This article describes how to keep tenant deposits in an escrow account.
Bank Setup for an Escrow Account
If you use a separate bank account for deposits, make sure to add this bank account to the property, associate it to the Deposit Cash G/L account, and set the Deposit flag. Online payments will go to this bank account, and this cash account will be available for selecting when you are manually recording security deposit receipts.
Recording Tenant Deposit Receipts
If you want the security deposit to be recorded to an escrow account, when you enter the receipt for the security deposit, you need to change the cash account from the operating account to the escrow account. Online deposit payments will automatically go to the escrow account if the bank account in Breeze is set up this way.
Refunding the Tenant Deposit
When you refund the deposit through the Refund Deposit function, the cash account defaults to the operating account. The system will recognize that you are refunding the deposit from a different cash account than where it was receipted. After you post the refund, Breeze will ask you if you want to create a journal entry, and you can select Yes or No. The journal entry represents a cash transfer from the escrow bank account to the operating bank account. If you opt out of the auto-created journal entry, you can create a journal entry manually through Accounting > General Ledger > Journals.
Alternatively, you may want to make the payable directly from the escrow account. In this case, on the Refund screen, you need to change the cash account to the escrow account. No journal entry will be prompted, since the deposit was receipted and is being paid out of the same cash account.
Workflow Summary
If your company holds deposits in an escrow account, these are the two workflow options that you have in Breeze:
Deposits received to escrow; paid out through operating. If you are recording a receipt manually, you need to remember to change the cash account to the escrow account. On the Refund Deposit screen, a pop-up will appear with an option to create a journal entry created along with the tenant payable.
Deposits received to escrow; paid out through escrow. If you are recording a receipt manually, you need to remember to change the cash account to the escrow account. You also need to change the cash account to the escrow account on the Refund Deposit screen.