Commissions
General
A commission is a fee paid to an agent (an external company) or an employee (internal
salesperson) for transacting a piece of business or performing a service. It is
fairly common to pay commissions for sales.
Basic Data
To make this possible, you must connect the customer to one or more
commission receivers. You start by setting up basic information about commission
receivers and commission receiver groups. Depending on the setup, you can
calculate commissions to individual commission receivers as well as to
commission receiver groups. In the information about the commission receiver,
you state, among other things, information about the salesperson if an internal
salesperson is entitled to receive commissions. You can also enter the currency
of the commission receiver, which is the currency in which the commission amount
is being paid. If you enter a commission agreement with a different currency
this will only change the calculation currency.
Commission Agreement
The next step is to create a commission agreement to exactly control how and
when commissions are to be calculated. You can enter more than one agreement
line to each commission agreement. You can set a wide range of terms, consisting
of any combination of the following:
- Validity Period: The date between which the commission agreement is
valid.
- Calculation Base: Whether the commission calculation should be based on
customer order or customer invoice information. The calculation base decides
which quantity, amount and date to use for finding a valid agreement
revision. If you select Order Entry, the commission will be calculated
immediately, based on information from the order line. If you select
Invoiced, on the other hand, the commission will not be calculated until the
order line is invoiced. If there is an existing invoice the information from
the invoice will be used for the calculation of the commission, and the
invoice date will be used to find a valid commission agreement revision. If
no invoice is created, the total due commission amount will be calculated
using the data from the order line as a basis for calculation and for
finding a valid commission agreement revision.
- Currency: The currency in which the commission is being calculated. N.B.
If you have connected a different currency to the commission receiver the
commission amount will be paid in this currency.
- Sequence Order: The order in which the different agreement lines are
taken into consideration. Lines with lower sequence numbers are considered
before lines with higher numbers.
- Percentage: The commission percentage to be used, unless overridden by a
valid range line in the Commission Agreement Line window. This means that
the percentage on the agreement line will be used until the first valid
range is reached, i.e., the percentage entered in the commission agreement
line does not have any influence. The percentage can be left open if a
commission range is to be applied.
- Range Type: Every agreement line can be set to apply within a defined
interval only. The possible range types are:
Quantity - The commission is applicable only for sales exceeding a set
minimum quantity, expressed in the sales unit of measure. The quantity will
be either the quantity from order line or the total invoiced quantity,
depending on previous settings. You must have defined a sales part to be
able to select this range type. You must go to the Commission Agreement Line
window to specify the details about the interval.
Amount - The commission is applicable only for sales exceeding a set minimum
amount, either the order line amount or the total invoiced amount, depending
on previous settings. You must go to the Commission Agreement Line window to
specify the details about the interval.
Discount - The commission is applicable for sales exceeding a set minimum
discount, either the total order line discount or the total invoiced
discount, depending on previous settings. You must go to the Commission
Agreement Line window to specify the details about the interval.
- Calculation Method: If you have chosen Additive, the system will apply
all commission lines that meet the set conditions. If you have entered
Exclusive for some lines, the system will first check if any of these, in
sequence number order, meet the requirements. It will apply only the one
with the lowest sequence number and will disregard all others.
- Sales Part Number: The commission will be calculated only for the
entered sales part number.
- Customer Number: The commission will be calculated only for sales to the
entered customer number.
- Customer Statistic Group: The commission will be calculated only for
customers with the entered customer statistic group.
- Customer Type: The commission will be calculated only for customers of
the entered customer type.
- Customer Group: The commission will be calculated only for customers
belonging to the entered customer group.
- Country: The commission will be calculated only for sales to the entered
country.
- Market: The commission will be calculated only for sales to the entered
market.
- Region: The commission will be calculated only for sales to the entered
region.
- Sales Price Group: The commission will be calculated only for sales
parts belonging to the entered sales price group.
- Sales Group: The commission will be calculated only for sales parts
belonging to the entered sales group.
- Commodity Group 1: The commission will be calculated only for sales
parts with the set value as commodity group 1.
- Product Code: The commission will be calculated only for sales parts
with the entered part product code.
- Product Family: The commission will be calculated only for sales parts
belonging to the entered product family.
Commission on Customer Order
When you enter a customer order line matching the above set criteria, the
system will generate one or more order commission line(s). You can later
manually create additional order commission lines and change the ones created by
the system.
You can change any commission line considerably, such as commission
percentage or amount and other features. If required, you can also add or remove
commission lines.
For each order line commission there is a defined line source. The line
sources are:
- System - the system has generated the commission in accordance to set
rules.
- Modified - the user has manually modified a system generated commission
line.
- Manual - the user has manually entered the commission line from the
customer order line registry.
- Correction - the commission has been changed after the original entry,
but the original commission line is in status closed and cannot be updated.
A correction line has been generated by the system to correct the original
commission.
