Markup on Vendor Expenses

There are some property management companies that operate as a vendor liaison. The property management company contracts with vendors and pays them directly from their own property management operating account. 

In those cases, the property manager might add a Markup fee to vendor expenses to compensate for their time and coordination. 

For example, if you receive a $90 invoice for plumbing work from ABC Plumbing and charge a $10 mark-up fee for every invoice, the total cost to the owner would be $100.

To maintain accurate records, you will want to:

• Create an Expense category 
• Create an Income category
• Add a bank account to document transactions made to and from your business account (not the operating account)

STEP ONE - Bill the Property the Marked-Up Expense

In your Rentec Direct account: 

1. Click on Properties
2. Right-click on a Property and choose Post Expense
3. Indicate the full charge to the property (vendor invoice + mark-up = $100 in this example).
4. Select the Bank account the funds are to be pulled from if you are paying out this expense to your management company as the payee. Or, leave the Bank account as NONE if the funds are to stay in your operating account.
5. Select your Repairs Expense Category
6. List your management company as the Payee
7. Add the name of the vendor performing the work in the Memo line  
8. Click on Post Expense 

STEP TWO - Track the True Vendor Charge 

Now that you have charged the property for the marked-up expense you can track the actual vendor expense ($90 from the example above), and you'll do so to your business account at a company level.  

Information to access a simple solution for tracking company income and expenses separate from property/owner expenses within the Rentec Direct software can be found here: Tracking Business Income & Expenses

Once that business ledger has been created you'll post the actual vendor expense on that ledger. 

In your Rentec Direct account:

1. Click on Banking
2. Right-click on the bank created to track business income and expenses and click on Post Expense
3. Enter the details of the actual vendor payment (amount, payee, category, etc.).
4. Click on Post Expense 

STEP THREE - Track Your Vendor Markup Income 

You'll now post an income transaction to that same ledger for the amount you billed ($100 in our example above) in  STEP ONE.  

In your Rentec Direct account: 

1. Within that same business ledger click on +Post Income
2. Enter the total Amount of income you received (mark-up plus vendor cost). 
3. Choose the Income Category 
   
   System Advice: It is highly recommended that you create a separate set of categories dedicated to tracking your property management business income and expenses. This will allow you to pull reports of those categories separate from property expenses and tenant income. Instructions on setting up new categories can be found here: Setting Up Categories | Chart of Accounts
4. Add a Memo to track the details of the payment. 
5. Click on Post Income 

System Note: In summary:

• Expense the cost plus markup from the property ($100) payable to you (your company, LLC, or other entity that manages your maintenance)
• Document the Full income in the bank account used to track your company income and expenses.
• Expense the actual vendor payment from the bank account used to track your company income and expenses, leaving the difference in your account.