4What is demanded, and what a receipt is posted against
Rent is demanded on the day fixed by the lease and receipts are posted against the unit and not against the payer, since an unallocated receipt sitting in the account presents as arrears on a file that is not in arrears.
Service charge is demanded on account against a budget drawn before the service-charge year opens, and expenditure is posted to the heads that budget used, so the account produced afterwards is read line against line; the surplus or deficit is then carried or demanded in accordance with the lease.
The two streams are never netted against one another on a file, to the extent that a credit on the service-charge account does not reduce a rent arrear and a rent credit does not pay a service-charge demand, in which case each stream keeps a balance that can be explained on its own terms.
4.4On account
A demand on account is a demand for a share of a budget that has not yet been spent, which is why the budget is drawn and circulated before the year opens rather than assembled afterwards from the invoices that happen to have arrived.
The share demanded is the share the schedule of apportionment produces, and the schedule is a fixture of the lease rather than a decision taken each year.
4.5The reconciliation
When the service-charge year closes, expenditure is set against the budget head by head and the account is produced in the same shape as the budget it answers, so that a difference on any one head can be read without reconstructing the whole year.
A surplus is carried or refunded and a deficit is demanded strictly in accordance with the lease, whereas a head that overspent for a reason worth recording carries that reason on the account rather than in somebody’s memory.
4.6An unallocated receipt
Money arriving without a unit reference is banked and held visibly as a credit awaiting a reference, because attributing it to the likeliest file is the fastest way to create two errors where there was one.
The arrears report therefore carries a short unallocated section of its own, and a file is never described as in arrears while a credit of the same amount is sitting unattributed on the same account.
4.7The arrears order
Arrears are worked in order of age and of consequence rather than of size, since an old small balance is usually a posting question and a new large one is usually a payment question, and the two want different first letters.
4The schedule of apportionment, worked through
A service-charge budget is divided between the units of a building on a basis the lease fixes, and the working below performs that division on figures entered by whoever is reading the page: a basis figure per unit, a budget for the building, and nothing else.
Nothing is apportioned until a budget and at least one basis figure are entered.
The arithmetic is fixed and visible: a share is one unit’s basis figure over the total of the basis figures entered, printed to three decimal places because a schedule of apportionment is read to three; the demand is that share of the budget rounded to the penny.
A basis entered as floor area behaves differently from a basis entered as unit count, whereas the arithmetic underneath is identical, which is the point worth noticing: the choice of basis is a term of the lease and the schedule only carries it out.