Setting up and using working capital in Guesty

Working capital is the amount of money used to fund operations and meet short-term obligations. Use working capital to protect yourself from liquidity or cash flow problems in case a repair is needed on a property by including this in your agreement with the owner. 

In the agreement, decide together on a set amount that will be held aside from the payout to the owner for this purpose. The amount will only be withheld when the working capital ledger is below the agreed sum.

Set up working capital

Step by step:

1. 1. Sign in to your Guesty account.
   2. In the top navigation bar, click the mode selector and select Operations mode.
   3. Click Owners.
   4. Select Accounting information tab.
   5. Fill out the “Minimum working capital” field with the desired amount.
   6. Click Save to apply the changes.

Recording a working capital payment

In the Balances table and the Owner Statement, you can see “working capital in contract” and “working capital on hand" columns. Working capital in contract reflects the amount of money agreed upon with the owner and working capital on hand reflects the current amount in the working capital sub-ledger. When you make an operations-related payment, the amount will be deducted from the working capital on hand and will be withheld from the next disbursement.

Move the money from the owner to the new sub-ledger for working capital by creating a journal entry in the Posting Journal. When making a payment, first check if there is a balance available in the owner ledger. If there is, use this money to make the payment so that the working capital ledger remains untouched. If there is no balance available in the owner ledger, use the funds in the working capital ledger to make the payment.

Remove working capital

Step by step:

1. 1. Sign in to your Guesty account.
   2. In the top navigation bar, click the mode selector and select Operations mode.
   3. Click Owners.
   4. Select Accounting information tab.
   5. Under “Minimum working capital”, change the amount to "0".
   6. Click Save to apply the changes.

Once the above action is taking, the working capital will be removed from the next automatically generated Owner Statement. The amount cannot be removed retroactively. 

For example: Owner statement is generated on June 1. Working capital changed to "0" June 2. Working capital amount will be removed in the next statement generated on July 1.

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