Commercial Real Estate Solutions
CAM Reconciliations can be Simpler and More Profitable
Simplify your CAM Rec process, reduce errors, increase accuracy and save tens of thousands of dollars each year.
General common area maintenance accounting can be overwhelmed by growth and complexity,... more properties, more tenants, and varied lease structures mean more provisions to track, more calculations to manage, and more information moving between accounting records, spreadsheets, lease documents, and property management.
The Cost of Complexity
The Annual Reconciliation May Be Only Part of the Cost
A 2% recovery gap represents $20,000 for every $1 million in recoverable expenses. At $3 million, that becomes $60,000. At $5 million, it becomes $100,000.
The exact numbers will be different for every property and portfolio, but the principle is the same: when significant property expenses are being allocated among multiple tenants under different lease provisions, relatively small differences can become meaningful.
And recovery differences are only part of the cost.
- Employees spend hours gathering information, checking spreadsheets, tracing expenses, and interpreting lease provisions.
- Management time is consumed answering questions and resolving issues that should be routine.
- Late reconciliations can delay collections and negatively affect cash flow.
- Under-billing can leave legitimate recoverable property expenses uncollected.
- Unexpected or poorly supported adjustments can create tenant frustration, disputes, and unnecessary pressure on valuable tenant relationships.
Employee time can be substantial as well. Just 20 unnecessary staff hours per week represents more than 1,000 hours per year. At a $60 loaded hourly cost, that is more than $60,000 annually before considering lost recoveries, delayed collections, tenant disputes, or management time.
What Good Looks Like
CAM Accounting Should Make the Property Easier to Manage
A well-run CAM process should provide management with a clear understanding of what is being spent, what is recoverable, what has been billed, and where meaningful variances are developing.
The accounting team should not have to reconstruct the process every year. Monthly accounting should naturally support the annual reconciliation, and tenant allocations should be consistent, supportable, and easy to explain when questions arise.
The people responsible for the work should be able to operate the process efficiently without relying on excessive spreadsheets, workarounds, or one person's institutional knowledge.
Done correctly, the benefits go well beyond producing a more accurate reconciliation.
- More complete and accurate recovery of legitimate property expenses.
- Less accounting and property-management time spent administering the process.
- More timely reconciliations and collections.
- Better visibility into property performance and recovery variances.
- Fewer tenant surprises, questions, and disputes.
- Greater management confidence in the numbers.
Make the Process Serve the Business
The Tools May Already Be There
QuickBooks may already be perfectly capable of supporting the accounting process. Excel may still be the right tool for portions of the allocation and reconciliation. And the people doing the work may already understand the properties and tenants exceptionally well.
The objective is not necessarily to replace those things or add another layer of technology.
The objective is to make the accounting, information, processes, and technology work together in a way that serves the business.
Criterion Solutions
Make CAM Accounting Simpler and more Profitable
Criterion provides CAM accounting and tenant recovery solutions that improve recoveries, reduce administrative effort, provide better reporting, make the process easier for your team to operate, and may save you tens of thousands of dollars annually.
We can review your systems and processes at no cost to you. Reach out to us today.