Commission Management from A to Z

The agent commission is one the most important things that brokers manage--and often one of the most complicated. Every company has its own commission structure, and it's common for individual agents within a firm to be on different commission plans. Additionally, agents have differing anniversary dates, splits, and recurring charges.

All these variables mean that the room for error is high--mistakenly pay an agent less than what they're owed, and they're unhappy, stop producing and may even switch firms. Overpay an agent, and it's your bottom line that's unhappy.

Most brokers mitigate this potential headache by automating commission management. Some use components that are part of their existing back office system or transaction management software, while others use third-party tools for commissions alone.

Regardless of which option you prefer, there are some basic functions that any commission management solution should include. Today, we'll take a look at what those are. To help us get a deeper understanding of what to look for in a commission management program, we turned to Andrew Chishchevoy, co-founder of Brokermint, a back office solution that offers a robust transaction management component.

"What we hear when we talk to companies is that brokers need a system to keep the information in their commission structures 'clean'--the splits, tiers, recurring charges," says Chishchevoy. "This is important because, ultimately, you use that information to pay agents. When the data is incorrect, that's where problems begin."