Best Practices for CAM Reconciliations - aktion …content.aktion.com/file/CRE/Session 2 Property...

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.


It is recommended that Trial Run is used, for as many

times as needed, until you are satisfied with the results.


Enter the transaction, accounting and charge dates:

In the Trial Run, these dates simply verify data.


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!


The journal will print out with two sections: Activity Amounts

Pulled from GL and a calculation detail for each Lease/Charge

Type.


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


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).


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.


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


Reconciliation Controls (only available if Reconcile Charges is

marked on Recovery Controls tab)


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’


Escalation Controls (only available if Escalate Charges is

marked on Recovery Controls tab)


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


Administration Fee (only available if Charge Administration Fee

is marked on Recovery Controls tab)


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


Calculation controls determine the information used in the

calculation of recoverable expenses, such as base year, amount,

stop and cap.


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.


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.


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.


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.


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…

http://www.sagecre.com/

http://www.boma.org/

http://www.irem.org/

http://www.naiop.org/

http://www.ifma.org/

Your Aktion Contacts

Sales:

Thane Belen

[email protected]

517-290-7908

Dan Pavlica

[email protected]

740-815-8349

Consultants:

Amy Deitz

[email protected]

248-880-8664

Chevon Rogers

[email protected]

734-536-7150

mailto:[email protected]




Thank you for attending.

Presented by Amy Deitz

Best Practices for CAM Reconciliations - aktion …content.aktion.com/file/CRE/Session 2 Property...

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