In Moderan there are three possibilities for Indexation: Fixed/Automatic indexation, CPI based indexation, or Manual indexation. This article will go through the workflow for all 3 types of indexation.
Before you begin
When you are entering Rent and other Fees it is highly recommended to specify which Billing lines are Indexed and which are not. This allows you to have a full overview and/or filter out all Fees that should be indexed.
Fixed/Automatic indexation
▶ Contracts > Rental Contracts > Edit > Indexation section
Automatic indexation can only be used with a fixed index.
1. Setting up Automatic Indexation
Mandatory fields that need to be filled in are:
- Automatic Indexation – check-mark (visible in Rental Contract Edit mode).
- Index – percentage, number field.
- Next indexation date – must be no less than one month in advance (31 days). This is because Rent invoices are always issued at the beginning of the month, and if the Indexation date is somewhere in the second half of the month, we must ensure that the Indexation calculation is completed before this month's invoices are issued — therefore, at least 1 month in advance.
- Indexation Frequency – in months; the time between each Next indexation date.
Indexation basis is a description field where you can note whether rent is indexed with a fixed % or CPI.
When using automatic indexation, you also need to check-mark each billing type to be indexed in Rental Contract > Rent and other Fees section > Rent and Fees table. Only the billing line that is marked for indexation and is active at the indexation time will be indexed.
2. Automatic indexation steps done by Moderan
Once automatic indexation has been added to a Rental contract:
- Info about indexation is visible in the Contract deadlines report.
- Contract billing types are indexed 1 month (31 days) prior to the Next Indexation Date by added rows in the Contract's Rent and Fees table with the description "Automatically indexed 1 month in advance, Index: %".
- The row's date is equal to the Next Indexation Date. Rows are added 1 month prior to this date, i.e. they are not yet active.
- Rows are created for all Billing type rows in the Contract that:
- are active (white ones — the latest value for a Billing type)
- are marked as "yes" in the Index field of the Rent and Fees table
- are dated before or on today (i.e. are not in the future)
- The Next Indexation Date field is updated by adding the number of months specified in the Indexation Frequency field to the current Indexation Date — one day after the last Indexation Date.
3. Notifications about Indexation
▶ Contracts > Rental Contract > Edit > Send Reminders to E-mail
You will receive a reminder about upcoming Indexation. There are three scenarios:
- If Indexation Reminder and Notify tenant are not filled, no notification is sent.
- If Indexation Reminder is filled:
- A notification is sent 1 month prior to "Next Indexation Date" + the "Indexation reminder" date period.
- It is also sent 1 month prior to the stated "Next Indexation Date".
- If Notify tenant is also filled, the notification is sent: "Notify tenant" days + "Indexation Reminder" period.
CPI based indexation
▶ Contracts > Rental Contracts > % START INDEXATION
In case you have multiple contracts with CPI based indexation term, you can use the semi-automatic indexation tool to index all Rental Contracts (Billing lines that have marked to Index) at the same time.
1. Setting up CPI-based Indexation
To use the semi-automatic tool, the Contract terms Indexation part should be filled as follows:
- Indexation basis – description field where you can note CPI, HICP, THI etc. and other important clauses, usually min and max values. For example: "CPI min 3% max 5%".
- Automatic Indexation – must be empty in order for this contract to appear in the % START INDEXATION tool.
- Index – no need to fill, but if you have min and max values, the min value can be added.
- Next indexation date – the date on which the new indexed rent is applied.
- Indexation Frequency – a number in months, used to calculate the new "Next indexation date".
2. Steps to index multiple Billing lines
When CPI-based Indexation is set up in the Rental Contract:
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Go to the CPI-based Indexation tool via the % START INDEXATION button:
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Use the Next Indexation Date Filter to get all Billing lines that should be indexed. By default, you can see only the Billing lines with Index marked "true", because the Index column has a filter applied:
You can clear the filter and check all Billing lines for the period. If you overlooked some Fees in the Rental Contracts and forgot to check-mark the "Index" column, you can click the Contract number and in the Rent and Fees table check-mark the Billing lines that should be indexed.
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After all Billing lines are listed, you can apply an Index for all of them in bulk:
This tool is very flexible — you can filter and sort the lines multiple times until the percentage can be applied in a bulk action. For example, Fees can be filtered by the Indexation basis field and Fee type (Rent, Parking, Marketing, etc.). Or you can use the general Search filter to get all Fees for one tenant who has multiple Rental Contracts.
