Commission types explained

When creating an Asset, you will have the option to choose from 3 different commission types:

  • Percentage of Rent
  • Fixed
  • Percentage of collection

The different types explained:

Percentage of Rent - Commission is calculated as a percentage of the monthly rental.

  • Commission is only calculated on the monthly rent amount, and it is a set % every month.
  • If the lease renewal is done, the billing rule will auto-update with the % of the new rental.
  • If you create a Managed type Asset with a percentage of rent commission type, the commission billing rule will create automatically on the Landlord Expense account. 

Fixed - Commission is specified as a Fixed amount.

  • You will note that no billing rule is created automatically on the Landlord Expense account with this type. 
  • You need to create the billing rule yourself and then specify the fixed amount you want to take monthly. 
  • When a lease renewal is processed, the billing rule needs to be updated manually.

Percentage of Collection - Commission is calculated as a percentage of the amount invoiced on the Tenant account, and is invoiced for all categories not excluded from the calculation.  

  • Default excluded categories must first be setup in Company Settings -> Lease Settings for this commission type.  It can also be customised on the Asset Mandate if this is different for the specific Asset.
  • Collection commission requires no billing rule to be set up
  • Commission invoices will be created on the Landlord Expense account when creating an Invoice on the Tenant account (only for categories not excluded). 
  • On receipt of payment, Collection Commission will be calculated based on the amount received from the Tenant (or total funds in the wallet), also taking into consideration categories that are excluded as well as the amount due on the Landlord Expense account.
  • The formula for the calculation is shown below: 

When to utilise Collection Commission ?

Collection commission can be utilised for two main reasons:

  1. You take commission on something other than Rental income as well, e.g. municipal recoveries.
  2. You only take commission based on what was actually paid by the tenant, not on the total invoice loaded. 
  • If you only take on what was received, there are two scenarios:
    1. Your tenants pay short the majority of the time -  If you take commission on Rent and other recoveries, Collection Commission would be a good option. 
    2. Only a few tenants pay short once in a while - If you only take commission on Rent and no other recoveries, you can still utilise Fixed or Percentage of Rent commission structure. When processing the monthly payments, you will have the ability to amend the commission amount to be paid manually.

Effective from 16 September 2022, Collection Commission will be charged against a sub-category to ensure complete transparency of the lease from where the collection commission originated from. 

The following changes were made:

  • The Collection Commission category on the Landlord Expense account has been changed to a HOLDER category (see example below):     

  • All existing Collection Commission transactions has been moved to a default sub-category called "Legacy Collection Comm" from where any remaining old balances still needs to be managed.
  • The Company Beneficiary will automatically be linked to all sub-categories of the collection commission category.
  • Going forward, Collection Commission will be managed as follows:
    • When a new Asset is created and the commission type is set to Collection Commission, the Collection Commission category will automatically be changed to a HOLDER category.
    • When Collection Commission is charged, the system will automatically create a sub-category for the Lease in question and create the billing transaction against the lease specific sub-category.
    • On the allocations dashboard, collection commission associated with each lease from where they originated will be shown separately as shown below.
    • If the auto suggest feature is used to suggest payment instructions, the system will only auto suggest payment instructions for the collection commission that is associated with the specific lease from where it originated.
  • For reference purposes, the wallet reference will be included in the transaction description for the Collection Commission billing transaction.
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