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Commission Schemes

A commission scheme says who earns commission, on what, at what rate or tier, and which accounts the cost goes to. Commission is accrued when a sales invoice posts, clawed back when it is credited, and paid by Finance, never by the person who earned it.

Where to find it

Admin Panel → Sales:

  • Pricing — the Commission schemes and Commission earnings tabs

Architect Panel → ERP - Trading & Analytics:

  • Pricing — the same console; its badge counts commission accrued and not yet paid
  • Commission Schemes — the schemes as a datastore

Who does what

Holders of ERP: Sales set up schemes. Paying commission, and accruing commission a sale missed, is for ERP: Finance or ERP: Administration; nobody can mark their own earnings paid. ERP: Reporting can read both tabs.

Setting up a scheme

  1. On Commission schemes press New scheme and give it a Name.
  2. Payee (salesperson): one salesperson, or Everyone - a catch-all for the whole sales team. A payee's own scheme beats the catch-all. Commission always goes to the document's salesperson, which a new document takes from the customer's account manager.
  3. Pays on: Revenue (net sales value) or Margin (revenue less cost).
  4. For margin schemes, Lines with no unit cost: Refuse the document until every line is costed (the default, which can never over-pay), Leave uncosted lines out of the commission, or Count uncosted lines as pure margin (zero cost). Freight, licences and services often have no cost.
  5. Rate %, used when there are no tiers. Or add Tiers (optional), worked out on each sale's commission base: rows of From amount and Rate percent, and choose How tiers pay: Flat - the whole sale at the band it reaches, or Marginal - each band at its own rate.
  6. Expense account and Accrued commission account: with both set, accruals post to the ledger (debit expense, credit the accrual).
  7. Optionally limit it under Only for sales where (none = every sale), tick Enabled, and press Save scheme.

Accrual, clawback and payment

  • Accrual: posting a sales invoice accrues commission to its salesperson under the matching scheme, dated with the sale, so the cost lands in the month it was earned.
  • Reversal and clawback: posting a credit note reverses the commission on the credited lines. If that commission was already paid, a clawback entry is recorded against the paid earning.
  • Payment: on Commission earnings, filter by Payee and Status (Accrued (unpaid), Paid, Reversed, Clawed back), tick earnings and press Mark selected paid.... Enter the Payment reference, Paid on and the Settlement account to post the settlement.

Sales with no commission

Below the earnings, Sales with no commission lists posted sales with a salesperson where nothing was accrued when they posted, why (no scheme matched, a margin scheme refused an uncosted line, accounts not set), and what would accrue now under today's schemes. Once the scheme is put right, Finance ticks them and presses Accrue commission on selected...; each accrues at its sale's date.

What goes wrong

  • Margin commission is nothing on most invoices: the scheme refuses documents with an uncosted line. Choose how uncosted lines are treated, then catch up from Sales with no commission.
  • Accruals are not in the ledger: one of the two accounts is blank.
  • You cannot mark earnings paid: you are not Finance or ERP administration, or they are your own.

Worked example

A distributor pays its whole sales team 3% of an invoice's margin up to 5,000 and 5% on margin above that, as marginal tiers (from 0 at 3%, from 5,000 at 5%). Freight lines carry no cost, so the scheme leaves uncosted lines out of the commission. An invoice with two costed product lines and one freight line accrues commission on the product margin only, and the earning notes the excluded freight line. At month end Finance filters Accrued (unpaid), marks the month's earnings paid with the payroll reference, and posts the settlement.

Recommendations

  • Pay on margin wherever your cost data supports it.
  • Decide uncosted lines explicitly on every margin scheme.
  • Set both accounts so accruals reach the ledger.
  • Review Sales with no commission monthly; it finds what a misconfigured scheme missed.