If you are new to creating invoices for your commercial rental tenants, here are some tips to help you ensure you are properly delineating everything on a basic rental invoice:
- Be clear to state the actual month that you are collecting the rent payment for.
- Commercial tenants typically pay for expenses in addition to the base rent, so here are some thoughts & options as to properly tracking exactly what you are invoicing your tenants for:
- Their portion of the property taxes (percentage of annual tax bill divided by 12)
- Their portion of the property insurance (percentage of annual policy premium divided by 12)
- Common Area Garbage (straight percentage of monthly bill)
- Common Area Electricity (straight percentage of monthly bill)
- Common Area Maintenance (straight percentage of monthly bill)
- Water & Sewer – One option here is to take water meter readings for each unit, then calculate each tenant’s percentage of the total water used that month, the multiply this percentage by the water bill for that month.
- Also, be sure to leave a line item on your invoice for a Balance Forward amount just in case your tenant, for whatever reason, did not quite pay the full rental invoiced amount from last month. Two common reasons for this would be:
- Commercial tenant has fallen on difficult financial times.
- The tenant submits payment in the same amount as last month prior to actually looking at the latest rental bill (since these may fluctuate each month).
Sometimes commercial tenants pay a consistent estimated cost for items outside of base rent, so the above-mentioned items may not be included on your monthly invoices, but nevertheless it is always wise to keep records in a ledger as to each tenant’s responsibility, per contract, throughout the year.
Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.