The most common type of payment in a lease agreement is a fixed payment at a specific frequency. To enter a reoccurring payment in Cradle, go to the Initial Recognition tab of an agreement and refer to the Payment Inputs section:
In terms of payment frequencies we've seen in the market, the most common type is monthly, with an 'in advance' payment timing. Here is an example of what that would look like in Cradle:
A payment frequency that is quarterly would look like this:
Example
It's all pretty straightforward. However, it is easy to make a simple error, and Cradle can only do what you tell it! For example, let's say we have a lease with the following details:
Start date: 2021-02-01
End date: 2022-12-31
Payment Frequency: Monthly
Payment Timing: In advance
Fixed Payment Amount: $10,000
Rent free period: First month of the lease
Noting these details enter the following information:
Should I be good to go? Actually, no, what you've told Cradle is that your first payment will occur in January 2022—Cradle even added a $110,000 catchup for the previous 11 months! This is because the commencement of the lease is in February 2021. You can confirm this by looking at the Events tab of the agreement:
What should have been entered is the following:
Cradle will take everything you enter very literally. So if something doesn't look right, it's more than likely due to the input lease agreement details. An excellent way to check is the Events tab, as it shows all upcoming payments. So if unsure, edit the agreement and check the Events tab.
Defined inputs
Payment Timing: This determines when the payment is made. Does the lessee pay before using the asset (In advance) or after using the asset (In arrears) for the set payment frequency, e.g. monthly
Payment Frequency: The frequency you make the periodic payment. Your options are daily, weekly, and monthly. Select monthly for all periods greater than a month.
Payment Interval: The interval between payment periods. For example, if you pay annually, you would enter 12 (and set payment frequency to monthly).
Start Payments in Month: Select the month when the payments occur. Remember not to forget when the commencement/transition of the lease is!
Pay On Day Of Month: Select the day of the month the payment occurs on.
First Payment Date: The date of the first payment (only applicable for daily/weekly).
Fixed Payment Amount: The amount of the recurring payment.
Add Payment on Commencement Date: Select this checkbox if you would like to have a payment on the commencement/transition date. This is only applicable if the payment does not fall on this date given the other parameters (only applicable for monthly).