Real Estate Portfolio Management / Cost Chargeback & Invoicing

Defining Lease Chargeback Agreements

Lease Chargeback Agreements document special agreements that may be written into a lease concerning how costs are to be charged back to that lease. On a per-lease basis, you can override how to handle the costs assigned to a particular cost category. When the system generates chargeback, it adjusts chargeback using the lease chargeback agreements you define. If there is no chargeback agreement to define how costs for a particular cost category are to be applied, the full prorated amount is charged.

From the Define Lease Chargeback task you can view existing chargeback agreements, edit chargeback agreements, and add new agreements.

Example

For example, suppose that a $275.00 cost assigned to a building HQ (which includes area covered by lease 001), has a cost category which calls for prorating the cost to leases, and that there is a Chargeback Cost Agreement record for lease 001 and this cost category. When the chargeback routine encounters this cost, it follows the standard procedure of calculating the proration of the $275.00 cost according to the specified cost category; suppose this cost is prorated so that lease 001 pays $168.00 of the total $275.00 cost.

The chargeback routine then checks the Chargeback Cost Agreements table to see if there are any special circumstances for working with the prorated cost. Suppose that the agreement calls for charging tenants for 50% of this type of cost; in this case the chargeback routine assigns only 50% of the prorated cost ($168.00) so that lease 001 is charged $84.00.

How to Define Lease Chargeback Agreements

To define lease chargeback agreements:

1. Select Business Process Owner / Define Lease Chargeback Agreements, or choose the Cost Profile button on the Recurring Costs tab of the Lease Portfolio Console.

   The Define Lease Chargeback Agreement section shows a list of your leases.

2. Select a lease from the list.
   

   The Chargeback Cost Agreements section shows a list of cost chargeback agreements for the selected lease.

3. Select a Cost Category to see details for the agreement entered for it.
4. To add a new agreement, click Add New in the Chargeback Cost Agreements section.
5. Complete the following required fields:
   
   Cost Category -- Enter the category of cost to which this agreement applies. This field and the Lease Code form the record's primary key. The Lease Code for the selected lease is automatically added.
   
   Charge Type -- Dictates how the particular charge is to be billed. Choose one of the following values. If you choose the Percentage value, also specify a value in the Percentage Factor value. For the Fixed value, also specify a value in the Amount - Fixed field.
   
   A. No Charge: Costs with this charge type are not billed. This value overrides the prorated value for the cost.
   
   B. Direct Charge: 100% of the prorated cost is applied.
   
   C1. Percentage: Use the Percentage Factor field (described below) to specify how much of the prorated cost should be applied.
   
   C2. Percentage Factor: If the Charge Type value is Percentage, complete the Percentage Factor field with the factor by which the charged back amount should be multiplied to determine the actual amount to bill. For example, some leases specify that certain prorated costs will be multiplied by the CPI. Complete this field with a decimal number, such as .5 if the tenant must pay 50% of a prorated charge.
   
   D1.Fixed: Regardless of the prorated amount that the chargeback routine generates, you pay a fixed amount of the cost. Use the Amount-Fixed field (described below) to specify this amount.
   
   D2.Amount - Fixed:If the Charge Type value is Fixed, complete the Amount-Fixed field with the amount to bill per incident. For instance, if you negotiate that the owner will charge $100.00 each time security must respond to an alarm, enter $100.00.
6. You may also want to complete the following optional field:
   
   Amount - Lower Cap -- Use this field to specify an amount below which tenants will not be billed for costs. For example, if your lease specifies that the owner will not charge a tenant for maintenance instances less than $100.00, enter $100.00 in this field. Caps take precedence over the table's other options. Therefore, if you enter a cap of $100 and specify that prorated costs are to be billed based on a Percentage Factor, the system ignores prorated costs below $100.00 and applies the Percentage Factor value to prorated costs that are $100.00 and over.