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Retroactive Payments

Use retroactive payments to make changes to the expense schedule retroactively and create catch-up payments. Review our Example Retroactive Payments Scenario.

Use Estimated Accruals to set aside funds for expected retroactive payments.

Add a retroactive payment

Add a retroactive payments to change the expense schedule retroactively and create catch-up payments.

  1. In Contract Expense Setup List, select the expense setup record to create a retro payment for.

  2. Click Retro Payment in the Actions menu on the rightmost side of the page.

  3. Complete the Retro-Payment Setup dialog:

    • Retro Date: Enter the date that the change is to take place from.

      The Retro Date must occur before the New Effective Date. A retroactive payment adjusts expenses for a past period after that period has ended. Because the adjustment applies to dates before the new expense schedule takes effect, a catch-up payment is required to cover the gap between the Retro Date and the start of the new schedule.

    • New Effective Date: Enter the begin date for the new schedule.

    • Stop Payment on New Effective Date?: Select to stop all payments on the listed expense.

    • New End Date

    • Posting Date

    • Due Date

    • Increase Cap: Populates depending on the Expense Setup record. Displays a percentage if you entered Percent Increase Cap and an amount if you entered Amount Increase Cap. This limits the New Payment Amount based on the cap.

    • New Amount / Percent Increase: Select whether this revised payment will be charged as an amount or as a percentage.

    • New Payment Amount: New recurring payment amount. Do not enter your catch-up payment amount. The system calculates your catch-up payment automatically. This is capped based on the Increase Cap if one is set.

    • Send Email?: Send yourself a confirmation email once the retro payment has been created.

    • Use posting date for vendor allocation?: Select to allocate your catch-up payments according to the current vendor allocations. Clear, if the catch-up payment needs to be split between the current and previous vendor allocations.

    • Mark Retro Payments as One-Time Payments?: Mark this retro payment as a one-time payment.

    • Create Retro Payment as One Lump Sum?: Create the retro payment as a lump sum payment.

      If cleared, the catch-up amount is distributed in monthly payments evenly between the retro date and the new effective date.

    • Update All Future Schedules?: Available when Percent is selected in New Amount / Percent Increase and CPI-index Adjustment is not selected. Select to update all schedules after the New End Date with the new escalation amount in New Payment Amount.

    • Payment Description

    • Remit Message

    Click Calendar A small button with a picture of a calendar on it. to select dates.

  4. Preview a summary of the changes to be made once the retroactive payment is created:

    1. Click Preview Payment.

    2. Click the link above the OK.

    3. Click Cancel to close the window.

    4. Click OK to close the first Preview window.

  5. Click Create Payment.

    A Success dialog box opens, confirming that the retroactive payments were created.

CPI Adjustment Retro Payment

Use retroactive payments to make changes to the expense schedules retroactively and create catch-up payments. We recommend this for making a manual adjustment to a schedule for CPI (Consumer Price Index) changes because index data are usually populated retroactively, and landlords usually notify lessees of a change in rent after the effective date of the change.

You can make CPI Adjustments in bulk.

Closed CPI-Indexed Rent Calculation

When you make a CPI adjustment, these values are pulled from the associated CPI table:

  • Base CPI index: From the month and year of the expense setup if no ASC 842 re-measurement was done; or from the month and year of the ASC 842 re-measurement.

  • Current CPI index: From the month and year of the retro date of the CPI adjustment being made.

The ratio of the two values is calculated. The CPI increase is calculated from this ratio, based on the base rent as of the retro date and the ratio calculated in the previous step.

This CPI increase is never below 0, even if the current CPI index is lower than the base CPI index. This way, the total CPI-indexed rent is never lower than the fixed base rent. However, as the CPI index fluctuates up or down, the amount of the CPI expense above base rent may either increase or decrease.

If catch-up payments are due, they are calculated by taking the difference between the new and previous CPI-increase schedule amounts.

If you create a retro payment based upon a CPI increase, remeasure your IFRS schedule. CPI increases do not impact ASC 842 schedules.

Create a retro payment based on a CPI adjustment

Before you create a retroactive payment based upon a CPI index, that CPI Index must be selected on the expense setup record.

  1. In Contract Expense Setup List, select the expense setup record to create a retro payment for.

  2. Click Retro Payment in the Actions menu on the rightmost side of the page.

  3. Complete the Retro-Payment Setup dialog:

    • Retro Date: Enter the date that the change is to take place from. This must occur before New Effective Date. A retroactive payment adjusts expenses for a past period after that period has ended. Because the adjustment applies to dates before the new expense schedule takes effect, a catch-up payment is required to cover the gap between the Retro Date and the start of the new schedule.

      Retro Date is the date the CPI-indexed increase should take effect, and the CPI index data is fetched according to this date.

    • New Effective Date: Enter the begin date for the new schedule.

    • Stop Payment on New Effective Date?: Select to stop all payments on the listed expense.

