Generating Invoices for Building Expenses Charged Back to Leases
Real Property / Chargeback & Invoicing / Chargeback Administration
Generating Invoices for Building Expenses Charged Back to Leases
A typical chargeback scenario for a building owner is to charge back building expenses to leases, so that the costs are equally divided among the building's tenants. If you are a landlord, after approving these chargeback costs, you might want to generate invoices for each tenant indicating the amount they owe. However, once the chargeback costs for these building expenses are approved, their status is automatically set to "Payable", as the building cost record uses an Amount - Expense. The problem is that only cost records with a status of "Receivable" can be used for generating invoices; it does not make sense to invoice expenses, which would become invoices for negative amounts.
If you want a cost to be useful for generating invoices, it must be defined as an Income rather than an Expense. To handle the chargeback of building expenses to leases so that you can generate invoices for the chargeback, you could create two cost records - one for the building expense that is Payable to the external source of this bill, and another as an income that can be prorated to each tenant and is a Receivable that can be invoiced. These two cost records will essentially represent all the tenant payments coming in as one income cost, and then the lump sum going out to the external source as a separate expense cost. The Amount - Income on the first cost will equal the Amount - Expense on the second, so that ultimately the transaction will balance out to zero, indicating that there is no net change. For these expenses, you are acting as an intermediary, collecting the income from the tenants and forwarding this income to the external company to which you owe the expense.
For example, suppose you have incurred a building expenses for outdoor seating for $5000.00 that you are going to pass on to your tenants. To invoice the tenants for these amounts, you could do the following:
- Create a cost record for the building that has an Amount - Expense of $5000. You will use this cost record to track your payment of this expense.
- Create another cost record for the building that has an Amount - Income of $5000.00 and uses a cost category that has an Assigned To - Rolls Up To - Prorates To value of Buildings-None-Leases. You will use this cost record to generate the chargeback and to generate an invoice for these payments.
- Approve the cost record for the Amount - Income, and generate chargeback for it using the Cost Chargeback Wizard.
- After the cost is approved and chargeback is generated, you can use the Invoice Cost Wizard to generate invoices for each of the cost records generated by the chargeback.
See Also