking "+ Add Vendor."

  • Enter Bill Details:

    • Bill Date: The date of the invoice.
    • Due Date: The date the bill is due.
    • Bill Number: The invoice number from the vendor.
    • Description: A brief description of the expense (e.g., "New toilet for unit 101").
    • Amount: The total amount of the bill.

  • Allocate Expense: This is where you specify the account the expense should be assigned to. Select the appropriate account from the dropdown menu. You can split the expense across multiple accounts if necessary.

  • Attach Document: Upload a copy of the invoice or receipt. This is crucial for record-keeping and auditing purposes.

  • Save: Click "Save" to record the expense.

Example: You hire a plumber to fix a leaky faucet in one of your rental units. You receive an invoice for $150. You would enter the vendor information, bill date, due date, invoice number, description ("Leaky faucet repair - Unit 2B"), and amount ($150). You would then allocate the expense to the "Plumbing Repairs" account and attach a copy of the plumber's invoice.

3. Automating Expense Entry with Bank Feeds

One of the most time-saving features of Appfolio is its ability to connect to your bank accounts and automatically import transactions. This eliminates the need for manual data entry and reduces the risk of errors.

  • Connecting Your Bank: Navigate to Accounting > Bank Accounts. Click "+ Add Bank Account" and follow the prompts to connect your bank account. You'll likely need to provide your online banking credentials.

  • Categorizing Transactions: Once your bank account is connected, Appfolio will automatically import transactions. You'll need to review and categorize these transactions to ensure they are assigned to the correct expense accounts.

  • Creating Rules: To further automate the process, you can create rules that automatically categorize recurring transactions. For example, you can create a rule that automatically categorizes all transactions from your utility company as "Utilities."

Tip: Regularly review your bank feed transactions to ensure they are being categorized correctly. This will help maintain the accuracy of your financial records.

4. Reconciling Bank Accounts

Bank reconciliation is the process of comparing your bank statement to your Appfolio records to ensure that all transactions are accounted for. This is a crucial step in maintaining the accuracy of your financial records and identifying any discrepancies.

  • Navigate to: Accounting > Bank Accounts. Select the bank account you want to reconcile.

  • Start Reconciliation: Click the "Reconcile" button.

  • Enter Statement Information: Enter the statement date and ending balance from your bank statement.

  • Match Transactions: Appfolio will display a list of transactions from your bank statement and your Appfolio records. Match the transactions that appear on both lists.

  • Investigate Discrepancies: If there are any discrepancies, investigate them to determine the cause. Common causes include:

    • Missing transactions
    • Incorrect amounts
    • Duplicate transactions

  • Finalize Reconciliation: Once all transactions have been matched and any discrepancies have been resolved, click "Finalize Reconciliation."

Common Mistake: Failing to reconcile bank accounts regularly. This can lead to inaccurate financial records and make it difficult to identify errors. Aim to reconcile your bank accounts at least once a month.

5. Generating Expense Reports

Appfolio offers a variety of expense reports that can provide valuable insights into your property's financial performance.

  • Accessing Reports: Navigate to Reports.

  • Common Expense Reports:

    • Income Statement: Shows your revenue, expenses, and net income over a specific period.
    • Balance Sheet: Shows your assets, liabilities, and equity at a specific point in time.
    • General Ledger: A detailed record of all transactions.
    • Budget vs. Actual: Compares your budgeted expenses to your actual expenses.

  • Customizing Reports: You can customize reports by specifying the date range, properties, and accounts you want to include.

Example: You want to see how much you spent on repairs and maintenance for a specific property in the last quarter. You would generate an Income Statement for that property and specify the date range as the last quarter. You could then filter the report to only show the "Repairs & Maintenance" expense category.

6. Utilizing Vendor Management Tools

Appfolio's vendor management features can streamline your expense tracking by centralizing vendor information and payment processing.

  • Adding Vendors: As mentioned earlier, you can add vendors when entering bills. Ensure you include all relevant information, such as contact details, payment terms, and insurance information.

  • Paying Bills Online: Appfolio allows you to pay bills online directly from the platform. This eliminates the need for manual check writing and reduces the risk of errors.

  • Tracking Vendor Performance: You can use Appfolio to track vendor performance, such as response times and quality of work. This can help you identify the best vendors for your needs.

Tip: Regularly review your vendor list to ensure that all information is up-to-date. This will help you avoid payment errors and maintain good relationships with your vendors.

Conclusion: Taking Control of Your Property Management Expenses

Mastering Appfolio's expense tracking features is essential for effective property management. By setting up your chart of accounts correctly, automating expense entry with bank feeds, reconciling bank accounts regularly, and utilizing vendor management tools, you can gain valuable insights into your property's financial performance and make informed decisions. Remember to consistently review and refine your processes to optimize your expense tracking and maximize your profitability. Don't be afraid to explore the different report options and customize them to meet your specific needs. Your financial health depends on it!