Dealing with channel commission
Your distribution partners are usually set up as channels, and to be able to use the partner's platform to market your accommodations, you have to pay a channel commission. There are several ways to deal with channel commission in BEX PMS and your financial administration.
1. Basic approach
The most straightforward way to deal with channel commission is this:
The distribution channel sends you a commission invoice for the use of their platform.
You process this in your accounting software, and the data in the BEX PMS financial module mainly serves to check the accuracy of the commission invoice.
If the distribution channel charges the guest directly, you send a channel invoice for the full amount due. This means that the channel invoice does not contain a cost item that calculates and deducts commission. When paying this invoice, the channel may already deduct the appropriate commission, which is recorded in a separately sent commission invoice.
You have set up a separate ledger account for each of these channels. When processing the channel invoices (income) and the separate commission invoice (expense) on the same ledger account, the total balance should match the actual received payments (channel invoice minus commission).
You can choose to process this exclusively in your accounting software, using BEX only to create and send channel invoices.
Advantages
You do not have to calculate the commission amounts, only check the commission invoice for accuracy.
No additional cost items need to be set up to deduct commission directly on a channel invoice. This prevents any mismatches due to you and the channel not using the same calculation base (the total of reservation cost items that are subject to commission).
2. Including commission on channel invoice
If you want to deviate from the basic approach, it is possible to deduct and register the channel commission on the channel invoice itself. To do this, you create a mandatory cost item that you apply to the channel invoice instead of the guest invoice.
Note that in this case, the channel invoices are meant to be paid in full by the channel partner. Any separate commission invoice sent by them should be deemed already paid.
Go to 'Costs', and create a new mandatory cost.
Set the price calculation to 'Percentage of the total amount' or 'percentage of total rent amount (incl. discount)'. Which of these you select, depends on how the commission should be calculated according to the agreement with the channel.
Set the default price to the appropriate percentage, but ensure that it is a negative percentage, with a minus sign. This is to ensure that the percentage is deducted from the other channel invoice cost items, not added to it.
Under 'Applicability', apply to all types, but only the one specific channel. Also select 'Always'.
Under 'Financials', select BEX PMS, and the appropriate ledger account.
Only select 'Count as rent' if you want to deduct the channel commission from the base rent used to calculate the settlement payout to the owner. Read more about the effect on owner settlements below.
Be sure to select 'Exclude cost from advertised all-in price'.
Save this new cost.
Go to the channels overview, and open the relevant channel.
Click 'Edit', and go to the section 'Invoicing of rent and costs'.
At 'How do you want to configure mandatory costs?' select 'Configure per cost' and ensure that the cost item that you just created is invoiced to the channel.
Save to update the channel settings.
Raising channel rates to compensate for commission
Using a price factor in the channel settings, it is possible to raise the advertised rates on that channel. This way, it is possible to have the guests themselves pay for the exact amount of commission their reservation will cost you. Read more: Edit the price factor of a channel
Note that if you use a price factor to increase prices for guests, this also means that the calculation base for owner settlements is increased. Read more about your choices regarding owner settlements below.
Effect on owner settlements
When paying settlements to owners, the base rent is the amount that is subject to owner commission before being paid out. If you want to compensate for channel commission rates in this process, you can either adjust the base rent or the charged owner commission.
Adjusting commission charged to owner
If you’re using commission agreements of the type 'Percentage over rent' or 'Pool system', you can differentiate the rate of a specific channel by setting a custom commission percentage. Use a custom commission percentage to increase the rate for this channel.
Read more: Setting owner commission percentages
Adjusting base rent
Important: It is assumed that any channel price factor that you use, is set up for the compensation of channel commission only.
If the price factor deviates from this formula, the 'count as rent' setting in a cost item described below will not easily cancel out the price factor increase for owners.
If you use the basic approach:
If you have not used a price factor to raise channel rates, the base rent for owner settlements is the same as your regular rates.
If you do use such a price factor, the base rent for owner settlements will be equally increased.
To undo this increase for the purpose of owner settlements, two cost items need to be set up. Read more under 'Rent readjustment for basic approach' below.
If you use a commission cost item on the channel invoice:
In this cost item, the setting 'count as rent' will lower the base rent with the commission percentage.
In combination with raised channel rates using a price factor, this will return the base rent to its regular rate.
Not using the setting 'count as rent' in this cost item will keep the base rent as-is.
In combination with raised channel rates using a price factor, the base rent will be higher than your regular rates.
Rent readjustment for basic approach
These instructions apply if: 1) You want to base owner settlements on your regular rates, 2) the channel/guest are subject to increased rates due to the channel price factor, and 3) you use the basic approach for channel commission.
Go to 'Costs', and create two new mandatory costs.
The first cost item you need to set up lowers the base rent for owner settlements, using the 'counts as rent' setting.
First cost item settings:
Price calculation: 'Percentage of standard rent amount (incl. discount)'.
Default price: the same percentage that is charged as channel commission, but ensure that it is a negative percentage, with a minus sign.
Applicability: Apply to the one specific channel, and set to 'Always'.
Ledger account: select BEX PMS, and the same ledger account that is used for the rent.
Invoice rule: Set up an invoice rule called "Rent", where you group rent items, but do not show costs that are part of the invoice rule. Apply it to this cost item.
Count as rent: Activate this setting.
Exclude cost from advertised all-in price: Activate this setting.
The second cost item ensures that nothing changes for the guest/channel as a result of the first cost.
Second cost item settings:
Price calculation: 'Percentage of standard rent amount (incl. discount)'.
Default price: the same percentage that is charged as channel commission, this time as a positive percentage.
Applicability: Apply to the one specific channel, and set to 'Always'.
Ledger account: select BEX PMS, and the same ledger account that is used for the rent.
Invoice rule: Use the same invoice rule as applied to the first cost item.
Count as rent: Do NOT activate this setting.
Exclude cost from advertised all-in price: Activate this setting.
Marking channel reservations as paid
If you receive (part of) the money due from the channel instead of from the guest directly, the payments you receive probably cover all relevant reservations / channel invoices within a certain timeframe.
Using channel settlements, you can easily check whether the total amount received matches the amounts in the channel invoices, and book those amounts onto the reservations (marking those channel invoices as paid).
Read more: Processing channel settlements