- Click PREVIEW and review the New rent and fees values. All newly generated values appear on the right side of the table in light blue. You can edit the New start date, New next indexation date and New description fields if needed.
- New fees are calculated with high precision (using many decimal places). If needed, you can Apply rounding and choose how many digits after the comma to keep.
Rounding is applied based on the Billing Line basis. For example, if the basis is By m², the New fee per m² will be rounded; if the basis is Fixed, the New monthly fee will be rounded.
Excel export is recommended after the PREVIEW step. You can save the indexation data if you or your colleagues want to review it later
- Once you click INDEX NOW, new billing lines with indexed values are created in Rental Contracts (Rent and Fees table).
Once you apply indexation it is not possible to reverse this action — all corrections have to be done manually in every Rental Contract's Billing lines.
There are 3 scenarios where the program gives an indication in red:
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When you filter all Fees (with and without "Index" marked) — lines with option "No" appear in red and it is not possible to apply Index to them. However, you can go to the Rental Contract, review these lines and if necessary, check-mark them:
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When the Next Indexation date is earlier than the Start date of the Fee. This might happen, for example, if you have a Step Rent:
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When Indexation Frequency is missing in the Rental Contract — the program cannot apply a New next indexation date:
3. Notifications about Indexation
▶ Contracts > Rental Contract > Edit > Send Reminders to E-mail
You will receive a reminder about upcoming Indexation. There are two scenarios:
- If Indexation Reminder and Notify tenant are not filled, no notification is sent.
- If Indexation Reminder is filled:
- A notification is sent 1 month prior to "Next Indexation Date" + the "Indexation reminder" date period.
- It is also sent 1 month prior to the stated "Next Indexation Date".
- If Notify tenant is also filled, the notification is sent: "Notify tenant" days + "Indexation Reminder" period.
4. Backdated Indexation
▶ Contracts > Rental Contracts > % START INDEXATION > BACKDATED INDEXATION
Backdated Indexation is used when, for example, the Next Indexation Date is January 1st and the indexation term is last calendar year's CPI. Because CPI is usually published in the second week of January, it is not available when January rent invoices are usually issued. In this situation, tenants are invoiced using the previous year's prices for the January billing period. Once the CPI value becomes known, Moderan retroactively calculates the correction lines and includes them together with the indexed Rent and/or other Fees in the February invoice.
The process works similarly to the standard CPI-based Indexation, with the addition of a correction line created specifically for the January period.
How to Use Backdated Indexation
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Go to Contracts > Rental Contracts > % START INDEXATION > BACKDATED INDEXATION.
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The Next Indexation Date filter will automatically be pre-filled with the current month.
You may select a Start Date in previous months, but selecting a future date is not allowed.
- Continue following the steps described in the CPI-based Indexation workflow.
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Click PREVIEW to review the new Rent and Fees values.
- All newly generated values appear on the right side of the table in light blue.
- If needed, you can edit the New Start Date, New Next Indexation Date and New Description fields.
- Two additional columns highlighted in pink — Previous Period Correction and Correction Description — show the correction amounts that will be added to the Billing lines to charge tenants for the January period.
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When you click INDEX NOW, Moderan creates new billing lines in the Rental Contracts (Rent and Fees table) — lines with the indexed values, and additional Previous Period Correction lines.
The Description field for the Previous Period Correction lines indicates the period to which the correction applies.
- In the Rent and Fees Calculations Report (typically used for issuing rent invoices), the January period will display the old amounts for the tenant. The February period will show the new indexed amounts for Rent (and other Fees), along with the correction lines related to the January period.
Correction lines are displayed in pink
Please note that correction lines are not shown separately in the Revenues report. Instead, they are merged into the January Rent (and other indexed Fees).
Manual indexation
▶ Contracts > Rental Contracts > Rent and Fees > Billing line
Manual indexation starts in Reports > Contract Deadlines, where you can easily check which Rental Contracts should be indexed at the given moment and go straight to the Rental Contract by clicking on the name:
Calculate the indexed rent manually and create a new Billing line in the Rent and Fees table, filling in all required information. When indexation is done manually, please also update the Next Indexation Date to keep information up to date.
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