    • CPI-index Adjustment: Select to create a CPI index adjustment, then use Lucernex CPI index data or manually enter adjustment:

      • Use Index Data for Increase: New End Date and New Payment Amount automatically populate. CPI information displays in the rightmost column including Index Name assigned to the expense setup, Begin Date of the CPI index, base Payment Amount for the expense setup, Base CPI, and Retro CPI.

      • manually enter adjustment: We recommend that a good scenario for this is when the landlord has sent a letter where the rate increase is specified as either an amount or a percentage and you have validated that this is the right increase outside the system, have not uploaded the index relevant to the contract, or you want to override the amount that would have been automatically calculated:

        • New End Date

        • Posting Date

        • Due Date

        • Increase Cap: Populates depending on the Expense Setup record. Displays a percentage if you entered Percent Increase Cap and an amount if you entered Amount Increase Cap. This limits the New Payment Amount based on the cap.

        • New Amount / Percent Increase: Select whether this revised payment is to be charged as an amount or as a percentage.

        • New Payment Amount: New recurring payment amount. Do not enter your catch-up payment amount. The system calculates your catch-up payment automatically. This is capped based on the Increase Cap if one is set.

    Click Calendar A small button with a picture of a calendar on it. to select dates.

  4. Complete the remaining options:

    • Send Email?: Send yourself a confirmation email once the retro payment has been created.

    • Use posting date for vendor allocation?: Select to allocate your catch-up payments according to the current vendor allocations. Clear, if the catch-up payment needs to be split between the current and previous vendor allocations.

    • Mark Retro Payments as One-Time Payments?: Mark this retro payment as a one-time payment.

      Clear to populate catch-up payments as a short-term recurring expense schedule.

    • Create Retro Payment as One Lump Sum?: Create the retro payment as a lump sum payment. Clear to distribute the catch-up amount in monthly payments evenly between the retro date and the new effective date.

    • Payment Description

    • Remit Message

    Click Calendar A small button with a picture of a calendar on it. to select dates.

  5. Preview a summary of the changes to be made once the retroactive payment is created:

    1. Click Preview Payment.

    2. Click the link above the OK.

    3. Click Cancel to close the window.

      The second Preview window closes.

    4. Click OK to close the first Preview window.

  6. Click Create Payment.

    If you selected Use Index Data for Increase, your CPI retro payment schedule displays on the Recurring Expenses page in Expense Schedule / Escalations section. Is CPI? is selected in the Is CPI? column of the CPI retro payment schedule.

Generate a Retro Payment for Daily Rent

Use retroactive payments to make changes to the expense schedule retroactively and create catch-up payments.

If you select Daily Rent on the expense setup record, the Retro-Payment Setup dialog does not display the CPI-index Adjustment option for creating adjustments for CPI-indexed rent.

  1. In Contract Expense Setup List, select the expense setup record to create a retro payment for.

  2. Click Retro Payment in the Actions menu on the rightmost side of the page.

  3. Complete the Retro-Payment Setup dialog:

    • Retro Date: Enter the date that the change is to take place from.

      The Retro Date must occur before the New Effective Date. A retroactive payment adjusts expenses for a past period after that period has ended. Because the adjustment applies to dates before the new expense schedule takes effect, a catch-up payment is required to cover the gap between the Retro Date and the start of the new schedule.

    • New Effective Date: Enter the begin date for the new schedule.

    • Stop Payment on New Effective Date?: Select to stop all payments on the listed expense.

    • New End Date

    • Posting Date

    • Due Date

    • Increase Cap: Populates depending on the Expense Setup record. Displays a percentage if you entered Percent Increase Cap and an amount if you entered Amount Increase Cap. This limits the New Daily Rent Rate based on the cap.

    • New Amount / Percent Increase: Select whether this revised payment will be charged as an amount or as a percentage.

    • New Daily Rent Rate: Enter new daily rent rate. Do not enter your catch-up payment amount in this field. The system calculates your catch-up payment automatically. This is capped based on the Increase Cap if one is set.

    • Send Email?: Send yourself a confirmation email once the retro payment has been created.

    • Use posting date for vendor allocation?: Select to allocate your catch-up payments according to the current vendor allocations. Clear, if the catch-up payment needs to be split between the current and previous vendor allocations.

    • Mark Retro Payments as One-Time Payments?: Mark this retro payment as a one-time payment.

    • Create Retro Payment as One Lump Sum?: Create the retro payment as a lump sum payment.

      If cleared, the catch-up amount is distributed in monthly payments evenly between the retro date and the new effective date.

    • Update All Future Schedules?: Available when Percent is selected in New Amount / Percent Increase. Select to update all schedules after the New End Date with the new escalation amount in New Payment Amount.

    • Payment Description

    • Remit Message

    Click Calendar A small button with a picture of a calendar on it. to select dates.

  4. Preview a summary of the changes to be made once the retroactive payment is created:

    1. Click Preview Payment.

    2. Click the link above the OK.

    3. Click Cancel to close the window.

    4. Click OK to close the first Preview window.

  5. Click Create Payment.

    A Success dialog box opens, confirming that the retroactive payments were created.