Commissions

Commissions

Commissions purpose

The purpose of commissions functionality is to enable leasing companies to manage a variety of commissions scenarios. Commissions can have different posting setups for each financial product. This functionality allows leasing providers to easily set up and configure various combinations of commissions, making it easier for them to offer competitive and attractive leasing options to their customers. It also offers possibility to claw back commissions if contract was terminated earlier.

1. Leasing Setup

Relevant fields on Leasing Setup:

Commission Batch Posting Rule – defines if commission batch posting will create and post actual purchase document or just G/L transactions.
Comm. Batch No. – commission batch number series.
Commission Batch Posting No. Series – posted commission batch number series.

Figure 1. Leasing setup, Commission fast tab

2. Financial Product Setup

To setup how commissions are used, field Commissions Dr Posting should be selected in Financial Product setup. There are 3 options:
No posting on Activation - no postings occur on activation and commission batch must be used to invoice commissions receivers;
Originator Payable – commission receiver is invoiced and balanced with Commission Expense Accrued account (Leasing Posting Setup fields are used: Comm. Expense Accrued (BS) and Comm. Amortization Profile);
GL Clearing Acc. - Commission amount is posted to commission expense account and balanced with clearing account. Fields used for posting: Comm. Expense Accrued (BS), Comm. Amortization Profile, Originator Clearing Acc. (Cr).
Commission VAT Group – defines VAT group for commissions posting.

Figure 2. Financial Product setup, Accounting and Tax fast tab

3. Leasing Posting Setup

It is required to fill in account numbers in Leasing Posting Setup for each financial product to be able to use commissions. Fields that must be filled: Comm. Expense Accrued (BS), Comm. Amortization Profile, VAT on Commission (Group), Originator Clearing Acc. (Cr).

Figure 3. Leasing Posting Setup

Figure 4. Leasing Posting Setup

4. Commission Schema Setup

In order to calculate commission, commission schema must be created and assigned to originator. Navigate to search menu and type Commission schemas to find a list of schemas. Use New action to create a new schema. Commission schema card consists of General group and Commission Schemas part.

General group fields:
Code – unique identifier for commission schema.
Description – short description of the schema.
Valid From – date when schema becomes valid.
Valid Until – date when schema becomes invalid.
Commission Schema fields:
Above Amount Financed – amount from which commissions will be calculated.
Commission % - commission percentage, if commission % is used, brokerage % should not be used in the same line.
Brokerage % - brokerage percentage, , if brokerage % is used, commission % should not be used in the same line.

Figure 5. Commission Schema Setup

5. Commission Aggregation Group Setup

To track total sales volume and pay commissions accordingly, you can create a commission aggregation group for the originator. To do so, navigate to the Commission Aggregation Group page and create a new group.

Code – create code for the group.
Description – short description of a group.
Pay Commission To – select originator code, that should be receive commisions for this group.

Figure 6. Commission Aggregation Group Setup

6. Commission Claw Back Setup

If contract was terminated early, it is possible to claw back a percentage of commission back from the originator. To set up commission claw back rules, navigate to Commissions Claw Back Setup page.

Valid From – Date from which this setup is valid.
Valid Until – Date until this setup is valid.
Termination Term (Months) – months after contract activation.
Claw Back % - percentage of commissions to claw back from originator.

Figure 7. Commission Claw Back Setup

7. Commission Setup on Contact

To assign commission schema and group to an originator, navigate to contact card and find Commission tab. In Commission schema field select commission schema which applies to this originator and in Commission Aggr. Group field select group to track total sales volume.
Note: originator contact should have assigned Is Originator role in Roles tab.

Figure 8. Contact card, Commission fast tab

8. Schedule

When creating application and selecting originator with commission schema, you can confirm that the commission schema was added and commission amount was calculated by navigating to Installment schedule, then Commission / Subvention fast tab. Notice that Pay Commission To field is populated with the value from Commission Aggr. Group record.

Figure 9. Schedule Card, Commission/Subvention fast tab

If commission schema has brokerage % field populated instead of commission %, commission amount will not be calculated. Brokerage amount will be calculated instead.

Figure 10. Schedule Card, Commission/Subvention fast tab and Brokerage amount

9. Contract Activation

Depending on Financial Product configuration, general ledger entries cabn be created upon contract activation.

Figure 11. G/L Entries

10. Commission Batches

If commissions were not posted during activation, it must be done manually. To do this, navigate to the** Commission Batch List** page and create a new batch. Select Posting Date and Payment Due Date. Posting Start Date and Posting End Date are suggested automatically but can be modified manually if needed. Use Suggest Commissions action to populate commission batch with commissions for selected period. This action will also create lines for commission claw back if there are any in the selected period. Note that Entry Type field values are different for commissions and claw back. Claw back amount is calculated from the Claw Back setup.

Figure 12. Commission Batch card

When batch lines are reviewed, use Post action to post lines. If Commission Batch Posting Rule is Via PO in Leasing Setup, then Posted Purchase Invoice will be created for new commission line and Posted Purchase Credit Memo will be created for claw back line. Otherwise, G/L entries will be created instead.

Figure 13. Commission Batch card, created documents numbers