Service charge with budgets and year-end reconciliation
Share a building's running costs among its tenants with cost pools, a yearly budget and each unit's share by area. Bill on account each month or quarter. Reconcile the year from your accounts, with a cap and a statement per lease.
PLANSScale only
Why it matters
In an office block or a mall, the cost of security, cleaning, lifts and common electricity is shared by the tenants. Most landlords bill a fixed figure on account. At year end they spend weeks in a spreadsheet, working out each tenant's real share by area and days. Tenants dispute the balance because they cannot see how it was reached. In SmartMy Lease the budget bills each tenant their share on account by itself. The actual costs come straight from the accounts each pool posts to. Reconcile the Year gives each lease's share, days, cap and balance in one step, and bills or credits it.
The problem it solves
- Year-end service charge takes months, built in a spreadsheet from the ledger.
- A tenant who moved in mid-year is charged for the whole year, or not at all.
- Increases above what the lease allows are billed, and the tenant refuses to pay.
- Empty units' share of the costs is quietly spread over the other tenants.
How it works
- Set up the cost pools of a property once in Lease > Billing > Rent > Service Charges > Cost Pools. Examples: Security, Lifts, a sinking fund. Each pool names the analytic account its costs land in.
- On each unit, set its share. It goes by area times a weighting (1 to start with), a Fixed Share (%), or No Service Charge.
- Make the year's budget in Service Charges > Budgets. Give the dates, how often to bill on account, the cap, last year's budget and the budget per pool. Press Start.
- Each day a job bills every let unit's share of the budget for the period, as a charge on its lease.
- After the year ends, press Reconcile the Year. The actual costs of each pool are read from its analytic account.
- Each lease's share counts its days in the year and the cap. The balance is billed or credited on the lease.
- The Year-end Statements tab shows each lease's share, days, actual share, capped share, the landlord's part, paid on account and balance.
Everything it does
Cost pools
- Name, property, kind: Running Cost, Sinking Fund or Marketing Levy
- Costs Land In: the analytic account vendor bills are posted to
- Invoice As: the product used on the charge
- Common meters can add their confirmed use to a pool's costs (with utilities)
Unit shares
- Fixed Share (%) first; the rest is shared by area times the weighting
- No Service Charge leaves a unit out (a landlord's store room, for example)
- Common areas never take a share
Budget
- Billed on Account: Monthly, Quarterly (to start with) or Yearly
- Cap on Increase (%): a tenant's share may rise at most this much over last year's actual; 0 means no cap
- Last Year: the budget whose actual costs the cap compares with
- Draft, Running, Reconciled, Cancelled; only a draft can be cancelled
Billing on account
- A daily job bills each period as it starts, up to the budget's end
- Each let unit's lease is charged its share of the budget for the period
- A unit with no tenant at the start of the period is not billed; its share stays with you
Year-end reconciliation
- Only after the budget's end date
- Running cost pools: actual costs from the analytic account in the budget's dates
- Sinking fund and marketing levy pools: the budget is taken as the actual
- Each lease's share counts only the days it held the unit
- What is over the cap stays with the landlord and is shown as Borne by the Landlord
- The balance becomes a charge on the lease, positive to bill, negative to credit
Who uses it
Lease ManagerSets pools and shares, makes and starts the budget, and reconciles the year.
AccountsPosts vendor bills to the pools' analytic accounts.
Asset managerReads the statements and the landlord's part over the cap.
Where you use it
- Web: Lease > Billing > Rent > Service Charges > Budgets and Cost Pools, for Lease Managers
- Web: each unit's service charge share
- Tenants see the charges on their bills on their web page and in the SmartMy Lease app
- Not sent as a statement: the year-end statement is a tab on the budget; there is no printed statement for tenants yet
What you control
Settings
- Billed on Account: Quarterly to start with
- Cap on Increase (%): 0 (no cap) to start with
- Service Charge Weighting per unit: 1 to start with
Questions
Where do the actual costs come from?
From your accounts. Each running cost pool names an analytic account, and the year-end reads every cost posted to it in the budget's dates.What about a tenant who moved in halfway through the year?
Their share is counted only for the days they held the unit. On account, they are billed from the first period that starts after they move in, and the year-end catches up the rest.Who pays the share of an empty unit?
You do. An empty unit is not billed on account, and its share is not spread over the other tenants.How does the cap work?
Set a cap and last year's budget. Each tenant's share can then rise at most the cap over last year's actual share. What is over the cap is shown as borne by the landlord.Can tenants see a statement?
They see the on-account and year-end charges on their bills. The full statement per lease is on the budget's Year-end Statements tab; a printed statement for tenants is not built yet.Which plan has it?
Scale, for offices, malls and mixed buildings.Related features
COMMERCIALTurnover rent with breakpoints and a yearly true-upCharge shops a share of their sales above a breakpoint, with higher shares above set sales levels. Tenants send monthly sales from their web page or app, or SmartMy POS sends them. You check and bill each month, then true up the year.OPERATIONSMeters, sub-meters and readings with unusual use flaggedKeep every meter and sub-meter of a building, with readings from staff, from tenants and from move-in and move-out checks. Each reading is checked by staff, and a sudden jump in use is flagged to the property manager.REPORTS AND AINOI and yield per propertyWork out net operating income for each property over any dates: rent and charges billed, less repair bills. See the yield on the value you enter.PORTFOLIOArea in square feet or metres, and rent by areaEach Entity measures in square feet or square metres. Units carry their areas, and a lease can be priced per square foot or metre. Rent on a lease with several units is shared by area.ACCOUNTINGFull accounting with GST returnsRent bills, deposits, cheques, owner money, vendor bills and the leases you take all land in the books of the same system. Scale adds the full accounting screens and reports, from ledgers to cash flow, and GSTR-1 and GSTR-3B for Indian Entities.
See your buildings on it.
Tell us how many properties and units you have, whether you let your own or manage for owners, and how rent is paid today. We will set up your portfolio with you on SmartMy Lease.