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Best Practices for
CAM Reconciliations
Presented by Amy Deitz
Introduction
Recoverable expenses are used to bill the tenant for
expenses incurred for the property.
During the recovery process, expense amounts are pulled
from General Ledger and charges are reconciled and
escalated as applicable.
In this session we will discuss processing recoveries and
the setup required for the process to calculate correctly
in conjunction with other related Timberline applications.
Tell us about yourselves!
Agenda
Review the Recovery Process
Review PM Settings for Recoveries
Review Property Recovery Controls Setup
Review Lease Recovery Controls
A Simple Example
A tenant is responsible for their prorate share of property taxes assessed to the building. Annual property taxes = $20,000. The Unit = 10,000 square feet of a 40,000 square foot building. Monthly payment toward the property tax = $400
At End of Year:The system pulls the expense of $20,000 from the GL The tenant’s share = 25% (10,000 SF/40,000 SF) The share of the property tax = $5,000 ($20,000 * 25%). The tenant’s share of $5,000 is compared to the total paid in of $4,800 ($400 * 12 months). A charge is created for $200 for the difference.
At the same time the future monthly estimated payments could be escalated and an administration fee could be calculated and charged.
Processing Recoveries
Tasks – Recoveries and Escalations – Recoverable
Expenses
Like other Property Management functions, Recoverable
Expenses offers the option for either a Trial Run or
Create Entries.
Processing Recoveries
It is recommended that Trial Run is used, for as many
times as needed, until you are satisfied with the results.
Processing Recoveries
Enter the transaction, accounting and charge dates:
In the Trial Run, these dates simply verify data.
Processing Recoveries
During the Create Entries run, these dates will be used for the
charges (and credits) created.
The ‘post entries’ check box is only available during a ‘Create
Entries’ run.
This process will pull expenses for the recovery period
(usually a year) for each account referenced
Settings on the property and lease are used to calculate the
lease’s portion of the expenses, comparing that portion to
what has been paid by the tenant, escalating future charges and
adding an administration fee
This process can take time!
Processing Recoveries
The journal will print out with two sections: Activity Amounts
Pulled from GL and a calculation detail for each Lease/Charge
Type.
Processing Recoveries
The amounts pulled from the GL should be reviewed carefully to make sure all expenses are accurate.
If an expense amount needs to be adjusted, there are two options: change the invoice in AP and allow the reversal entries to post in the GL or move the expense through a GL journal entry.
In either case it may be necessary to reopen a prior accounting period.
Once the changes are made, process another trial run to verify the expenses are what they should be.
After the expenses are pulled from the GL, the recoverable calculations are detailed for each lease.
If the calculations to not come out as expected, the Lease Recovery Controls can be adjusted and the trial run can be repeated as many times as needed to get the desired results.
Processing Recoveries-Journal Example
Processing Recoveries-Journal Example
Processing Recoveries
The lease detail portion of the journal displays how the
tenant’s share for each month of each expense was calculated.
The value starts with the monthly amount the expense item
for the property as a whole and applies the base year, stop and
cap.
Then the tenant’s share is calculated and any concessions or
occupancy adjustments are made.
The amounts are added up for each expense category for the
entire recovery period to get the tenant’s total share.
Processing Recoveries- Footer of lease detail
Processing Recoveries- Footer of lease detail
Reconciliation information: the tenant’s share is then
compared to the previously billed amount and a charge (or
credit) is created for the tenant.
Escalation information: future estimated charges are escalated
and retroactive charges are created.
Administration fee information: administration fee is calculated
and charged.
Questions?
PM Settings
PM – File – Company Folder Settings – PM Settings
PM Settings
The Task Options tab has a Recoverable Expenses Option for ‘Review and adjust expenses before reconciliation and escalation’.
If this is unmarked, there will be a single task, Recoverable Expenses.
If this option is marked, two tasks will appear: Pull Expenses from GL, Reconcile and Escalate.
By marking the option, the process goes from one step to two.
The benefit of the additional step is that tenant expenses can be manually overridden on the lease recovery controls if needed prior to reconciling and escalating.
This is not usual, so it is recommended to leave this option off.
Questions?
Property Recovery Controls Setup
Recovery controls for each charge type being recovered can
be found on the Charge Controls tab of the Property (PM –
Setup – Property).
Property Recovery Controls Setup
Settings on the Property Recovery Controls will act as
defaults to the Lease Recovery Controls, which then can be
adjusted as needed at the lease.
