The time of year when outgoings estimates and reconciliations are due can be time consuming and exhausting for everyone involved.
You can centralise the outgoings process which will enable both estimate and reconciliation calculations to be completed by Yardi, not calculated externally and then manually entered in.
You will need to go through a process of gathering business requirements and understanding how outgoings will flow together. The initial setup can be time consuming and require multiple areas of your business involved and to sign off, but the long-term benefit is well worth it.
The key configurations for outgoings are Recovery Groups and Expense Pools, which are setup on a system, property, and lease levels.
Recovery Groups are the first and high level (bucket) of the configuration process, with charge codes for estimates and recoveries linked to the Recovery Group property level setup. Think about how you might need your outgoings grouped together at the highest level, as well as property/lease/accounting requirements to help guide the configuration.
Some idea/examples of basic Groups:
1. General/Opex/Outgoings
2. Municipal Rates/Fire Levy/Statutory
3. Usage - Water/Other
Expense Pools are the next level down from Recovery Groups. You can attach multiple Expense Pools to a Recovery Group and account/GL codes are linked at this level as well as Numerator and Denominator columns (based on area labels) and Denominator Type (Total area vs Leased area).
TIP: Don’t set up too many, as this may cause outgoings related letters to be too busy or confusing.
Some idea/examples of basic Pools and how they would live under Groups:
As mentioned above, there are a couple of extra items to take into consideration for your outgoings setup – Area Labels and Charge Codes.
Area Labels
The Area Labels link directly to the Denominator and Numerator setup options in both the property level setup, and lease level setup. For most scenarios, this would be you default or primary area label – GLA or NLA.
You may have some unique scenarios where a particular property or tenant requires the calculation on an area or number other than GLA or NLA. This is where you would setup a new area label for this purpose and then set your Denominator or Numerator for that property or lease to this newly configured area label.
Charge Codes
The charge codes for estimates and reconciliations link to in the Recovery Group set at a property level, so you need to decide if you have existing charge codes that are fit for purpose or if new charge codes need to be setup for this.
The outgoings configuration process is complete, now what?
Each new property that is setup in Yardi will need to ensure that both Expense Pools and Recovery Profiles are setup as required through Property Commercial Configuration. If a lease is setup on a property that have these configured already, setting up the Recoveries on a lease these will pull through as a default, but can be updated or changed to meet the outgoings requirements set out in the lease.
The process of both estimates and reconciliations is also now much more efficient. Simply run the Recovery Estimate or Recovery Reconciliation functions in Yardi, send for any internal review that may be required, and once approved run the functions again and either Update Lease (Recovery Estimates) or Create Batch (Recovery Reconciliations). Yardi will create new charge schedule line items for estimates and charges/credits for tenants for reconciliations.
An additional efficiency to consider is that you can also utilise the correspondence to generate and issue letters to the tenants. You will just need to design and configure a word template using the relevant and available merge field tokens, setup the relevant correspondence configuration in Yardi and then you can use the Charge Schedule Extract and Reconciliation Letter options in the Correspondence menus to distribute to the tenants.
Lastly, you can consider setting up a dedicated Account Tree for recoveries related GL codes so analysis and tracking (like comparing budget to actuals) can be simpler.
This has been a brief overview on items and considerations to get you started with your recovery/outgoings/CAM setup and processes. There are a lot more options and configurations you can setup that could work for you with particular property or lease requirements including:
IMPORTANT NOTE: More complicated outgoings calculations, such as those by major tenancies, may not be achievable in Yardi.
There may be some sweat and tears along the way but the efficiencies you will gain in the budgeting, estimate and recovery times of the year will have your accountants and lease administration team members thanking you!
So that’s it. Go, be bold and start your recoveries setup and configuration journey today to start your new year right!
