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28.12. Understanding Payment Statements and Reallocation
When you view an agent's payment statements, you will notice, first that the statement is an invoice and second that it uses credits to show the commission payments being made (e.g., as money going out rather than coming in) and finally a refund for the full amount being paid to the booking agent.
The reason the statements look this way is because Arctic must debit the agent's commission account and since you are paying this out to the agent, it must issue a refund for that amount to complete the process ensuring the commissions will be shown as "paid" when viewing an agent's commission account.
As you can imagine, the payment statements are effected when agent bookings are cancelled or changed and therefore less commission are due to the agent. When this happens, Arctic will handle the effected commissions according to the "Automatically Reallocate" setting selected. Before we discuss how the reallocations are handled, let's first look at the options you have when you cancel an agent booking that has the "Who Pays" set to customer.
Cancelling booking agent activities is just like cancelling activities for your normal guests. In the case where the agent is the "Who Pays", you will assess any cancellation fee necessary and then process any refunds accordingly. In the case of bookings where the customer is the "Who Pays", Arctic will present you with an option to preserve the agent commission as shown here:
If you choose "No, cancel the commission", any commission already paid to the agent will result in either an over-paid commission that you must manually re-allocate to another activity or Arctic will reallocate the amount for you automatically towards the agent's other unpaid commissions. If you choose "Yes, leave the commission in place up to the maximum value of the cancellation fee", Arctic will leave any paid commissions as is, if the cancellation fee fully covers the commission already paid to the agent. If the cancellation fee is less than the commission already paid to the agent, the result will be either an over-paid commission that you must manually reallocate or Arctic will reallocate the amount for you automatically towards the agent's unpaid commissions.
These behaviors are again determined by your "Automatically Reallocate" setting and are only available for agents for whom the "Who Pays" is set to customer.
If a commission has already been paid to a booking agent, and subsequent changes cancel or reduce the commission, then Arctic's "Automatically Reallocate" setting kicks in and based on the option chosen, either "Yes" or "No", Arctic will do one of the following.
Automatically Reallocate: Yes
If you chose "Yes" for this setting, Arctic will apply any commission or part of a commission paid on a previous payment statement for a cancelled reservation or reduced reservation, towards other unpaid commissions that are owed to the agent. It does this automatically and it gives you the option to rebuild the effected payment statement so that you can provide your agent with detailed information regarding what the original over-paid commission was for and how that overpayment was subsequently applied. (Note: You do not have to rebuild the previous payment statement, Arctic will still apply the over-paid amount to the agent's unpaid commissions but rebuilding the original payment statement will make it clearer what changed and how it was handled.)
When "Yes" for the "Automatically Reallocate" setting is selected, if you run an agent's commission report and the agent has commissions that have changed due to a cancellation or reduction, you will see the following in the "Payment Statements" section of the page:
Notice the "View & Fix" button. When you click the "View & Fix" button, Arctic will display the following page:
On the "Changes in Commission Payment" page, Arctic displays all of the commissions related to the effected payment statement. It gives you the "Description" column that lists what the commission was for, the associated activity number and the guest's name just like you see on the "Commission Report" page. In addition to the "Description" column, you will see a column called "Previous Allocation" which will show the original amount of commission paid on the statement. The "Current Allocation" column shows the total current commission amount that is owed for the commission. The "Change" column shows the change. If the "Change" is in red, this indicates an amount that was overpaid originally. If the "Change" is in green, this shows new commissions that were added to the statement and the amounts applied to them to offset the overpayment. Arctic only adds the new commissions to the report, if you have "Yes" selected for the "Automatically Reallocate" setting.
At the bottom of the page, you see a blue "Rebuild Payment Statement" button. Clicking this button will cause Arctic to rebuild the original payment statement to reflect the changes indicated above. Again, this is a great way for you to provide your agents a way to see and understand the changes that occurred and the commissions that were altered because of the changes.
The revised payment statements look like this:
Notice the overpaid commission amount shows as a "charge" on the statement and that the additional commission payments are then added to the statement to offset the overpayment.
Automatically Reallocate: No
If you chose "No" for the "Automatically Reallocate" setting, much of the information will still look the same, i.e. you will see the message shown above indicating there have been changes that effect a previous payment statement and you will still see the "View & Fix" button. The main differences become clear on the "Changes in Commission Payment" page as shown here:
Notice, with the "Automatically Reallocate" setting set to "No", that while the "Change" column still shows, it only shows the amount of the commissions that were overpaid. It does not add any other commissions to offset the over-payment. At the bottom of the "Change" column you will see the total amount that has been overpaid on the original payment statement. This is shown in green because this is now the payment amount the agent owes you or that you can now apply towards the balance of the next commission check you will issue to the agent. To alert the agent of the changes, you can do one of two things. One, you can print the "Changes in Commission Payment" page or two, you can rebuild the original payment statement by clicking the blue "Rebuild Payment Statement" button. Either method will allow you to give the agent a way to see the change and understand how the overpayment then effected their current commission payment. If you choose to "Rebuild the Payment Statement", when the "Automatically Reallocate" setting is set to "No", Arctic will automatically add a "Payment" to the rebuilt payment statement. Essentially, Arctic assumes the agent will give you a payment for the amount of the over-paid commission. The new statement will look like this in these instances:
Notice again, that Arctic added "charges" for the commissions that were overpaid but instead of adding new commissions to offset the amounts that have changed, it has added a "payment" from the agent to balance the statement to 0.00. Again, if you choose to rebuild the original payment statement and you provide your agent with the newly rebuild payment statement and the current payment statement, your agent will be able to account for the difference in the amount of the commission check versus what their current payment statement shows.
In the next, sections we will demonstrate how to create filter reports to know which agents have commissions in the current statement period and to create billing statements for your agents for whom the "Who Pays" is set to agent.