Commission Handling in PowerShift

PowerShift can calculate commissions for you whether you pay a flat rate to a single sales rep or split commissions among to up to 4 reps based on percentages. Commissions can be based at the sales order or line level (i.e., dependent on the item that is being sold). You define the rules that determine when commission is paid, the commission amount, and who is paid for each sale. You can to review commissions processing options in System Options Inquiry (XQ).

Beyond system options, you can set up hierarchies to reflect how you pay commissions. Think of a hierarchy as a set of rules that the system uses to determine who gets paid how much for which sales. There are two hierarchies: sales rep assignment and commission rate. You set up both of them in the Sales Commission Hierarchy Maintenance (SCHM) program. Your hierarchies may be simple (one level) or very complex, depending on the factors on which you base your commissions.

Sales Rep Assignment Hierarchy

Who receives commission for sales orders? If you assign one sales rep per customer, you can do so in the Customer Maintenance (CM) and Customer Ship-to Maintenance (CSM) programs and do not need to set up a hierarchy. However, if you also pay a sales manager, product manager, or support person a commission, you need to set up a sales assignment hierarchy.

You can assign sales reps to specific customers or to all customers in a sales region. You can assign sales reps by customer type (for example, domestic, international, government), by price class, or by a category that is unique to your industry. In the latter case, you can define a commission class to meet your needs and set up classes in the Commission Class Maintenance (TCCM) program. You then assign a commission class in the customer's record in the Customer Maintenance (CM) and/or Customer Ship-to Maintenance (CSM) programs.

If you assign sales reps by specific items or classes of items, use the Commission Class Maintenance (TCCM) program to assign commission classes to items. You then assign a commission class in the item's record in the Branch Item Maintenance (IMB) program. You can also assign reps by product class, product subclass, or item price class, using codes that can also be used for pricing and reporting purposes.

Examples:

Commission Rates Hierarchy

Do you pay different commission rates depending on the customer or item sold? If you pay a standard rate for all orders, you can enter that rate in the Commission rate field in each rep's record in the Sales Rep Maintenance (SM) program and do not need to set up a hierarchy. However, if you vary the rate, you need to set up a commission rate hierarchy.

Examples:

Sales Rep Assignment

If you set up a rep assignment hierarchy, use the Sales Rep Assignment (SRAM) program to assign reps. For example, if your hierarchy is by customer, you would enter a record for each customer.

If your hierarchy is by sales region, you will enter a record for each sales region and as many as four sales reps to that region. If your hierarchy is by customer type and product class, you would enter a record for each combination of customer type and product class for which you have sales reps.

For each rep you assign, you can also indicate the rep's split or the portion of the sale that the commission is based on. You would use this feature if you pay more to the outside sales rep, who typically has more influence on the sale, than to the inside sales rep or customer service rep. For example, the outside rep's commission might based on 100% of the total sale while the inside rep's commission is based on 50% since his contact with the customer was limited.

Setting Rates

If you set up a rep assignment hierarchy, use the Commission Rate Maintenance (SRCM) program to set up rates. How you set up rate records depends on whether you pay a set rate, if rates differ depending on the rep, or if rates are dependent on order size.

All examples are based on order totals, but you can also calculate commissions by order line.

Example 1
If you pay a set rate for this customer type, customer, item type, item, rep type, or rep, enter a single rate and/or flat amount. Assuming a rate of 7%, your commission rate record would look like this:

Level

Rate

Flat Amount

% paid on

Orders up to

1

7.00

 

 

 

You can exclude an item from commission payment by selecting the Non-commission? field in the item's record in Enterprise Item Maintenance (IM) or Branch Item Maintenance (IMB).

Example 2
If you pay a specific percent to certain reps regardless of the size of the order, enter a rate for each level. For example, you pay 5% to most reps, 3% to some, and 2% to managers. Your commission rate record would look like this:

Level

Rate

Flat Amount

% paid on

Orders up to

1

5.00

 

 

 

2

3.00

 

 

 

3

2.00

 

 

 

Then you would set the Commission type field in each rep's record in Sales Rep Maintenance (SM) to 1, 2, or 3. In this example, managers would have a Commission type of 3. In this example, if the order totals $20,000, a commission type 1 rep is paid .05 x 20000 = 1,000, a type 2 is paid .03 x 20000 = 600, and a type 3 is paid .02 x 20000 = 400.

Example 3
If you reward reps for making large sales, enter a maximum amount in the Orders up to field. Your commission rate record might look like this:

Level

Rate

Flat Amount

% paid on

Orders up to

1

1.00

 

 

15000

2

3.00

 

 

30000

3

5.00

 

 

50000

In this example, if the order totals $20,000, the rep would be paid .03 x 20000 = 600. If the order totals $40,000, the commission would be .05 x 40000 = 2000.

Example 4
If you pay a set amount for order totals within a certain range, enter an amount in the % paid on field. For example, for orders between $15000 and $30000, you pay the same commission amount. You could enter a flat amount, a % paid on (calculated Rate x % paid on for orders within the range), or both.

Level

Rate

Flat Amount

% paid on

Orders up to

1

15.00

0

0

15000

2

12.00

2250

15000

30000

3

9.00

4050

30000

50000

In this example, if the order totals $20,000, the rep would be paid (.12 x 15000) + 2250 = 4050. If the order totals $40,000, then the commission would be (.09 x 30000) + 4050 = 6750. Orders below $15000 are paid 15% of the total.

Commission amounts are calculated when you run the AR Invoice Register (RR). System options control when commission is paid and if it is paid directly from accounts payable, if it requires manual checks to be processed or if amounts are output to a file for your payroll system.

There's lots more info in PowerShift's help system. Enter ? followed by the program name at any menu: