Read time 2 minAs a business owner you are burdened with a slew of responsibilities, one of which is optimizing the cost of doing business. Amongst which maintaining and managing the lease for the business premise ranks top on the priority list. However, given the myriad business and operational demands, it hardly comes as a surprise that some of the lesser important priorities take a back seat or are often overlooked.
One such area is common area maintenance (CAM) expenses, a clause that is found in any commercial lease and is often a point of contention between landlords and tenants. This is a tenants pro-rata share of operating expenses for the common areas that the landlord passes on to its tenants. Usually, CAM is billed based on estimation throughout the year, and later reconciled with actuals. Tenants are then either reimbursed or sent additional invoice depending on what they have paid for a year is more or less than the actual expenses incurred.
Understanding issues that are all too common in CAM billing
Even though the process of calculating and reconciling CAM expenses appear to be simple it is fraught with errors and inaccuracies. Apart from erroneous calculations, sometimes landlords may inadvertently pass on expenses that do not quite fall under the CAM category. For instance, a repair work done for a certain tenant, which does not fall under a shared space, is passed on as a CAM expense, this is an all too common occurrence that often inflates the CAM invoices. Apart from this, poor interpretation of expenses and its categorization also results in unnecessary expenses finding their way into the CAM billing.
As it is CAM expenses form a significant part of commercial lease cost for any business, even a slight inflation or erroneous billing can substantially add to the overall cost burden.
Outsourcing CAM audit to ensure accuracy of CAM charges
To address the challenges of inaccurate CAM billing and overcharges, businesses need to partner with professional firms to conduct a thorough CAM audit. Outsourcing partners bring the right and necessary tools, resources, and certified talent who can help you determine whether or not what you are being charged is reasonable and as per the lease terms.
Moreover, outsourcing CAM audit offers value for both tenant and landlord. They often identify errors and inaccuracies in the billing and also determine the way CAM charges have been calculated. This process also helps rectify any future errors. As for landlords, audit allows them to streamline their process and correct any billing inaccuracies, averting any risk of non-compliance and tenant-conflict.
CAM audit has emerged to be a great practice, in that its enables business owners to not only ensure they avoid overpaying against operating cost but also optimize lease cost, thus saving substantial amount of money year-on-year.
