Best Practices for CAM Reconciliations - aktion 2 Property Mgmt Best Practices... · Best Practices

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Transcript of Best Practices for CAM Reconciliations - aktion 2 Property Mgmt Best Practices... · Best Practices

  • 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 tenants share = 25% (10,000 SF/40,000 SF) The share of the property tax = $5,000 ($20,000 * 25%). The tenants 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

    leases 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

    tenants 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 tenants 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 tenants total share.

  • Processing Recoveries- Footer of lease detail

  • Processing Recoveries- Footer of lease detail

    Reconciliation information: the tenants 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 w