Standard Terms

The following Standard Terms are available. A term for either base rent or base rent irregular must be added.

  • Base Rent: The fixed rent payment due under the terms of a lease. Multiple base rent terms can be added, but they cannot overlap.
  • Extension: Indicates a lease prolongation of the terms and conditions. The lease contract can have one or more contract extensions with different values for a specific period of time (i.e., the terms can overlap) but the ones chosen for the activation group should not overlap. This option becomes available once a base rent has been added.
  • Supplemental: Additional fees that need to be added to the base rent and extensions. The supplemental term can only be used in conjunction with another term. Note that this term must overlap with the base rent, and cannot start before the earliest base rent.

    Note: This option only becomes available once a base rent has been added.

  • Reduction: To reduce the base rent and extensions. The reduction term can only be used in conjunction with another term. Note that this term must overlap with the base rent, and cannot start before the earliest base rent.

    Note: This option only becomes available once a base rent has been added.

If the unit is a bulk asset, note that the terms and conditions entered should be the total value for all of the quantity entered in the lease component.

If you select the option Payments in Arrears on the contract Accounting page, payments are done at the end of the day. This means that the payment date determines the last day of the accrual period (i.e., rent amount is used to cover the interest expense generated from the end of the previous payment date to the end of the current payment date). For example, payments in arrears on February 15th will include interest expense generated from the beginning of January 16th to the end of February 15th.

By default, payments are in advance (i.e. not in arrears) and payments are done at the beginning of the day. In this case, the rent amount is used to cover the interest expense generated since the beginning of the previous payment date until the beginning of the current payment date.

To add a base rent term:

  1. Load the lease component, and click Terms & Conditions in the left-panel.
  2. Click Add New TermStandard Term.
  3. In the Term Type field, select "Base Rent".
  4. By default, the selected Term Type populates the Name field. Modify it if required.
  5. In the field Lease Amount/Unit, enter the amount of the rent, according to the Amount Frequency (e.g., day, month, year).

    Note: If the contract is a non-lease service contract (set in the Lease Type field), lease amounts cannot be entered.

  6. In the field Non-Lease Amount/Unit, you can enter the total amount related to services, maintenance, or any other kind of accommodation fee, according to the Amount Frequency. You can distribute the non-lease amount for different GL categories once the term has been submitted.

    Note: If the contract is a short term lease or low value lease (set in the Lease Type field), non-lease amounts cannot be entered.

  7. The Total Amount field displays the sum of the lease and non-lease amounts entered.
  8. The Contract Currency field shows the value that was selected for the MLA or contract.
  9. In the Amount Frequency field, indicate how frequently the total amount is applied (e.g., daily, monthly, yearly). Note that selecting "One Time" means that the even if there is a partial month (due to the Start Date and First Payment Date not being on the same day), the payment amount is always equal to the Total Amount. If it is set to "Month" or "Year", the amount will be pro-rated based on the number of days in a partial month or year.
  10. In the Payment Frequency field, indicate how frequently payments will be made.
  11. In the field First Payment Date, specify the date of the first payment. Note that if there are multiple base rent terms, they must all use the same day of the month as the day selected for the base rent.

    Note: If the last day of the month is selected, all subsequent payments will also occur on the last day of the month.

  12. In the field Last Payment Date, specify the cut-off date for the last payment. The last payment will still occur on the same day of the month as rest of the payments. This date can be before, on, or after the Expected T&C End Date.
  13. If the First Payment Date is set to the last day of the month in a Base Rent term (e.g., February 28 or April 30), the checkbox End of Month Payment appears, and is checked by default. If it is checked, all subsequent payments occur on the last day of the month. If it is unchecked, all subsequent payments occur on the selected day of the month.
  14. Enter the maximum guaranteed residual value per unit in the GRV/Unit field.
  15. If it is known, enter the duration of the term in the field Term (months) and Term (days). This will automatically set the Last Payment Date and Expected T&C End Date if they have not been set.
  16. Enter the Expected T&C Start Date, which will eventually be replaced by Actual Start Date once the activation group is activated.
  17. If the Expected T&C End Date has not been automatically set by the start date and term duration, specify the end date for the base rent.
  18. By default, the field Lessor Notification Date is set to be 90 days before the Expected T&C End Date of the term. If the term spans less than 90 days, the notification date is set to the start date of the term. This field can also be changed at the activation group level.
  19. If a Non-Lease Amount was entered, the non-lease amount distribution to one or more GL categories must be defined in the "Manage Non-Lease Amount Distribution" section that appears automatically at the end of the form.
    1. Select whether the distribution will be done by amount or percentage in the Portion drop-down.
    2. The GL categories (defined in the Nakisa AdminConsole) are listed under Non-Lease Amount Distribution. Click on the required category row, and enter the Non-Lease Portion.
  20. Click Submit.

To add an extension term:

  1. If there is an existing Base Rent term, an extension term can be added. Click Add New Term > Standard Term.
  2. In the Term Type field, select "Extension 1".
  3. Enter values for the same set of fields as for the base rent term, with the following exceptions:
    • The Payment Frequency is automatically the same as the values set for the base rent.
    • The selected First Payment Date must be the same day of the month as the base rent term.
    • Note that the Expected T&C Start Date is filled in with the greatest end date of the base rent by default, base rent irregular, or extension term. Modify it if required.
  4. Click Submit.

To add a supplemental or reduction term:

  1. If there is an existing Base Rent term or Extension term, a supplemental or reduction term can be added. Click Add New Term > Standard Term.
  2. In the Term Type field, select one of the following options:
    • Supplemental
    • Reduction
  3. Enter values for the same set of fields as for the base rent term, with the following exceptions:
    • The Payment Frequency is automatically the same as the values set for the base rent.
    • The selected First Payment Date must be the same day of the month as the base rent term.
    • The GRV / Unit cannot be set.
    • The Expected T&C Start Date cannot be earlier than the earliest base rent term. If the Expected T&C End Date of the supplemental term goes beyond the end of the last base rent or extension term, the remainder of the supplemental payments will not be posted. This term is only applied as a supplemental to base rent and extension terms.
  4. Click Submit.

See also:  

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