A CAM true-up lands in the client's inbox on a Tuesday in February. It is a $22,400 extra charge for last year. CAM means Common Area Maintenance, the shared costs a landlord passes to tenants. A true-up is the final amount owed once actual costs are known. The client is a 12-person law firm in 4,200 square feet downtown. They were paying $1,200 a month in CAM, or about $14,400 for the year. The true-up says the actual cost was $36,800. For more context, see the accounting firm hub.
The client forwards it to you with two words: "Is this right?"
That is the fractional CFO's moment. Not the bookkeeper's. Not the controller's. Yours.
CAM Reconciliation Statement: An annual accounting from the landlord comparing estimated CAM payments collected from tenants against actual operating expenses incurred during the year. The result is either an additional charge or a credit to each tenant.
First move: size the gap
Before you reply to the client, do the math. The law firm paid $14,400 in CAM estimates last year. The reconciliation says their share of actual costs was $36,800. That is a $22,400 gap. That is 156% above the estimate. A reconciliation is the landlord's annual bill that trues up estimates against actual costs.
That number is a starting point, not an answer. Big gaps happen for real reasons. Maybe a new roof, a tax reassessment, or a jump in insurance. They also happen for bad reasons. The landlord may have made a math error. They may have added costs the lease excludes. They may have used the wrong pro rata share. Pro rata share is the slice of costs a tenant owes, based on its floor area. Or they may have skipped a gross-up. A gross-up fills in costs for empty space as if the building were full.
Your first job is to find out if the gap makes sense. Do that before you tell the client what to do.
What to request before you advise payment
Do not advise payment on a big true-up without the detail. The reconciliation statement is a summary. The backup is the building's expense ledger, split by cost type.
Request these four things from the landlord in writing:
- The full expense reconciliation. It should show each cost type, the total building cost, and the tenant's share.
- The pro rata share math. It should show how the tenant's percent was set, and which square footage was used.
- Any capital costs in the bill. Most leases keep capital items out of CAM.
- The management fee math. Fees charged on gross revenue, not CAM costs, are a common overcharge.
Take the law firm example. A $1,200/month estimate suggests someone set the CAM number at the start of the lease and never updated it. The $22,400 gap may be fully fair. Or it may be three or four years of low estimates the landlord is now collecting. Either way, you need the backup.
The client talk: what it is and the options
Once you have sized the gap and decided whether to review first, frame it for the client. Do not lead with alarm. Do not lead with comfort. Lead with facts and options.
Here is how that talk goes. "You got a CAM reconciliation for last year. The landlord says your share of building costs was $36,800. You paid $14,400 in estimates. So they are billing the $22,400 difference. That gap is bigger than usual. Before you pay, I want to request the backup detail to confirm the math is right. You likely have 30 to 60 days to review before payment is due. Here are your options."
Then give three options. Pay now, if the client trusts the landlord and does not want to spend time on it. Review with backup before paying. Or refer for a formal audit if the amount is worth it.
The law firm with $22,400 at stake almost surely wants option two or three. A 3-location retailer with three true-ups totaling $18,000 may trigger an audit sooner. The total exposure is what drives that call.
When to escalate to a formal review
The key question is whether the gap is worth the cost of a formal review. I built CAMAudit because CFOs and their clients kept hitting this wall. A big, odd bill, and no easy way to check the math.
A formal review is worth it when you see certain signs. The gap is more than 20% above the estimate. The management fee looks like it was charged on a base that includes taxes and insurance, which inflates the fee. The pro rata share does not match the lease. Prior-year true-ups also looked high. Or a lease renewal is coming up, where billing history matters for the talks.
A law firm in a renewal window has extra reason to care. A pattern of overbilling is leverage in the talks. A formal audit that recovers a past overcharge is leverage too.
Cash flow impact and how to model it
The cash flow side of a true-up is simple if you model it. It is painful if you do not. A $22,400 charge hitting in February is $22,400 of cash out that was not in the Q1 forecast.
The fix is to build true-up risk into the model from the start of the year. Estimate the prior-year true-up from known cost trends. Watch for tax reassessment notices, insurance renewals, and landlord notes about capital projects. Flag the estimate as uncertain. Give it a low and a high case.
For a multi-location client, do this for every site. Three sites with $6,000 of true-up risk each gives you an $18,000 bucket in the forecast. That number is not exact, but it is honest. It heads off the February call where the client asks why cash is $22,000 below plan.
When the real true-up arrives and runs higher than your estimate, update the forecast right away. Then walk the client through the bridge. What was estimated. What was actual. What changed. That is the advisory value.
When delaying payment is the right call
Most leases have an audit rights clause. It gives tenants a set window to review a reconciliation before payment is final. Common windows are 30, 60, or 90 days from when the statement arrives. Some leases let tenants hold back disputed amounts during an audit.
It is reasonable to advise a delay in three cases. The backup was requested and has not come. A review is in progress. Or the disputed amount is large and the lease allows withholding. It is not reasonable to delay forever. Track the audit deadline closely.
One key note. Some leases treat payment as acceptance. If the client pays the full true-up with no reservation, they may lose the right to dispute it. For a $22,400 charge, read the lease audit rights clause before the check goes out.
The advisory service you can already offer
You are already the client's trusted advisor on cash flow and money calls. Adding CAM review is not a stretch of your scope. It is a normal part of managing occupancy cost. For most small businesses, that is the second or third biggest expense.
The real question is whether you have the right tools to do it fast. Reviewing a CAM reconciliation by hand, line by line, against the lease takes time and lease know-how. You can refer it to a specialist who uses a structured audit tool. Then you offer the service without building the skill in-house.
The value to the client is the same either way. Someone checked the math before the check went out.