BuildingHQRecording rent looks like the simplest job in property management. Money arrives, you write it down. It stays simple for exactly as long as every tenant pays the full amount, on time, in one transfer, with a reference that tells you who they are.
The first part payment breaks it. So does the tenant who misses March, then in May sends two months at once. So does the rent that changed halfway through the year. Each of these is easy to handle on its own, and together they are the reason most landlords cannot answer the question “how much is this tenancy actually behind?” without sitting down for twenty minutes with a bank statement.
Two different questions, often confused
Before any system helps you, be clear which of these you are asking:
- What is the balance? Everything charged since the tenancy began, minus everything received. One number, running forward forever.
- Which periods are unpaid? A list: January settled, February short by 150, March untouched.
The balance is what you take to a court or a guarantor. The period list is what you use to have a conversation, because “you are 640 behind” invites an argument and “February is 150 short and March is outstanding” invites an explanation. You want both, and they must agree — if your period list sums to something other than your balance, one of them is wrong.
Record what was expected, not just what arrived
This is the step people skip, and skipping it is what makes arrears uncomputable later.
For every tenancy, every month, write down the amount that was due — before you know whether it arrived. Rent, plus any recurring charges you collect (service charge, parking, utilities, whatever applies). That expected figure is a fact about the tenancy agreement, and it does not change retroactively when somebody pays the wrong amount.
If you only ever record receipts, then a month where nothing arrived leaves no trace at all. There is no row. The gap is invisible, and it stays invisible until a total does not add up.
The practical test. Delete your bank statements. Can you still say what each tenancy owed you last year? If not, your records describe your bank account rather than your tenancies, and the two are not the same thing.
Rent that changes mid-tenancy
When rent goes up, the expected amount changes from a specific date — and every month before that date keeps its old figure permanently. This sounds obvious and is the most common source of quiet errors, because the natural thing to do in a spreadsheet is update the “rent” cell, which silently rewrites history. Last March suddenly shows a shortfall that never existed, or an overpayment that was never made.
Keep rent as a series of dated rates, not a single current value. The rate that applies to a month is whichever rate was in force during that month. The same goes for service charges, which in many buildings are reset annually.
Allocating a payment across months
A tenant sends 1,800 against a rent of 1,000, having missed two months. Which months does it settle?
Oldest first is the right default. Settle February fully, put the remainder against March, leave March short by 200. It is the conventional treatment, it is what most tenancy agreements imply, and it keeps the arrears clock running on the oldest debt rather than resetting it.
There are two cases where oldest-first is wrong, and both need you to override it deliberately:
- The tenant says otherwise. If somebody transfers with the reference “May rent”, that is an instruction, and applying it to February instead will not go well when they notice.
- A guarantor or deposit is involved. If a payment comes from a third party for a specific period, it belongs to that period.
Whatever you decide, write down which months a payment was applied to. A payment recorded only as “1,800 received on the 9th” will have to be re-allocated from memory the next time anyone asks, and memory will not agree with the last time you did it.
Part payments are normal — treat them as such
A month is not binary. Design your records so a period can be partly settled, with the shortfall carried, rather than forcing yourself to mark the month paid or unpaid. Landlords who cannot record a part payment tend to do one of two unhelpful things: mark the month paid because most of it arrived, or leave it unpaid and lose track of the money that did.
The same applies to overpayment. Somebody who rounds up, or pays a deposit-sized transfer by mistake, creates a credit. Credits need to be visible, or they get quietly absorbed and reappear as a complaint months later.
The unidentified payment
Every portfolio accumulates them: money in the account with a reference that means nothing. The instinct is to guess. Resist it, because an incorrectly allocated payment is worse than an unallocated one — it makes two tenancies wrong instead of leaving one question open.
Hold unidentified receipts in a visible list until they are identified. Then fix the underlying problem: give every tenancy a payment reference, put it on the tenancy agreement and in the rent reminder, and ask tenants to set it once in their standing order. This single change removes most reconciliation work permanently.
What a defensible arrears record looks like
If you ever have to escalate — a guarantor, a notice, a court — the record that works has these properties:
- It is contemporaneous. Entries were made when things happened, not reconstructed afterwards.
- It shows expected and received side by side, per period, so the shortfall is visible rather than derived.
- It explains every allocation. Anyone can see which month each payment was applied to.
- It reconciles to the bank. The receipts in your records are the credits in your account, with nothing extra and nothing missing.
- It includes the correspondence. The reminders you sent, and when. A tenant who was never asked is in a different position from one who was asked four times.
Notice periods, pre-action requirements and what counts as adequate notice before escalating all vary considerably between countries and often between regions. This article is about keeping records you can rely on; before acting on arrears, check the rules that apply where the property is.
When a spreadsheet stops being enough
Spreadsheets handle this fine at three or four units. They start to fail somewhere around ten to fifteen, and the failure is rarely dramatic — it is that the sheet becomes the only thing that knows how the calculation works, one formula gets pasted over, and nobody notices for a quarter.
The signals worth watching for: you dread the reconciliation rather than doing it monthly; you have more than one version of the file; you cannot answer an arrears question without opening the sheet; or you have started keeping a second, informal list of “things the spreadsheet does not handle”.
Expected amounts are recorded per unit per month from the tenancy, using the rent and charge rate in force in that month, so changing the rent never rewrites the past. Payments can be partial, can span several months, and are allocated oldest-first by default with the allocation shown and overridable. Arrears are calculated from expected-versus-received per period, so the period list and the balance always agree.
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