Service Charge Accounting

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Service Charge Accounting

Service Charge Accounting

Service charge accounting is the process of calculating, recording, and managing shared property costs that are passed on to tenants or leaseholders.

It is commonly used in commercial and residential property management (e.g., offices, shopping centers, apartment blocks).

In simple terms: It ensures that tenants only pay their fair share of building costs.
 

Service charge accounting typically covers: 

  • Collecting costs: utilities, maintenance, cleaning, security, insurance, repairs, etc.
  • Allocating expenses: splitting costs between tenants based on agreed methods (e.g., floor area, usage, lease terms)
  • Budgeting: estimating annual service charge costs in advance
  • Reporting: producing statements showing actual vs budgeted costs
  • Reconciliation: adjusting overpayments or underpayments at year-end

Our Process: 

  • Accruals
  • Prepayments
  • Check duplicate transactions.
  • Check invoices outside review period.
  • If amount is correct
  • If relates to the correct period
  • If expense code is correct
  • If relates to the correct property
  • Comparison between actual expenditure and budget.
  • Explanation of any variance occurred.
  • Queries raised for further information/evidence.
  • Follow up of answers and further actions to be taken.
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Our Expertise and Capabilities

We are a team of 28 professionals working with the BDO UK offices in Bristol and Gatwick in an outsourcing environment for more than 10 years. 


We support clients with commercial and residential property portfolios. 


We currently manage approximately five major clients who have outsourced the review of their property-related expenses to our team.


Our accountants are highly qualified and possess extensive experience in this field.


Team leaders and managers perform quality reviews of the work prepared by the analysts before submission to our clients at BDO UK.


We are responsible for the comprehensive review of all expenses recorded for each property, ensuring that they are accurately allocated to the appropriate expense accounts. 


We also perform correcting journal entries to rectify any errors identified during our review procedures.

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Key Contacts

Dedicated professionals committed to your unique challenges.

Andy Lim Shung

Andy Lim Shung

Lead Partner, Accounting, Book-keeping & Financial Reporting Outsourcing - BDO Solutions
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Roubeina Gowry

Roubeina Gowry

Associate Director
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Anisha Poonyth

Anisha Poonyth

Associate Director
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Frequently Asked Questions (FAQs)

Service charge accounting involves the review, recording, and reconciliation of costs incurred in managing and maintaining a property. These costs are then allocated to tenants in accordance with the lease agreements.

Typical service charge expenses include cleaning, security, repairs and maintenance, utilities for common areas, insurance, management fees, and health & safety compliance costs.

Invoice testing helps ensure that all expenses charged to the property are valid, properly supported, accurately coded, and in line with the lease provisions and client requirements.

When an incorrect expense or coding issue is identified, adjustments are proposed and processed to ensure that the final accounts fairly reflect the property expenses.

The review process improves accuracy, strengthens compliance with lease terms, helps identify errors early, and provides clients with reliable and transparent service charge accounts.