Return to Section 2 HERE
Step 5 - Management Fee Policy
Administration -> Policies -> Finance -> Management Fees -> Organization
If you are creating a new Management Fee Policy, you can create different scopes (Organization/Complex/Building). We advise to start with organization and then it can be narrowed down later.
Next you will need to navigate to the 'Calculation Rule' tab and fill out accordingly.
Please see below for information regarding filling out the Calculation Rule information:
- Rule Name: This is will appear on the owner bill that you will send (so e.g. 5% off gross rent)
- Management Entity: Choose the correct entity (Management Fee or CRA in our example)
- Method Type:
1. GL Income: You can choose specific GL accounts for the fee to be taken from applicable income.
2. Leasing Events: Specific events during the lease (eg Renewals or Increases)
3. Fixed Amount: This will take a fixed amount every month.
4. Journal Activity: Financial activity of the client (ie charge a fee % per number of transactions)
- Service Billed: The service type that you have created and it will be used later on as an expense on the vendor invoice.
- Building Item Pct: This is the percentage weighting that you want to deduct.
- Global Item Pct: This will not need to be edited
- Monthly Min: If the management fee is less than this amount, the system will charge this amount?
- Convert Negative: Income can be negative because many expenses may exist. Three options exist:
1. No Change: If you would like to charge the fee
2. Make Zero: If expenses are more than revenue, we advise using make zero (monthly minimum will apply)
3. Invert: If you have a negative $ amount, and want to make it positive.
In regard to Convert Negative - please see an example below.
Let's say the management fee is 10% of the income and the rent is $1,000/ month BUT a negative charge was given to the tenant of -$100.00 (essentially a credit).
With the following options for Convert Negative - here is how the management fee calculated would be.
- No Change - The management fee would be $90 (10% of $1000 - $100)
- Make Zero - The management fee would be $100 (10% of $1000 -/+ $0)
- Invert - The management fee would be $110 (10% of $1000 + $100)
- Account Mapping: Here you will choose the GL accounts that you want to be involved in when the system calculates the income from which the management fees will be applied.
Once you have added all of the rules you wish to apply, select 'Save as Current'.
Continue to Section 4 HERE
Please sign in to leave a comment.