In the realm of property management, commission calculations are not merely an administrative task; they are the financial lifeblood of property managers. These calculations determine the portion of revenue that property managers collect as their commission from homeowners, a process pivotal in managing owner relationships.

Commission calculation is often complex, with varying commission formulas among property managers, necessitating an automated solution for precision and efficiency. This is where Clearing steps in as the solution to this challenge by empowering users to streamline their commission calculations, providing property managers with a reliable way to collect their well-earned property management commissions, and transforming property management dynamics.

Clearing, a leading platform in property management, has introduced a game-changing feature – “Commission Setup”. It provides a streamlined and efficient solution to automate commission calculations in property management. This feature offers property managers flexibility, allowing them to define different commission formulas for each homeowner and asset. The feature allows property managers to select specific category items they want to apply commission to, i.e. accommodation fares, pet fees, etc. By doing so, property managers can automate, calculate, and display commissions in owner statements with transparency and clarity.

Log in to your Clearing account. Within the Clearing platform, navigate to the 'Rules' section in the side menu. Here, make sure to be on the 'On Bookings' tab and then click on the 'Commission' tab where you can define commission formulas for each homeowner and asset.

To create a new commission formula Click on "+" sign.

Note that you can create as many formulas as you need. Each formula can be applied to a different set of properties. For example, you might charge 20% on certain properties and 15% on others. With Clearing, you have the ability to select the assets under each formula.

The name of your formula should be relevant and based on the percentage you charge. For example "20% Commission".

On the left side of the commission setup, you will see a list of the homeowners you manage and their respective assets below. Select the assets for whom you want to set up the commission formula you are creating.

In this step, you can define the commission formula for the selected assets. In Clearing, the commission formula can be a combination of a percentage based calculation and a specific fee per booking. In most cases, it will only be a percentage based formula but some users charge an additional fee per booking so we give you to the option to select a "Flat" or "Percentage" commission item.

Let's focus on the percentage based formula. Your management commission is typically applied on a combination of fees, for example 20% of the accommodation fare after discount and channel fees are deducted. You might also charge 20% of the Pet Fees and other extra fees.

To allow for this flexibility and granularity in Clearing, you can select each category to apply your percentage on and add them to the formula. Those categories are the same as those used to categorize the financial items in each booking. For example "Accommodation Fare", "Cleaning Fee Collected", "Discount", etc.

For example, to create the above scenario where you charge 20% of the accommodation fare after discount and channel fees (also called host fees) are deducted and 20% of the Pet Fees, you want to:

We are adding the Discount and Host Fee in the formula with a positive percentage because those numbers are already negative. So from a math perspective, we are simply doing:

20% * Accommodation Fare + 20% * Discount + 20% * Host Fee + 20% * Pet Fee

which is the same as 20% * (Accommodation Fare + Discount + Host Fee + Pet Fee)

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If you need to apply your commission on other categories, you can repeat the process for each category. Click on the small information icon to find your list of categories applied on your booking financials.

This step is optional.

On top of selecting the assets for each formula, you can optionally select to apply a formula for certain channels. You can also decide to apply the formula on bookings with a minimum number of nights. For example, you might have different management rates for mid and long-term stays.

By default, the formula will be applied to all bookings regardless of the channel and length of the stay so you don't have to use those checkbox unless required to.

Now that you have setup your first management commission formula, go to your Bookings section on the left, and open a booking for an asset that was selected in your management commission formula. Open that booking and scroll to the "Management commission" section. There, we detected that the formula was applied for this asset and you will find the name of the formula. Next to it, you will find a button that says "Apply" and you can click on it.

Then scroll up and you will find your percentage rate in the commission column for each category that belong to your management commission formula. Again, if you see a positive percentage for a negative amount that means that we are deducting this amount before applying the percentage.

Once you have verified this step, you can scroll back to the management commission section and find the result of the formula. This number is your management commission for this specific booking. It will be reflected on owner statements and deducted from your owner's payouts.

You can manually apply this formula on other bookings that have different fees to make sure that it works as expected. Once done, you can go back to your Rules -> By Booking -> Commission and for the formula created, you can click on the right "Apply formula".

To apply your formula only on the most recent bookings, you can check the box "apply the rule on a specific date range" and select a threshold date.

If you have multiple homeowners with different commission formulas, repeat these steps for each homeowner. You can create individualized formulas tailored to their specific needs. Simply click on the 3 dots next to the formula name and click "Duplicate". This will create a similar formula that you can rename and for which you can change the percentage for each category and then select the assets for this formula.

With the Commission Setup completed, Clearing will now automatically calculate and display commissions for each homeowner based on the defined formulas and revenue items. You can access these commission details in owner statements or through the “bookings” menu option.

Automate your commission calculation process with Clearing's commission feature to ensure accurate and timely commission collections from homeowners (i.e. Short-Term Rental commissions and vacation rental commissions), strengthen your relationships with homeowners, and streamline your property management operations.

Are you ready to revolutionize your property management by automating commission calculations with clearing?

Connect with us for a personalized live demo today and learn how Clearing can transform your property management financial operations, making commission calculations effortless and accurate.

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Clearing is a Financial Technology Company, not a bank. Deposit Accounts are issued by Evolve Bank & Trust, Member FDIC.