Common costs are the tenant's share of the operating costs of the property, and settling these costs is not only a legal obligation, but also essential to maintaining a well-functioning property community. For both owners and tenants, it is crucial that this settlement is carried out in a fair and transparent manner.
Common charges accounting refers to the annual process of allocating and adjusting the costs incurred during the year among the property owners or residents. This often includes expenses such as renovations, electricity, janitorial services, elevator maintenance, cleaning and maintenance of common areas, etc. Correctly accounting for common charges ensures that all tenants pay for their respective share of the common areas, while ensuring the operation and maintenance of the building. This promotes a sense of fairness and equality among tenants, and reduces potential conflicts or dissatisfaction.
How to succeed with the settlement?
1. Accurate recording of costs
First and foremost, it is essential to have a thorough overview of all costs incurred during the year. This can include invoices, receipts and contracts with suppliers. Accurate registration will form the basis for a fair distribution of costs. In Fazile, the balances registered in the ERP system will be automatically imported monthly via API or via import templates. This helps you to have good control over costs against common costs invoiced on account, and to be able to settle this effectively at the end of the period.
2. Review of statutes and contracts
Carefully review the property's bylaws and tenants' contracts to understand how the common costs are to be distributed. Some bylaws/contracts may require a percentage distribution based on the size of each unit, while others may have a fixed annual cost. If, when entering the contract in Fazile, any uneven distributions and other weightings on the contract are also registered, the settlement will in practice be completed at the end of the period.
3. Communication with tenants provides predictability and transparency
Open communication is key. For both owners and tenants, predictable costs are essential for budget planning and financial stability. An accurate settlement of common costs allows all parties to predict and plan their financial obligations in a reliable way. Fazile of course gives you the opportunity to both budget the common costs and distribute them fairly to your tenants, as well as make the settlement accurate, and give the tenant insight into the distribution.
4. Use of Technology
Modern technological tools can be invaluable when it comes to simplifying and automating the billing process. Fazile is specifically designed for this task and can help both reduce errors and increase accuracy, as well as simplify the billing process.
Conclusion
A thorough and fair settlement of common costs is essential for the effective management of commercial properties. By following best practices and using modern tools and technology like Fazile, owners and property managers can ensure that this important process is carried out in a transparent, fair and efficient manner. This will not only minimize the chance of conflicts and dissatisfaction among tenants, but also ensure that the value and profitability of the properties are maintained in the long term.
With Fazile you get a seamless settlement process – simple!