B — November 22 - December 5, 2013 — Owners, Developers & Managers — Mid Atlantic Real Estate Journal
www.marejournal.com
C onstruction M anagement
By Anupam Goradia, CPA, CISA, CITP, WithumSmith & Brown, PC Getting more out of your commercial leasing software
M
odern commercial real estate lease accounting soft-
billing features are widely used by most landlords, most software typically has other features that are either read- ily available or require mini- mum customization. Using these features has the poten- tial of eliminating manually kept spreadsheets, reduces the risk of misinformation and could free up hours for resolution of issues rather than identification of issues. Listed below are some fea- tures that may be of use to implement best practices: 1. Managing Renewals: A leasing system should be able to provide management
with alerts when a tenant’s renewal is due. Generating a weekly report of all upcom- ing renewals in the next 3-6 months and discussing the status of such renewals a good way of keeping tabs on renewal business in a timely manner. 2. Monitoring Vacancy: Similarly, generating a report of all vacant units and their aging, i.e. how long they have been vacant, is another efficiency measure worth implementing. 3. Automating Rent Step-ups: Set up rent step-ups in the
system itself. Thus, there will be no need to manually maintain a separate list of tenants whose rents are due for step-up. The system will automatically use the increased rent from the rent schedule set up at inception of a new lease. If the rent step-ups are not fixed at the time of agreement, and if they are dependent on contingencies such as CPI or tenant sales, the system will usually have a trigger on specified dates that flags that a rent step-up is due. If that feature is not avail- able, alternatively, the rent
for the month for which the step-up is due could be set at a dollar, which would at- tract attention at the time of the monthly billing run. The revised rent for the ten- ant could then be set up for automated billing. 4. Automat ing Late Fees: The process related to the calculation of late fees and providing late fee notifica- tions can be automated. The system may be capable of calculating late charges both as a fixed sum and/or as a percentage of an unpaid balance and can generate late fee letters at the click of a button. The process may just require setting up the required formula for late fees at inception of the lease set-up in the system. Also, printing letters may require a one-time set-up of the template. Usually when the system calculates late fees, it also updates the bill- ing system to reflect those amounts. If a tenant is not to be charged late fees, a system may allow them to be waived. 5. Billing for Tenant Extras: Some leasing systems have property management mod- ules where tenant requests for additional billable work are recorded and tracked for completion. Some landlords prefer to use separate sys- tems for such work. Some- times, the amounts spent on additional work get en- tered when the invoices are paid in the accounts payable module. It may be possible to import such amounts into the billing system and then modify them as necessary for any mark-ups or dis- counts. Also, a report can be generated from the system for all tenant related work performed in a month and can be reviewed for billing. These steps would ensure that billing for tenant extras is complete and timely. 6. Annual Reconcilia- tions for Common Area Maintenance Charges, Taxes, Insurance, Etc.: Annual reconciliations continue to remain one of the most complicated and time consuming tasks for an ac- countant in the commercial leasing business. While a complete automation of the continued on page 15B
war e pr o - vides ample features to make day- to-day man- agement of the leasing b u s i n e s s more man- a g e a b l e .
Anupam Goradia
Software enables “manage- ment by exception” whereby management can focus on issues that require atten- tion and follow up. While the month-to-month rent
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