Apart from others an order line commission can also be fixed. Special
conditions are applied when fixed commissions are used. Fixed order commission
lines will neither be calculated nor considered in the recalculation process.
Commission calculation
However, the system will create only the commission lines. To copy the
commission percentage or commission amount, you must actively initiate the
calculation of the commission line.
You can initiate the calculation of order commissions as soon as they have
been created. You can choose between:
- Update Calculated Commissions - All the selected (already) calculated
commissions will be recalculated. This will be the case if some of the
values have changed (quantity, price, etc.). Manually entered commissions or
system generated commission lines with manual additions will not be changed.
- Update All Commissions - Same as above, but also the manually entered
commissions will be deleted and replaced by the recalculated values. This
also applies for system generated commission lines with manual additions.
The system will ask whether you really want to overwrite the manual
commissions.
As stated above, there are a few differences in the handling of manually
entered commission lines and system generated commission lines in the
recalculation process.
If you make manual changes in a system generated commission line, that line
will be handled in the following way:
- Changed lines will be marked via the line source “Modified”.
- “Modified” lines can contain both percentage and an amount.
- If choosing to recalculate the commissions via Update All Commissions,
the modified line will be handled as a purely system generated line, i.e.,
no consideration will be taken to the manual modifications. The commission
calculation will then purely be based on the basic data setup and the
information found in the applicable commission agreement. The manual changes
will be overwritten by system created data. The line source will in this
case be changed back to “System”.
- When using Update Calculated Commissions, the manually entered values
will be used as a basis for calculating commissions. This means that the
values will not be overwritten by current data from the commission
agreement. In this case, a “Modified” line will work in the same way as a
manually entered line.
Before you finalize the commissions, you must run the commission calculation
for all required sites, commission receiver groups, and/or commission receivers.
Once the commission calculation is finalized, you can no longer change or
recalculate any affected commissions. Normally, you finalize them for a fixed
period of time, e.g., you finalize January in February, if the chosen period is
"'month." On finalizing, the system will consider the calculation period of the
commission receiver as entered in the basic setup. The system will alert you if
you finalize the calculations before the end of the calculation period of the
commission receiver.
If you have finalized the commission calculation without a previous
commission calculation the "neglected" commissions will be transferred to the
next commission period. They will not be lost. The same applies if, for some
reason, the basis for calculation is changed after a commission has been
finalized. An example would be if you create a credit invoice for an order with
invoice based commissions that have been finalized. In this case a correction of
the commission will be transferred to the next commission period. In these cases
the system will generate a correction line to the next commission period.
When an order line is canceled, the connected commissions will be removed
automatically. All open commission lines will be canceled. Closed commission
lines will be reversed by a correction line, that will be connected to the next
open commission period. One correction line per receiver will be created.
Correction lines
Commission lines with line source “Correction” are system-generated lines
created to correct earlier given commissions. Correction lines are created when
recalculating commissions and the commission period for the original commission
line amount is closed and finalized (Finally Calculated).
The system creates the Correction lines by calculating how much Commission
the receiver is entitled to get by the time for the calculation. After that, a
check is performed to find out how much commission the receiver already has
gotten. If there is a difference, a correction line will be created for the
amount that differs.
Correction lines have the following characteristics:
- Correction lines only contain an amount, not a percentage.
- The commission amount, calculated commission amount and total commission
amount fields always show the same value on a correction line.
- Correction lines will only be created for system generated lines (lines
with line source “System” and “Modified”) and not for “Manual” and Fixed
lines.
- A correction line cannot be changed manually.
- It is not possible to create a line with line source “Correction”
manually.
- Correction lines will be created both for invoice based and order based
commissions.
- The correction lines have a connection to the original lines that they
correct. The behaviour at recalculation of a correction line is dependent of
the line source of the original line (“Original Line Source”).
If the original line source is “System”:
The current data from the commission agreement is used at both “Update All”
and “Update Calculated”. This means that the amount and percentage from the
commission agreement are used to calculate how much commission the
commission receiver is entitled to at the time for the calculation.
If the original line source is “Modified”:
When using Update All Commissions, the current data from the commission
agreement is used for the calculation. When using Update Calculated
Commissions, the amount and percentage from the original line is used for
the calculation. This means that manually changed values on the original
line will have an impact on the calculation for correction lines.
- To make it possible to create correction lines even though there is a
“Manual” open line, the system will allow one open “Manual” line and one
open “Correction” line at the same time. This also makes it possible for the
user to make manual changes despite the fact that there is an open
correction line. Otherwise, only one open commission line at the time is
allowed. An exception is “Fixed” lines that do not have this limitation.
Commission Reports
The system is not automatically producing any credit note or similar document.
However, you can use any of the commission reports to initiate the payment of
commissions and to serve as verification. You can design the reports to show
commissions to a specific commission receiver or a commission receiver group
during any period of time, and you can produce it in a more detailed or less
detailed version.