Reconciliation season in a multi-let building
The service charge year closes. The property accountant exports the cost ledger, sorts it into the schedules (common parts, lifts, HVAC, car park, estate), applies each tenant's percentage, deducts what they paid on account and works out who owes a balancing charge and who is owed a credit. Then the statements go out.
Then the emails start. The tenant on the ground floor wants to see the cleaning invoices. The retailer's agent says their lease excludes the lifts. A tenant who moved in mid-year asks why they were charged for the whole year's window cleaning. Each query means finding invoices in a shared drive, checking the lease, rerunning part of the spreadsheet and replying. Months later the balancing charges are still not paid.
Why every reconciliation turns into queries
Commercial tenants, and especially their surveyors, check service charges closely. They are entitled to see how costs were arrived at, and professional guidance in the sector expects transparency. The trouble is that the landlord's own records make transparency slow.
- Invoices are filed by supplier or by month, not by schedule and building.
- Apportionment percentages sit in a spreadsheet that has been edited for years.
- Lease exclusions and caps for individual tenants are known to one person.
- Part-year occupation and voids are calculated by hand for each tenant.
- The statement shows totals, so the tenant has to ask for the detail.
What the delay costs
Balancing charges go unpaid while queries are open, sometimes for most of the following year. Voids and caps mean some costs are the landlord's to carry, and if nobody separates them properly, you either undercharge or face a dispute. Property accountants and managers spend weeks answering the same kinds of questions. And tenants who feel the service charge is opaque bring it up at renewal.
The reconciliation we build
- Supplier invoices are captured as they arrive, read with AI extraction, coded to building and schedule, and stored with the scanned invoice attached. A person confirms the coding before posting.
- Each tenant's share, schedule by schedule, is held with the lease terms that affect it: exclusions, caps, part-year occupation, and any weighting your surveyor has agreed.
- At year end, the reconciliation calculates each tenant's share of actual costs, subtracts what they paid on account and shows the balancing figure. Void shares and capped amounts are shown as the landlord's cost, separately.
- Per-tenant statements are produced from your template, with a schedule-level breakdown.
- A tenant portal lets each tenant, or their surveyor, see the breakdown and open the backing invoices for their building.
- Queries raised through the portal are logged against the line they relate to, so answers are given once and patterns show up.
- Balancing charges and credits are posted to your accounts system, and unpaid balances join your normal credit control.
| Tenant question | Answer today | Answer with the pack |
|---|---|---|
| Can I see the invoices? | Someone searches the shared drive | Open in the portal against the line |
| Why am I paying for lifts? | Reread the lease | Exclusion held on the tenant record and shown |
| Why a full year when I arrived in June? | Recalculate by hand | Part-year share calculated and shown |
| What happened to the empty unit's share? | Explain by email | Shown as landlord cost on the pack |
What is recoverable under each lease, and how, is for your surveyor and your leases to decide. The system applies the rules you set and shows its working.
How the year end feels once it is running
The reconciliation is a review of a prepared pack rather than a rebuild. Tenants get statements they can check themselves, and their surveyors find the backing without writing to you. Queries fall to the genuinely difficult ones. Balancing charges are raised promptly and collected with the rest of the ledger.
Because invoices are coded to schedule as they arrive through the year, the property manager can also see spend against the service charge budget each month. An overrun on the HVAC schedule shows up in the autumn rather than at the reconciliation, when it is too late to explain to tenants in advance.
Is your service charge year end like this?
- Reconciliations go out months after the year end.
- Tenants routinely ask for backing invoices.
- Apportionments live in an old spreadsheet with manual edits.
- Lease exclusions and caps are applied from memory.
- Balancing charges stay unpaid while queries run on.