The one-way street of commission

Slow payment of invoices by hotels and venues is a source of frustration, says MD of Clearwater Events.

Stephen Morton-Prior is the managing director of Clearwater Events

 

Hotel and venue commission is a frustrating topic and one that many agencies struggle with. Commission often forms an important revenue stream for an agency, especially with venue find-only projects.

Commission helps fund future projects and in turn can keep costs down for the client. With commission being so important to many agencies, it amazes me how difficult it is to claim commissions due.

A hotel or venue will quite rightly chase for payment of their invoices in a timely manner. Many agencies respect this and work with their clients to ensure payment is delivered on time. However, this does have to work both ways. 

The same hotel or venue can often place commission invoices on 60 and even 90-day payment schedules (that’s if you are lucky). If I was to place their invoice on a 90-day payment, I can bet there would be an outcry from their finance department very quickly.

We have had situations where hotels have denied agreeing to commission, noting commission invoices have never been received or that payment of the invoice has been delayed. In turn, there are some major international hotel chains that can charge a processing fee for actually paying your commission. Yep, that’s right, they take a percentage of your invoice as a processing fee. Not entirely fair and these hotel chains would soon grumble if we withheld money as a processing fee!

It seems a very one-way street in regards to commission payment, especially with some of the larger hotel chains. Commissions are paid on their own terms with little to no regard to an agency’s own invoice terms and conditions. I know industry colleagues who are often chasing commission invoices with many months delinquency, only to be treated with virtual disdain when they dare chase for payment.

Dealing with centralised commission processing centres only adds to the frustration with draconian red tape that is designed only to benefit the hotel chain.

I think certain hotel chains and venues have got away with bullying tactics for far too long when it comes to commission. If an agency has the decency to feed business to your property, then with respect, we deserve the decency of being paid in a timely manner, in full.

Commission to many agencies is a vital revenue stream and forms a valuable component of making sure clients receive extraordinary service at a great price. Clearwater Events has created a clear policy for commission collection and our top tips include:

  • Have the commission values noted in the contract. Or if you prefer, have a detailed email agreeing to the commission value
  • Agree to a timeline before the contract on payment terms of your commission invoice and push for this to put in the contract
  • Identify any processing charges before signing the contract. Remember, this is the time to negotiate, as the hotel/ venue wants your client’s business
  • With the larger chains, opt for payment by bank transfer to avoid processing fees. Make sure you are set up correctly before the event happens
  • Ensure that you have completed all necessary paperwork to ensure you are aligned correctly for payment. Partner with the finance team of the hotel/ venue & do this as soon as the contract is signed
  • Raise commission invoices quickly & clearly state payment terms
  • Follow through & do not be afraid to apply pressure if payment terms are not kept (they would do the same to you)

 

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