Property Recovery Controls Setup
Expense Categories are detailed at the property level and act
as the map for the expenses to be pulled from the General
Ledger:
Property Recovery Controls Setup Expense Categories – enter a description up to 15 characters;
categories will sort alphabetically
Fixed / Variable – used primarily for determining if an Occupancy Clause applies.
Subject to Admin Fee – mark if subject to the fee
Unit Square Footage Type – used to calculate prorate share (numerator)
Property Square Footage Type – used to calculate prorate share (denominator)
From Account – starting account of account range that encompasses expense
To Account – ending account of account range that encompasses expense
Stop Amount/Cap Amount– both are optional and may be used by the calculation methods during reconciliation and escalation
Property Recovery Controls Setup
Reconciliation Controls (only available if Reconcile Charges is
marked on Recovery Controls tab)
Property Recovery Controls Setup
Reconciliation basis calc method – RE/Recov Basis unless a
custom calculation method is needed (this is rare)
Reconciliation calc method – RE/Reconcile
Adjustment charge type – choose a charge type to be used for
the adjustment
If tenants are charged estimated amounts during the recovery
period, mark ‘Subtract charges made during recovery period’
If an invoice is to be sent to the tenant, mark ‘Print
reconciliation charge on invoice’
Property Recovery Controls Setup
Escalation Controls (only available if Escalate Charges is
marked on Recovery Controls tab)
Property Recovery Controls Setup
Escalation basis – choose Actual Expenses or Budgeted Expenses
Escalation basis calc method – RE/Escal Basis unless a custom calculation method is needed (this is rare)
Escalation calc method – RE/Escalation
Escalation budget type – if Budgeted Expenses are used for the Escalation basis, choose a budget type to be used
Percent increase
Retroactive option – choices include No retroactive charge
Create a charge
Distribute through calendar year end
Distribute through recovery period
Distribute through fiscal year
Retroactive charge type
Property Recovery Controls Setup
Administration Fee (only available if Charge Administration Fee
is marked on Recovery Controls tab)
Property Recovery Controls Setup
Admin fee basis – choose Actual Expenses or Budgeted
Expenses
Admin fee basis calc method – RE/AdmFee Basis unless a
custom calculation method is needed (this is rare)
Escalation calc method – RE/AdmFee Chg
Escalation budget type – if Budgeted Expenses are used for the
Admin Fee basis, choose a budget type to be used
Admin fee percent
Charge type
Property Recovery Controls Setup
Calculation controls determine the information used in the
calculation of recoverable expenses, such as base year, amount,
stop and cap.
Property Recovery Controls Setup
Use last tab to enter occupancy clause controls, such as the
occupancy percent, the square footage basis, and whether the
occupancy clause applies to fixed or variable expenses.
Questions?
Lease Recovery Controls
Setup on Property fills down to the Lease and then each lease
can be adjusted as needed.
Lease Recovery Controls
Recovery from/to dates need to be setup initially on the lease
and then are maintained by the system.
The dates roll each time the recovery is processed with the
‘Create Entries’ option.
Dates can be accessed using the Audit Setup Activity option if
needed.
Lease Recovery Controls
Charges this period also need to be initially entered and then the system will maintain the balance. Can also be adjusted using Audit Setup Activity.
Lease Recovery Controls
Expense category details fill in from property setup and can be
adjusted as needed. A manual percent can be entered in lieu of
calculating the prorate share by square footage.
Lease Recovery Controls
Remaining tabs also fill in from Property setup:
Lease Recovery Controls
Remaining tabs also fill in from Property setup:
Lease Recovery Controls
Remaining tabs also fill in from Property setup:
Questions?
Summary
In this session we:
Reviewed the Recovery Process
Reviewed PM Settings for Recoveries
Reviewed Property Recovery Controls Setup
Reviewed Lease Recovery Controls
More Information
Please refer to the material from this session in your
Conference CD
Contact your consultant for one on one training
Other sessions from this conference you might review:
Service Management for Property Managers
Archiving Leases
Sage Knowledgebase: www.sagecre.com; click on Sage
customer website to login
Trade Associations often offer eductaional seminars:
BOMA (www.boma.org), IREM (www.irem.org), NAIOP
(www.naiop.org), IFMA (www.ifma.org), etc…
Your Aktion Contacts
Sales:
Thane Belen
tbelen@aktion.com
517-290-7908
Dan Pavlica
dpavlica@aktion.com
740-815-8349
Consultants:
Amy Deitz
adeitz@aktion.com
248-880-8664
Chevon Rogers
crogers@aktion.com
734-536-7150
Thank you for attending.
Presented by Amy Deitz
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