/charge-escalation
An escalation schedule raises a recurring charge over time according to a rule, instead of
someone remembering to edit every lease every year. Set it once at lease signing and the increases
happen on time, predictably, with a projection you can show a landlord.
The three pages
Escalation shapes
Anniversary and calendar stepping produce noticeably different cash flows across a portfolio.
Anniversary spreads increases through the year; calendar concentrates them, which is easier to
communicate to owners but produces a single large billing jump.
Creating a schedule
1
Configure on a lease
Escalation is attached to the lease’s charges, so start from the lease. Configure on a lease
from the escalation module takes you there.
2
Pick the shape
Match the shape to what the lease agreement actually says. If the agreement says “5% per annum
on each anniversary”, that is step (anniversary), not percent annual on a calendar year.
3
Set the parameters
Rate or index, the effective date, and any cap or floor your agreement specifies.
4
Choose the charges it applies to
Usually rent. Service charges often escalate on a different basis, or not at all — check before
applying one schedule to everything.
5
Review the projection
Before saving, look at the projection. This is the number the tenant will see on their invoice,
and the number the owner will ask about.
Projections
The projections page shows, per schedule and per charge, what the amount will be in each upcoming period. Use it to:- Brief owners on expected income before it happens.
- Warn tenants ahead of an increase, rather than after they receive the invoice.
- Catch mistakes — a schedule applied at 50% instead of 5% is obvious in a projection and invisible in a rule.
- Budget — projected escalations feed realistic revenue budgets. See Budgets.
How escalation reaches the invoice
An escalation changes the recurring charge amount from its effective date. The next generation run bills the new amount. Already-issued invoices are never rewritten — an increase that should have applied earlier is corrected with a debit note, not by back-dating the schedule.Managing schedules over time
Good practice
- Create the escalation schedule at lease signing, from the signed agreement, while the terms are in front of you.
- Never let “we’ll adjust it manually each year” be the plan for more than a handful of leases — it is the single most common source of under-billing in a growing portfolio.
- Review the projections page once a quarter and reconcile it against the recurring charges that actually changed.