Commission Processing

Commission Processing allows users to establish very sophisticated plans to track sales commissions for both sales reps and brokers. Commissions are accrued as they are earned and then paid out accordingly.

The process of setting up a commission structure, accruing for commissions owed, and paying commissions requires configuring many different parts of the system.

A basic understanding of the process is as follows.

Items: Each item sold can be assigned a sales rep and broker commission type code. This allows commissions to be calculated on each item in one of four ways: cents per pound sold, percent of the net sales price, percent of gross profit dollars, and percent of gross margin percent. The specific commission rate paid to an individual sales rep or broker under the commission option is defined in the broker and sales rep tables. All sales reps and brokers are paid under the same method as defined in the commission type assigned to the item. The commission rate can be different from one sales rep to another or one broker to another.

Commission Accruals. Commission accrual calculations are based on sales that are both invoiced and costed. The accrual calculation uses the net product selling (invoice amount minus price exceptions) price buckets multiplied by the quantity sold; other-type price exceptions (freight, packing, rebates, etc.) are excluded from the calculation. Price exceptions for sales rep and broker commissions can be added back to the product price to calculate commissions. From the items accrued, commission payments can be made on all sales or just collected sales if the Collected Sales Only setting for the sales rep or broker is set to Y (Y=yes). The accrual report identifies all items that have been accrued (what the sales rep or broker has earned) and also the amount of commission the sales rep or broker will actually get paid. It is up to your accountant to determine whether the commission accrual account will be adjusted with a journal entry to equal the total at the bottom of this report.

Commission Processing. Commission Processing identifies all items for which commissions have been accrued, but have not yet been paid. From the accrual list, the system determines all items that are payable based on the rules that have been defined. Payable items are displayed for review, and may be changed or reclassified to accrued. When commission processing is updated, a journal entry will automatically be created for the commission payable. The commission expense (expense account) will be debited, and the commission payable (current liability account) will be credited. A commission accrual report will also be printed.

Setting up and running commission processing is a complex operation. Users who are not well versed in Net•Yield setup and operation should plan to have a Net•Yield consultant assist with the process.

Security Required : Payables - Commissions