Sales Commission needs JustificationThe argument goes with businessmen till today that compensating salespeople is a business development expenses or it’s an investment to elicit the performance of their business. The answer for this question is obvious. Compensation to sales people in terms of incentive or commission is definitely an investment as this will enable the performance of their business.
The standard way of compensating marketing people in most businesses is Sales Commission. Sales commissions are calculated dynamically based on the performance of a sales person. Sales people are the most important employees in any company and adequately compensating them for high performance becomes a vital business activity for a company.
In addition to Salespeople, Sales managers, technical support personnel and others may also be recognized for commission. Salespeople’s compensation can be a combination of Base Salary and Sales Commissions or can be pure Sales Commissions. Salespeople with pure Base Salary are rare. Salespeople take a risk with their compensation in a commission situation, but they typically have an upside where they could make far more than the average employee, if their performance is high.
Commission calculating methods are possibly the most variable methods performed by an organization. These methods tend to vary significantly from industry to industry, and many times within companies in an industry. Sales commission programs tend to be different by employees even within a company. Unlike regular salary, Sales Commissions tend not to be governed by a lot of laws and rules, and this adds further variability to the programs. Variations can include the kind of performance being compensated (Revenue Vs Gross Profit), the frequency of calculation (Monthly Vs Quarterly), and the type of transactions being compensated (Invoices Vs Payments), the level of salespeople being compensated Sales representative Vs Sales Manager and so on.
To help your business to perform and to have better people to support and trustworthy, one should possess a very good system of compensating the people. Thus, CI.COM has come out with a new system called Commission Manager for planning, advising and paying commissions on time to people who will really feel happy to perform.
It’s all about – Commission Manager
Commission Plan
A Commission Plan is the fundamental groundwork of Commission Manager Program. The commission plan is the keystone of setting up the performance expected from the sales people and the compensation for the performance at varying levels. Some of the notable plans that help the users to come out with a good compensation to sales people are plotted hereunder.
Period
This is the period of performance within which goals are set and attainment is measured. This can be a month, quarter, half-yearly, full year or any periods.
Volume
The volume of sales determines the performance. Generally, business that has got good number of products to sell and make volume profit prefers the volume based commission to their sales people.
Territory/ Location
The performance is measured based on the sale in a geographical customer based location or the territory of the customers. This helps the business in planning on compensating people who do sales based on geographical locations where, selling a product is more challenging.
Job Category
The commission for sales rep may not be the same as the commission for a sales manager. This may vary based on their job category, roles and responsibilities.
How Commission Manager works?
Commission manager module works as like the standard modules of sage ACCPAC ERP
• Initially, the user needs to set/choose the parameters that are necessary for the commission calculation like Setup->Options UI, Commission plan->Commission Plan UI etc.
• The user can categorize the salesperson into groups or by job category. Likewise he can categorise the customer based on the location. This categorization can be used in commission calculation.
Commission calculation
• Commission manager automatically fetches the invoice and credit note information from the OE/AR module without user intervention.
• Based on the settings, the commission will be calculated once the specific document in AR (Invoice or credit note) is posted in ACCPAC.
• The user can edit, advise, pay (both partially and fully) the commission to the salespersons.
• The payment of commission can be accounted in ACCPAC either by creating an AP Misc payment or GL Journal
Ragava Prasad
CI•COM (P) LTD.
prasad@ciglobalsolutions.com .
To know about Sage products, visit: www.sagesoftware.com
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Ragava Prasad at his booth at Nashville
Ramani along with client
Ragava Prasad with clients
