Avoya Travel is in talks with suppliers to implement policies to pay agents a nonrecallable portion of their commission at the time of booking. The network has already come to an agreement with one.
Jeff Anderson, co-president of Avoya, discussed the initiative -- Instant Commission 2.0 -- during a media call Thursday.
Anderson said that, like others in the industry, Avoya has been working to close the gap between bookings and when agencies are actually paid.
Its solution is to implement a "booking commission," the first payment from a supplier to an agent, at the time of booking, followed by a "departure commission," the second payment once the client has traveled.
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For example, Anderson said, if an advisor typically earns a 16% in commission from a supplier, the booking commission could represent 5% and the departure commission could represent 11%. The supplier could not recall the booking commission if the client later canceled.
"We believe that the volume of work done at that point in time is significant enough to say, 'Seller, you have earned it. We're going to honor the 5%,'" Anderson said.
It would come at a relatively low cost to suppliers, Anderson said. He estimated that paying a nonrecallable booking commission would cost about $6,000 per $1 million in sales. That figure differs for each supplier.
Reception among the suppliers Avoya has been in talks with has been varied, Anderson said.
He does believe those that are early adopters of early-pay commission for the industry at large, not just Avoya, will benefit from share shift.
Some already have introduced early-pay measures. Anderson applauded them.
While some supplier agreements will just be in place with Avoya, Anderson said the organization is advocating for early agent pay across the board, regardless of an advisor's affiliation.
The technology to pay out two-part commissions could come directly from the supplier, or from an in-house solution Avoya developed for its Instant Commission initiative some 10 years ago. If a supplier wanted to use Avoya's solution, he estimated it could go live as early as November.
Instant Commission is an early-pay initiative the company developed around a decade ago to get money into advisors' hands faster.
Senior vice president of sales Steve Hirshan said once an agent makes a booking, they have the ability to request a portion of their eventual commission in advance. Avoya forwards them that payment. Then, when the commission is paid, Avoya recoups its initial outlay, and the remainder of the commission goes to the agent.
Suppliers don't fund that initiative, Anderson said. That money comes from Avoya itself.