How to reconcile commercial CAM expenses

1. Establish the reconciliation period and expense universe

Choose the calendar or lease year being reconciled. Gather the general ledger or bank activity, invoices, tax bills, insurance statements, utility records, vendor credits, and any prior-year adjustments that belong to the property.

Do not begin by allocating expenses to tenants. First create a complete property-level record of what was actually spent and when.

• Separate cash timing from the applicable expense period
• Identify credits, refunds, and duplicate transactions
• Keep capital projects visible even when they may be excluded
• Preserve the source document for unusual items

2. Categorize and determine recoverability

Map expenses into consistent categories such as taxes, insurance, landscaping, security, utilities, trash, repairs, and administrative costs. Then apply the lease definition of operating expenses rather than assuming every property cost is recoverable.

Use HOUSE for owner costs or expenses that cannot be assigned to a real tenant. That preserves the full property cash picture without incorrectly passing the amount through.

3. Apply tenant-specific lease rules

Confirm each tenant’s pro-rata share, pool, exclusions, caps, gross-up provisions, base years, and audit rights. A single property may contain NNN, modified-gross, and special negotiated provisions at the same time.

• Verify occupied and rentable square footage
• Apply category-specific caps or exclusions
• Respect different expense pools
• Document manual judgments and overrides

4. Compare actual recovery with amounts billed

For each tenant, compare the recoverable share of actual expenses with CAM estimates billed during the year. The difference is either an amount due or a tenant credit. Keep the monthly billing ledger separate from the annual calculation so the balance can be traced.

• Actual recoverable share
• CAM billed or paid
• Prior credits and adjustments
• Final balance due or credit

5. Review, communicate, and preserve

Before posting, review material year-over-year changes and the categories driving them. Prepare a tenant-facing summary that explains the high-level calculation without exposing another tenant’s information. Preserve the approved version, source transactions, and notice date.

CAM reconciliation is not legal or accounting advice. Ambiguous lease provisions, material disputes, and tax treatment should be reviewed by qualified professionals.