Entering a tenant improvement allowance

A tenant improvement allowance is an amount, agreed upon during the negotiation of a commercial lease, that an incoming tenant can spend to retrofit or renovate an office space.

If your business plan includes a lease and you need to represent a tenant improvement allowance in your forecast, you'll need two entries:

  • A long-term Asset entry representing the dollar value of the improvement
  • An Investment entry to balance the expenditure 

 

Entry #1: Asset for the value of the improvement

  1. In the Forecast section, click Assets:
    Forecast section Assets highlighted.png
  2. Click the Add Asset button:
    Arrow pointing to Add Asset button.png
  3. Name the asset:
    2023-07-17_13-30-37.png
  4. Select One-time amount, and then enter the full amount of the allowance. Select the month in which the improvement work will begin. Once entered, click the Type button beneath the asset name:
    allowance amount.png
  5. Click Long term, and enter the useful life of the improvement. Under Do you plan to resell this asset, click No:
    asset details no resell.png

    Note: In the U.S., the useful life of a tenant improvement is often the length of the lease. But we recommend checking with your accounting advisor to make sure this is accurate for your local area.

  6. Click Create & Exit.
  7. The Assets table will now show the value of the improvement, depreciating over time:
    asset list tenant improvement.png

 

Entry #2: Investment to balance the asset entry

Note: The asset entry you created in the previous step represents the funds being spent on the improvement. This Investment entry places the cash into your forecast for that expenditure.

  1. In the Forecast section, click Financing:
    Forecast section financing highlighted.png
  2. Click the Add Investment button:
    add investment.png
  3. Select One-time amount. Enter the same amount as you entered in your asset entry, and select the same month in which the improvement work will begin:
    tenant_improvement.png
  4. Click Save & Close.
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