Expense Setup Page

An Expense Setup is the parent record for a recurring expense, enabling you to:

Enter a daily rent rate for rent payments.
Calculate CPI-Indexed rent.
Change payment due dates and some coverage dates with Custom Payment Coverage.
Add Expense Setup records for all recurring expenses.

Navigate to Contract > Payment Info > Recurring Expenses using the links in the Navigation Pane on the leftmost side of the page. Select the Expense Setup page in the upper-right corner.

Add an Expense Setup

Add the parent record for a recurring expense, enabling you to create:

Vendor Allocations: Specify who receives payment and the percentage allocated to each vendor.
Expense Schedules and Escalations: Determine the amount and frequency of payment. Apply taxes to the expense, change your proration method, opt to pay in arrears, or use custom payment coverage.
Expense Allocations: Specify the departments or organizations associated with the expense.
Rent Payments: Generate rent payments once your expense setups and expense schedules are created and approved in the system.
Retroactive Payments: Generate retroactive payments including those for CPI Adjustment and daily rent.

Enter information that needs to flow from the recurring expense to the transaction as a Description and/or Remit Message

Click Add Item in the Actions menu on the rightmost side of the page.
Complete the form:
- Expense Group: Select a group or create a new group or category and select it.
  
  Groups are the first level of organization. These are the parents of types, and grandparents of categories. Use groups, types, and categories to simplify reporting.
- Expense Type: Select an expense type or add a new Expense Type and select it.
- Expense Category: Select an expense category or create a new group or category and select it.
  
  Categories are the third level of organization. These are the children of types, and grandchildren of Groups. Use groups, types, and categories to simplify reporting.
  
  Recurring expenses with a category of Rent are included in calculations such as Natural Breakpoint, Aggregate Base Rent, Annual Base Rent, Expense Forecast, Report Fields – Financials (Calendar & Fiscal). We recommend using four expense categories.
  
  The Rent category affects system functionality, do not delete it.
- Frequency: Payment frequency. If you select a frequency other than Monthly, the Monthly Amount is replaced with a Period Amount field. Select payments to follow English, Irish, and Scottish quarters to match your fiscal calendar.
- Description
- Currency: Specify the currency of the payment.
- Rentable Area: Amount of space in the selected Area Unit that is rentable. Do not enter 0. If you do not use rentable area, leave it blank.
  
  This populates with the rentable area you entered in Step One: Contract Summary Setup Page.
- Area Unit: Units to measure the Rentable Area in. This populates with the values you entered in Step One: Contract Summary Setup Page.
- Pro Rata Share: Proportionate share of the expense. For example, many contracts for tenants of indoor malls stipulate that each tenant pay a pre-determined percentage of common area maintenance (CAM) expenses.
- GL, Internal Ref #: General ledger to charge this recurring expense to.
  
  This is only for information. You must configure your account information when you create your expense types and allocations.
- Secondary Schedule Allocations:
  - Enter a Secondary Schedule Allocation percentage to allocate a percentage of the expense to a secondary schedule.
  - Enter the Secondary Rent Schedule Allocation Amount to allocate an amount of the expense to a secondary schedule.
- Remit Message: Enter the message you want to appear on the memo line of a check.
- CPI Index: Select the CPI Index associated with this expense setup. To view details about a CPI index, choose an index from the field and click View .
  
  If this not a CPI-indexed expense, do not select a CPI Index. If you are using Daily Rent, this field does not display.
  
  If you have added a contract-level CPI index, this CPI index is labeled Contract Specific in the CPI Index field. Review our Frequently Asked Questions about CPI Indexes.
- CPI Notes: Enter notes about your CPI Index. If you use Daily Rent, this field does not display.
- Daily Rent: When included in the layout, enables you to add expense schedules with a Daily Rent Rate. When selected CPI Indexes are not available.
- Escalation Rules: Rules that determine the increase for a retroactive payment.
  - Amount Increase Cap / Percent Increase Cap: Enter an amount or a percentage cap that limits the increase for a retroactive payment. This caps both CPI and non-CPI escalations.
  - CPI Multiplier: CPI Consumer Price Index index multiplier. Default value is 1. Enter a number greater than 0.
    
