We understand that numerous different arrangements are being agreed to with tenants with regards to the COVID-19 issue.
As such we have recommended below how they can be recorded in Cirrus8 plus we have developed a new report to allow you to report out this information on a global basis.
COVID-19 NOTES
A Trust Accountant user can create a new Note Heading called COVID-19.
Configuration > System Configuration > Parameter Type: HEADING – Note Headings > Add New Parameter:
Enter a code for the Note Heading (alphanumeric characters only) and a Description:
This heading will now be available to be selected in the Lease Notes Section under Manage Lease as a Trust Accountant and Lease Summary as a Property Manager:
Reporting on Lease Notes
There is a new Excel Report that Trust Accountants and Property Managers can run under Management Reports > Excel Report called ‘Leases Notes’. Here you can select to pull out all Lease Notes into an Excel Spreadsheet for all, or selected properties:
RENTAL RELIEF & MANAGEMENT FEES
There are currently two main types of rental relief being offered by Owners to Tenants – Deferred Rent and Rent Abatements. Below is the best way of setting up both types of rental relief in Cirrus8 and the options you have as to how this will affect Management Fees that are charged as a % of Collections.
RENTAL ABATEMENT:
For the below example, we will be implementing a temporary 50% Rent Abatement from April – June 2020. A Trust Accountant user will need to action this as a new lease charge setup is required.
Create new Account Codes:
One account code will be used if Management Fees are to remain being calculated on the original Rent amount and another to be used if Management Fees are to be reduced along with the tenant’s Rent and the other if.
Configuration > Manage Chart of Accounts > New Account
- If Management Fees are to remain calculated on the original Rent amount, you will set this new account code up to be ‘Exclude from Management Fee Calculation’:
2. If Management Fees are to be reduced in line with the tenant’s Rent, you will set this new account code up without selecting ‘Exclude from Management Fee Calculation’:
Add new Lease Charge:
Leases > Manage Lease > Select Lease > Lease Charges > new:
Account: Select appropriate COVID-19 Rental Relief account code as set up earlier
Charge Description: As you would like to appear on Tenant Invoice
Charge Type: Rent
Charge Frequency: Monthly
Partial Rent Method: Monthly or Annually
Charging Status: Enter a date you wish for this charge to be stopped
Start Charging Date: 01/04/2020 (when abatement is to begin)
Next Charging Date: 01/04/2020 (when abatement is to begin)
Charge Amount (p.a): Amount of abatement provided. (THIS MUST BE A NEGATIVE AMOUNT AND BASED ON AN ANNUAL FIGURE. I.E IF RENT IS $50,000.00 PA AND A 50% DISCOUNT IS BEING GIVEN, ENTER -25,000 IN THIS FIELD)
Parking Bays: Enter relevant Number
Click Save Unit Charge Details and then View against the newly created charge:
Enter a To Date being the date the abatement is to end and click Stop Charging. (This button will change to ‘Start Charging’ once clicked):
If the tenant has not paid their April charges and you wish to re-raise the Tenant’s April invoice to include the new rental abatement, you will need to reset the invoice number under Accounts Receivable > Reset Invoice Number and then raise standing charges for April 2020, which will create transactions for the rent abatement. You can the generate tax invoices with an earliest due date of 01/04/2020 and including transactions up to 30/04/2020 and your new invoice will include the original rent, the rent abatement and any other lease charges:
If the Tenant has already paid April charges, enter a one-off credit to the tenant via Accounts Receivable > Invoices & Credits without generating an Interim Invoice. Start the Rental Abatement Lease Charge from 01/05/2020 whereby for May 2020, they would receive an invoice that includes the Rental Abatement for April & May 2020.
DEFERRED RENT:
For the below example, we will be implementing a temporary 50% Rent Deferral for 3 months from April – June 2020. A Trust Accountant user will need to action this as April charges need to be amended.
If the tenant has not paid their April charges, reset the invoice number via Accounts Receivable > Reset Invoice Number and then reduce the April Rent charge via Accounts Receivable > Invoice and Credit Adjustments to account for the rent deferral. Generate a new Tax Invoice and issue to Tenant.
Create a new Account Code:
Create a new Account Code (using the above method) for Deferred Rent. This account code will not need to be excluded from Management Fee Calculation as management fees will be recouped once the deferred rent is recovered from the tenant.
Update Lease Charges:
Step one is to reduce the current rent during the deferred rent period:
Leases > Manage Lease > Select Lease > Lease Charges > View:
Select Add Charge Period:
Charge Dates: 01/04/2020 – 30/06/2020 (or length of deferral)
Increase Type: Fixed
Amount Type: Yearly
New Amount: Enter new temporary rent charge
Add
Repeat the above steps to revert the rent back to the original amount once the rent deferral period has finished:
Charge periods for RENT should now reflect as below:
Step two is to create a lease charge to recover rent once the rent deferral period is complete:
Leases > Manage Lease > Select Lease > Lease Charges > new:
Account: Select appropriate Deferred Rent account code as set up earlier
Charge Description: As you would like to appear on Tenant Invoice
Charge Type: Rent
Charge Frequency: Monthly
Partial Rent Method: Monthly or Annually
Charging Status: Enter a date you wish for this charge to be stopped
Start Charging Date: 01/07/2020 (when deferred rent is to be recovered)
Next Charging Date: 01/07/2020 (when deferred rent is to be recovered)
Charge Amount (p.a): Amount of deferred rent to be recovered
Parking Bays: Enter relevant Number
Click Save Unit Charge Details and then View against the newly created charge
Enter a To Date being the date the recovery of deferred rent is to end and click Stop Charging. (This button will change to ‘Start Charging’ once clicked):
If the Tenant has already paid April charges, enter a one-off credit for the deferred rent amount to the tenant via Accounts Receivable > Invoices & Credits without generating an Interim Invoice. This credit will be included on the May 2020 invoice.
When running July standing charges, the deferred rent amount will be picked up and charged to the tenant.
If you have any questions or queries on the above, please contact support@Cirrus8.com.au