Reckon Accounts does not seem to easily handle real estate commissions for a commission-only sales person where a periodic, say, fortnightly or monthly "advance" is paid against future commissions with sale commission, as it falls due to be paid to the salesperson for settled sales is offset against an accumulated total of these fortnightly advances. "A Debit/Credit system" you would call it.
From my year 12 accounting circa 1972 I seem to remember (a dangerously poor memory) that a prepaid expense is an asset by replacing Cash at Bank for the pending commission expense. If I am correct with that then the prepaid (“advance”) commission might accumulate in Reckon Accounts as the prepaid expense in a “payroll asset” account (like PAYG accumulates in a payroll liability account) until the actual commission expense is entered at which point the Payment entry made when commission is payable has the effect of doing two things : (a) a non-cash double entry creating the commission expense in reduction of the payroll asset and (b) for any proportion of the commission which exceeds the balance in the payroll asset account the entry would be a commission expense entry in reduction of Cash at Bank.
Reckon Accounts would have to be able to look at the payroll asset balance for that employee using a logical lookup function and apply it to an apportionment of the commission transaction total.
Another trick is that a commission is often split between more than one employee e.g. the listing agent and the selling agent. There would have to be a separate payroll asset account linked to each employee and there would have to be separate payroll asset lookups happening for each of the employees to which a sale commission is being distributed or apportioned.
The trick would be in having a running total for the accumulating fortnightly or monthly advance payments as a sort of charge to the employee (sort of a reverse liability account), on the one hand, and on the other hand having Reckon reduce the commission amounts payable by the amount of the accumulated charge, then reduce the balance of the charge to zero or to a reduced balance if the accumulated charge is greater than the commission transaction amount.
If the commission payable at that point in time exceeds the accumulated balance then the difference would be payable to the employee as part of a given payroll processing event. Alternatively if it is less, then the accumulated balance is reduced and no additional sum is paid to the employee (because they have received net advances that are greater than commission earned). Sorry if I am being repetitive.
Does anyone know if there is a technique to do this in Reckon Accounts (without having to run a separate excel spreadsheet or whatever).
If not, could Reckon programmers please look at this and maybe consult with the real estate industry to be able to do it in an optimal way????
By optimal I mean performing all aspects of the commission side of our payroll entirely within Reckon Accounts with as much automation as possible but with sufficient flexibility to allow for substantial variation in commission structures. I assume you could make provision for this through your Payroll Item facility? Also, optimal would also mean being able to print a statement, in addition to payslips or summarized in a payslip, that would tell me what additional amount I have to add to the regular payment that gets made to the employee’s bank account in a given pay period in recognition that commission is always a variable amount as opposed to the commission advance payments which are fixed amounts.
The ultimate would be to initiate this from the customer invoice for the full business commission such that a commission split (between the share due to the business and the share payable to one or more sales reps who participated in the sale) is made and calculated at the invoice preparation stage without any of that being displayed on the printed or emailed customer invoice. What I can’t fathom is how Reckon would make the link between the Accounts Receivable section and the Payroll section to allow all this to happen such that it feeds right down the line into such things as payment summaries.
Because commissions are variable amounts there should be something that flags a reminder to apply a nominated tax rate – an appropriate amount based on a subjective estimate of annual earnings. Otherwise Reckon will apply the raw tax tables and possibly apply the wrong amount of tax.