What are Variable Payments?
Variable payments are additional expenses incurred due to the right to use an asset that varies relative to changes that occur throughout the lease term. This may include payments related to percentage rent or CPI.
Variable payments are excluded from the calculation of lease liability – these payments are simply expensed as incurred.
Examples of Variable Payments
Monthly rent as a percentage of sales or a per-mile rate once a mileage threshold is achieved are both examples of variable payments. Variable lease costs will not be included in the lease liability calculation, but are still required to be disclosed.
How This Works in LeaseGuru
To enter variable payments in LeaseGuru, you may do this during lease entry or by amending a lease under the "Additional Payments" tab shown below.
Once this tab is open, select "Add Additional Payment" to begin entering your payment. When entering this payment, please select "Variable" if this applies as shown below.