Debitsuccess: Sub Merchant Agreement Help

The Sub Merchant Agreement, at the end of the Management Agreement, is an additional mandatory agreement for centres to complete, as described here. This section identifies any exposure to prepayments for Visa or MasterCard. The calculations for the dollar figures can be rough estimates.

The first section is for any business owners that own more than a 25% share:


Anyone that owns more than 25% of the business needs to be listed here.

For the prepayment exposure section, the first question is essentially asking if you bill in advance or in arrears. 

If you don't bill in advance, then you can answer "No" and then put "N/A" in all of the remaining fields. 

If you do bill in advance, then you need to enter your (estimated) annual credit card turnover first:


Next, determine the average transaction size for each credit card payment. You can estimate this by doing {Your Day Rate} divided by {Average CCS Amount) times by {Days Service is Open}.

For the percentage of credit card sales being prepaid question, If you bill solely in advance, then this would be 100%. Otherwise, any rough estimate of percentage will be fine. 

For the next section: 


If you bill in advance for the current week, then you'd be billing seven days in advance, meaning the average delivery terms of prepayments would be 7 days. You'd need to put “7 days” in each of the four boxes: If weekly payments; If fortnightly payments; If monthly payments; If a combination of all of the above. 

If you bill in advance for the current week and the following week, then “14 days” would need to go in the boxes, and so on. 

For the last section, if you're billing 7 days in advance and entered "7 days" in the fields above, then the average dollar amount outstanding would be 0 - as there are no prepayments outside the 7 days. If you bill 14 days in advance, then it would be 50% of the fortnightly transaction. This means that if the day rate is $100, and CCS is 50% and the parent has the child in every day, then they'd be billed for 14 days ($700), but then outside the 7 days means that there are 7 days remaining, equalling $350 in this example. 

Again, these just need to be estimates and are only relevant if you bill in advance. If you only bill 20% of your parents in advance, then starting by estimating for 100% of parents, then reducing those numbers by 80% is sensible.