Accruing for and Paying Sales Representative Commissions

DEACOM has the ability to accrue commissions, during invoicing, to product-specific commission expense accounts and a general accrual account. In this way, commissions may be accrued based on specific product sales. The Sales > Commissions / Rebates transaction compiles the results of the Commission and Rebate calculations and presents them in a report that is based on the selections chosen in the pre-filter. This allows the Sales team to review Commissions data at the order and line level, while also reviewing Rebate data for a Customer.

Configuration

Commissions and Rebates are calculated based on the parameters set up in the Sales > Maintenance > Commissions and Rebates section of the system. Additionally, Sales Reps must be linked to a Vendor record in order for their Commissions to be paid out. For further information, refer to Assigning Commissions and Rebates and

 

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Process

Accruing for Commissions

The process for using this option involves several setup steps, as indicated below. Links to the specific sections dealing with these setups are also provided.

  1. Item Master "Commission Expense" account and Item Master "Commissionable" flag:
    1. Item Master "Commission Expense" account - Located on the Accounts tab of the Item Master record, available via Inventory > Item Master. Defines the account to which accrued commissions will be debited when Sales Orders containing this item are invoiced. Customer and Facility GL overrides are factored in during this process. When creating new items, the default value for this field is provided by the account specified in the "Commission Expense" field on the Accounts Receivable tab in Accounting > Options.
  2. "Commission Accrual" and "Commission Expense" accounts. In versions 16.00 and prior, these accounts are located on the Accounts tab within System > Options. In versions 16.01 and later, these accounts are located on the Accounts Receivable tab within Accounting > Options. These accounts function as follows:
    1. Commission Expense: Defines the "Commission Expense" account to which Commission expenses will be debited during invoicing.
      • Note: the process is designed to evaluate all items that match the criteria specified in step 1 above and group the items by "Commission Expense" account. Next, the system sums up the extensions for the invoiced Sales Order lines (shipped amounts) and then post a debit to each account for the summed amount per account. Customer and Facility GL overrides are considered in this process.
    2. Commission Accrual: Defines the "Commission Accrual" account to which the total commissionable amount from a Sales Order will be posted. Specifically, the total commissionable amount will be credited to this account during invoicing. Customer and Facility GL overrides are considered in this process. For Sales Rep Purchase Orders, this account will receive a debit for the total commissionable amount.

Accounting Notes:

  • Un-invocing the Sales Order will create reverse postings for the same exact amounts.
  • The system will gather commission accruals during payment entry and voiding if the commissions are based on pay date or payment received date and the accrual and commission expense accounts are set in System > Options. Note that in versions 16.01 and later, the accrual and commission expense accounts are set in Accounting > Options.
  • The Accrual Summary and Accrual Detail reports via Sales > Commissions / Rebates are useful when reconciling the balance of the commission accrual account. These reports display sales orders that have been invoiced but not paid, after their original invoice amounts have been evaluated and factored through the commission rules.
  • "Vendor" field on the Sales Rep record. When the "Create PO" button on the Sales > Commissions / Rebates report is clicked, the system will evaluate the selected Sales Reps and orders in the grid, and group them by Vendor, from the Sales Rep record, and Facility, from the Sales Order. The system will then create a Purchase Order for each Vendor/Facility with lines as follows:
    1. Group the Sales Orders Commission lines by Bill-to company and Sales Rep, summing up the total commissionable amount for that Sales Rep from sales to that Bill-to.
    2. Add a Purchase Order line for each Sales Rep and Bill-to with no item on it (not required on Purchase Orders). The description should be sm_lname, sm_fname - bi_name. The "Purchase to" account for each expense line should be the System Options commission accrual account overridden by Customer and Facility (this is why the lines are grouped by Bill-to and Sales Rep instead of just Sales Rep).
    3. Ensure that this Purchase Order has all normal functions, such as date calcs, fire for it. Follow MRP's create Purchase Order logic.

Paying out Commissions

  1. Navigate to Sales > Commissions / Rebates.
  2. Select a Report type of either "Line Level Detail" or "Order Level Detail". See the Commissions / Rebates Encyclopedia page for details on all the fields referenced on this page.
  3. Select an appropriate "Start date" and "End date".
  4. Fill in any other pre-filter fields as desired.
  5. Click the "View" button to display the Commissions form containing all appropriate Commission amounts as well as data supporting the Commissions calculations. At this point, users may print the report.
  6. Click the "Create PO" button to generate a Purchase Order for the Sales Rep, which can then be paid via a Check Run or Manual Check.

FAQ & Diagnostic Tips

Why can’t I review Commission data for all Sales Reps?

Users may be restricted to a specific Sales Rep or Sales Group within the system. When running Commission or Rebate reports, users restricted to a Sales Rep will only be able to see reports for that Sales Rep. Those restricted to a Sales Group will only be able to see reports for the Sales Reps in that Sales Group. Additional information on Sales Reps and Sales Groups is available via Sales > Maintenance > Sales Reps and Sales > Maintenance > Sales Groups. Additional information regarding user restrictions is available via System > Maintenance > User Restrictions.

How does DEACOM handle multiple active Commissions?

The Commissions Hierarchy is explained in the Calculating Sales Representative Commissions page.

Tip: The "Accrual" field is available to the commissions and rebates reports. This field is calculated as: original order amount * commission rules. The original order amount is the commissionable order amount prior to shipment.