In many leases, tenants are responsible for both rent and a share of the property expenses, which is commonly known as a service charge.
Automating the service charge process with Yardi Breeze Premier is one easy way property managers can save themselves a significant amount of time.
What’s included in service charges?
Service charges can include the cost of maintaining both internal and external spaces. Internal common areas may include lifts, public bathrooms, hallways, lobbies and more. Outdoor common areas often include car parks, landscaped spaces and signage.
Clearly stating to your tenants what is covered within the service charge can help avoid confusion or conflict with your tenants later. Service charges are usually allocated to tenants on a pro rata basis, meaning the more square footage a tenant rents, the greater their contribution to service charge expenses.
How does it work?
Tenants pay a periodic estimated charge for the property expenses based on a budget. The actual expenses are tracked in recoverable expense accounts throughout the year. Then, at the end of the year, a reconciliation is done:
- The tenant’s share of the actual expenses is calculated
- The tenant’s contribution is compared to the estimated periodic charges raised throughout the year
- If the expenses are greater, an additional balancing charge is created for the tenant. If the estimates are greater, the tenant gets a balancing credit
Saving time with service charge reconciliation in Yardi Breeze Premier
Of course, manually tabulating a year’s worth of expenses and comparing it to estimates for each tenant can be a time-consuming process, especially if you have many shared spaces or multiple properties. Fortunately, Yardi Breeze Premier automates service charge reconciliations for you.
In Yardi Breeze Premier, service charge recs are as easy as 1-2-3:
- Create a property and set up its tenants accordingly
- When you input payables for service charge, code them to accounts that are designated as ‘recoverable accounts’
- Run a reconciliation report at the end of the year to create the balancing charges/credits to the tenants
When you’re finished, Yardi Breeze Premier can automatically generate a reconciliation letter for each tenant. The reconciliation letter will show the balance due or owed and the reconciliation calculation detail for the year. You can even email the statement to the tenant.
And voila! Yardi Breeze Premier has helped you save a ton of time, trouble and paper!
What else can Yardi Breeze Premier do?
Yardi Breeze Premier is designed to streamline your property management operations, from service charge reconciliations to owner portals. If you have specific questions or would like to have a quick demo use the chat window below to speak to one of the team (not a bot!).