    The adjusted CPI rate is calculated by multiplying CPI Multiplier by the ratio of the CPI index at the time of the retroactive payment to the CPI index at the time the retroactive expense was set up. For example:
    - If the CPI index rate is 2.34% and the multiplier is 0.5, the applied CPI rate is 1.17%.
    - If the multiplier is 2, the applied CPI rate is 4.68%.
- Vendor Allocations
  - Payment Method: Select the payment method or create a new group or category.
  - Payment Due Day: Enter the numeric value of the due day. For example, enter 15 if payment is due on the 15th of every month.
    
    If your payment is due on the last day of the month, enter 0.
- Expense Schedule / Escalations
  - Proration Method: Proration is disabled in the first period of a re-measured Straight Line schedule because it changes the total obligation. If you use Daily Rent, this field does not appear. When calculating a partial period, the system uses different amounts depending on the method you select:
    - Annual (actual): Annual amount divided by the actual number of days in the year. This is then multiplied by the number of days in the period.
      
      Normal years use 365 days and leap years use 366 days.
    - Annual 360: Annual amount divided by 360 days. This is then multiplied by the number of days in the period.
    - Annual 365: Annual amount divided by 365 days. This is then multiplied by the number of days in the period.
      
      The system uses 365 as the denominator even if it is a leap year.
    - Monthly (actual): Period amount such as the monthly or quarterly expense amount divided by the number of days in that period. This is then multiplied by the number of days in the period.
  - Apply Tax #1? to Apply Tax #4?: Apply the selected taxes set at the location level.
  - Taxes Included In Amount?: Indicates that taxes are included in the total expense amount.
  - Pay in Arrears?: Mark your payments paid at the end of the month. Interest expense in a schedule accrues before the payment is applied. A schedule that is paid at the beginning of the month should not include an interest expense in its last month.
  - Custom Payment Coverage: Change payment due dates and some coverage dates for your expense setup records.
- Payment Flags / Indicators
  - A / R Flag: Select if the expense setup record is for an accounts receivable item, also known as an income item.
    
    As part of their lease, lessees (typically sub-lessees) may sometimes receive a discount if payments are made within a certain period before the payment due date. If you have a clause like this in your lease, you may want to leverage the Early Payment Discount Option for A/R Leases.
  - Reconcilable?: Select if the expense is reconcilable.
  - Ready For Payment: Select if this transaction is ready to be paid.
  - Hold Flag: Informational only. Select if this payment should be held.
  - Include in Planning and Forecasting: Select to make this expense available in the planning and forecasting feature in the accruals area.
    
    Review the Plan / Forecast page.
  - Plan / Forecast Group: If you selected Include in Planning and Forecasting, select the plan / forecast group to associate this expense setup with or create a new group or category.
  - Planning and Forecasting Notes
- Comments, Additional Information
  - Covenant: To associate this expense setup with a covenant, select the covenant.
  - Section: Section of the covenant that refers to this expense setup.
  - Amendment: Select the amendment associated with this recurring expense. To view the details of an amendment, click View next to Amendment.
Click Save Changes in the Actions menu on the rightmost side of the page.

The page refreshes. Your new recurring expense appears in the Contract Expense Setup List.

Edit an Expense Setup

Select the expense setup record from Expense Setup List at the top of the page.
Make your changes.
Click Save Changes in the Actions menu on the rightmost side of the page.

Delete an Expense Setup

Select the expense setup to delete from the Expense Setup List at the top of the page.
Click Delete Item in the Actions menu on the rightmost side of the page.
Click Yes in the confirmation dialog.

The system removes the expense setup from the Contract Expense Setup List.

Copy Expense Setup

Depending on the permissions your Administrator has assigned your member, you may copy expense setup records to address rental concessions and deferment scenarios in rent emergency situations. This follows FASB guidance from mid-April 2020, which states that lease concessions related to COVID-19 can be treated as variable rent expense if required. Expense setup records may also be copied in non-emergency situations.

Optionally, copy an expense setup record with its vendor allocations, expense schedules, and expense allocations.

Select the expense setup you want to copy from the Expense Setup List at the top of the page.
Click Copy Expense in the in the Actions menu on the rightmost side of the page.
In the Recurring Expense Copy window that opens, select the check boxes of the types of records you want to copy:
- Vendor Allocation: Only copies vendor allocation records where the vendor is active.
- Expense Schedule
- Expense Allocation
Click OK.

The Expense Type on the new Expense Setup record is blank.
Locate the new record and select it.
Enter the Expense Type and click Save Changes.