Commissions are an agent’s bread and butter -so that’s exactly what this release is about. Money is hard. Trust me, I know. Like everyone else in the land of death and taxes, my wallet is full of holes. In fact, it's so hard that real estate commission software has never really quite hit the nail on the head. Rex’s commissions system went through its last major overhaul three years ago when we launched the second version of our core product. Since then, Rex has grown significantly as a company and a product. New clients with different models have brought increasingly complex and varied factors into play when dealing with commissions. The existing approach in Rex has stood up reasonably well, but it’s fair to say we’re well and truly ready for a change. Today, we’re excited to announce a key update to commissions and invoicing in Rex.
Changes to invoicing
Commissions now a unique invoice category. Before today’s release, commission invoices were treated the same as any other receivables invoice in the system. While keeping things simple, this approach also made it harder to achieve some key objectives:
- Tracking commission vs. other cash inflow: For example, generating a report that shows actual commission revenue received instead of lumping commissions in with VPA and agent invoices.
- Tracking paid and payable commissions, and forecasting future cash-flow: For example, tracking what commissions are due, but haven’t yet been invoiced, or generating a cash-flow forecast based on due dates for commissions actually invoiced.
No more! From today, commission invoices are treated and reported on as unique from other invoices you issue in Rex. They can be issued from a commission worksheet on a listing, or from the invoices section when in finance mode on a listing. New system list for commission worksheets. To add more help to the poor admin users tracking sometimes dozens of settlements, we’ve also added a new commission worksheets system list. Importantly for this release, the new list lets users search for commissions that haven’t yet been invoiced or that are invoiced in two or more installments (e.g. split commission payouts on projects). Filter functionality that comes standard in all list views makes it easier to keep on top of piles of data. Savvy admin users might, for example create a saved filter for invoices that are due (or overdue) for payment and access the list each morning for quick follow-up. Simple. The changes to commission invoicing is especially helpful for agencies that process substantial volumes. All Rex users, however, will benefit from having a much clearer picture of their commissions cash-flow. To support these changes, we’ve made a few related updates:
- There’s a new drop down in the invoicing section of your Listing records that allows you to sort invoices by type: All, Custom, VPA and Commission.
- You can now issue invoices from a commission worksheet.
- You can now access invoices from a commission worksheet.
- “Commission Invoices” is available as a filter in the all invoices list view
Structural changes to agent deductions in commission worksheet
Agent deductions are a thorny issue. Before today’s release, Rex dealt with agent deductions after we allocated an agent’s award percentage, but before we had set the amount we’d actually pay to the agent. We called these: Per Agent Maximum Distributable Commission Deductions (mouthful we know)
Here’s an example:
Step 1 Gross commission:
$10,000
Step 2 Agent award:
Bob as the buyer's agent, is awarded 40% of Gross commission
$4,000
Step 3 Deductions:
We gave the sellers a gift basket worth $200, which we deducted from the award amount.
($200)
Step 4 Agent distribution:
We allocated Bob 30% of the remaining $3,800
$1,140
Step 5 Balance to agency:
This leaves the agency with $3,800 less the $1,140 distributed to Bob
$2,660
The problem with this approach is the sequence of Step 3 (highlighted in blue). Because the $200 gift basket is being taken out before the agent distribution step, the cost of the basket is actually split between the office and the agent (instead of being charged to the agent only). From today you’re able to add agent deductions after you’ve worked out how much you actually want to pay your agents. We call these Payable Commission Deductions.
Here’s the new revised workflow:
Step 1 Gross commission:
$10,000
Step 2 Agent award:
Bob as the buyer's agent, is awarded 40% of Gross commission
$4,000
Step 3 Agent distribution:
We agree to distribute 30% of the award amount to Bob
$1,200
Step 4 Deductions:
We deduct $200 from the amount to be distributed to Bob
($200)
Step 4 A Balance distributable to Bob after deductions:
$1,000
Step 5 Balance to agency:
This leaves the agency with $4,000 less the $1,200 distributed to Bob
$2,800
We think this works just like most agencies would assume a commissions system would – and also hopefully takes some stress away from your financial staff. Hopefully you’ll find a little less hair in the carpet of your accounting department from now on.
In with the new
In line with these changes, we’re also happy to introduce:
- A cleaner layout and process for agent awards (“responsibility of sale allocation”): this has been separated into its own standalone section.
- Written guidelines and explanation of key values in the worksheet.
- Changes to the commission summary at the end of the worksheet to reflect the above
- New audit logs for user changes to worksheets
To avoid throwing existing data out of whack, we’ve maintained a way to use the old behaviour for agent deductions. This will also allow those of you that want to keep relying on the previous behaviour for agent deductions to do so (though we wouldn’t recommend it). When creating a new worksheet, Rex will default to the new workflow - you can switch back to the old approach from the ‘worksheet settings’ button at the top of the commission worksheet screen. At the end of the day, cash is king. Whether you’re a large agency struggling to deal with sheer volume, or a smaller agency looking for better transparency, the picture should be clearer for you.
