Guide

How to manage commercial CAM charges and reconciliation

CAM disputes come from opaque math. Publish the pool, the pro-rata share, and the reconciliation and the disputes disappear.

The short answer

Manage CAM by defining the pool of recoverable expenses in the lease, allocating it by a stated method such as pro-rata square footage, billing monthly estimates, and reconciling to actuals annually with backup.

Overview

CAM disputes come from opaque math. Publish the pool, the pro-rata share, and the reconciliation and the disputes disappear.

Why it works this way

CAM disputes come from two places: expenses in the pool that the lease does not allow, and an allocation the tenant cannot reproduce. Both are prevented by writing the method down and showing the arithmetic.

The annual reconciliation is where trust is built or lost. Tenants with audit rights will use them, and the reconciliation should survive that.

Do it in this order

1. Define the expense pool and any exclusions in the lease. 2. Compute each tenant's pro-rata share from rentable square footage. 3. Bill monthly estimates based on the prior-year actuals. 4. Reconcile annually and issue a credit or a true-up invoice. 5. Share the reconciliation statement with supporting expense detail.

Checklist

  • Define the expense pool and any exclusions in the lease.
  • Compute each tenant's pro-rata share from rentable square footage.
  • Bill monthly estimates based on the prior-year actuals.
  • Reconcile annually and issue a credit or a true-up invoice.
  • Share the reconciliation statement with supporting expense detail.
FAQ

Frequently asked

Are capital items recoverable through CAM?

Only if the lease says so, and often only amortised over useful life. Check the specific lease language rather than a general practice.

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