Turnover rent is currently available to a limited group of customers as part of a beta.
Re-Leased calculates turnover rent from the sales you record and the rules set on the lease term. This article explains how the calculation works, so you can check the figures with confidence. All the settings mentioned here are configured on the term — see Setting up turnover rent on a lease.
The basics: rates and tiers
Turnover rent is a percentage of the tenant's sales. The percentage can be applied in two ways:
Flat rate — one percentage applied to all sales. For example, 6% of $50,000 in sales is $3,000 of turnover rent.
Tiered rates — different percentages for different bands of sales. Each band is charged only on the sales that fall within it.
With tiered rates, the calculation steps through each tier in turn. For example, with tiers of 5% on the first $100,000 and 7% above that, sales of $150,000 produce:
5% on the first $100,000 = $5,000
7% on the next $50,000 = $3,500
Total turnover rent = $8,500
If the lease uses sales categories, each category has its own rate (or its own set of tiers), and the amounts are added together.
Collection period vs calculation period
Two settings on the term control how often sales are reported and how the tiers are applied:
The revenue collection period is how often the tenant reports sales (monthly, quarterly, or annually).
The calculation period (set by the tier reset period) is the span over which the tiers apply before resetting.
When these two match, each period is calculated on its own. When the calculation period is longer than the collection period, turnover rent is calculated cumulatively.
How cumulative calculation works
With cumulative calculation, the tiers apply to the running total of sales across the whole calculation period, not to each period separately. For each new period, Re-Leased:
Adds the period's sales to the sales already recorded in the calculation period.
Applies the tiers to that cumulative total.
Subtracts the turnover rent already accounted for in earlier periods.
The remainder is the turnover rent for the current period.
This means a tenant moves up through the tiers as their sales accumulate over the period, rather than resetting each month. It's also why missing earlier periods affect the current figure — the running total needs to be complete. If sales are missing, Re-Leased warns you when you record the period.
How base rent is treated
The term's base rent treatment setting decides how the tenant's base rent affects the turnover rent charged:
None — the tenant pays the full turnover rent on top of their base rent.
Subtract from base rent — the base rent already paid is deducted from the calculated turnover rent for the period. If the base rent is higher than the turnover rent, no turnover rent is payable for that period (the amount doesn't go below zero).
Lesser of — base rent and turnover rent are compared, and the treatment is resolved at reconciliation so the tenant is charged correctly across the full period.
Where base rent applies, Re-Leased pro-rates it to match the period being calculated, including when the base rent changes part way through a period.
Checking a calculation
When you record sales, you can expand the breakdown in the dialog to see the sales used, the tiers applied, any base rent deduction, and the resulting turnover rent. This is the clearest way to check a specific figure.
[Image 1: The calculation breakdown showing sales, tiers applied, and the resulting turnover rent]
Next steps
See Recording sales figures for a period and Reconciling turnover rent.