Sales Commissions

Base Commissions Rate File - COM 1

Options for Calculating Commissions

This file allows you to establish and update commission rates for your sales force. You can also add or subtract from a commission (by percentage points) using several parameters. Base commissions may be adjusted based upon gross profit percentage, age of invoices, and other factors. For example, this file supports a positive or negative percentage for cuts. This means you can either raise or lower commission rates if the order is a cut. Cuts are identified by the C code in the restriction field of a line item and are usually associated with rolled goods or laminates.

1. When this option is accessed the following screen displays. This screen displays all of the base commission records already established on your system. You can create base commissions that are very general, such as one rate for an entire company, including all branches, cost centers, and salespeople. You can also create very specific base commission rates that apply to one salesperson and/or cost center. In the example below, the most specific record shown is for company 2, branch RAL, cost center ARM, and salesperson BWO. A line item must match all of the criteria for that commission record to be applied.



2. You can search by entering values above any of the columns. Enter the necessary code in the Opt column of the entry you want to work with, inquire on, or delete. The following screen is an example of a Base Commission record:



The example above applies to salesperson 901, for sales with any branch and cost center within company #2. The commission rates shown above should be interpreted as follows:

• Sales with gross profit percentage of 0.00% or less receive a commission equal to 2.00% of the sales value. (This entry covers all sales that have zero gross profit margin, or a negative gross profit margin. This may be important to compensate for sales of drops and other below cost items.)
• Sales with gross profit percentages between 1-17%, receive a commission of 15.00% of the gross profit value.
• 17.00% of gross profit is paid on sales with gross profit percentages between 18-39%.
• 18.00% of gross profit is paid on sales with gross profit percentages above 40%.
• A 1.00% reduction in commission is applied to sales flagged as cuts.

The fields on this screen are described in the following table.

Field	Description
Company	Enter a valid company number.
Branch	Enter a branch code or ALL to apply this rate to all branches.
Cost Center	Enter a cost center code or ALL to apply this rate to all cost centers.
Salesperson	Enter a salesperson code or ALL to apply this rate to all salespeople.
GP% Span From/To	Enter the gross profit percent to begin and end your range span. For example, in the figure above, if a sale has a gross profit percentage between 1 and 17 percent, the commission is 15.00% of the gross profit provided there are no other factors (free delivery, cuts) involved. All gross profit percentages on sales are rounded to the nearest whole percentage number before this table is accessed within the X by Y Commission Reports programs.
Comm%	Enter the commission percentage to apply if the GP% Span is met. Assume 2 decimal places when entering a commission percentage. For example, you can enter 15.00 to apply a 15% commission for meeting the GP% Span.
S/P	Enter S if the percentage applies to sales, or P if the percentage applies to gross profits.
Free Delivery	If the Billto file Delivery Charge field is set to N and the sale is a delivery (has a truck route), the percentage entered will be added or subtracted from the commission rate. This figure should normally be entered as a negative number.
Extended Terms	This field is not active, as this feature was superseded by the F9 screen.
Cuts	You can either raise or lower commission rates if the order is a cut. Cuts are identified by the C code in the restriction field of a line item and are usually associated with rolled goods or laminates. The percentage you enter will not apply to special orders or direct shipments.
Other	This field is not active, and is reserved for future use.
GP% Span, or Disc% off LP, or Disc% off Billto List Price	These options offer different methods for calculating commissions. Commissions based on discounts from the GP span (the default). Commissions based on discounts from List Price Commissions based on discounts from Billto File Price List These options enable field salespeople who are allowed to negotiate prices to think in terms of the discounts they are offering without having to calculate gross profit percentage. The normal use case is to assign the full commission rate to prices that are not overridden, and then to reduce commissions commiserate with discounts from the customer's regularly assigned price. The new commission system allows for promotions to be paid at full commission rate, or to have their own exceptional rates. For more information, refer to Options for Calculating Commissions.

3. Press F2 to establish exceptions to the commission file. Establish exceptions and press F2 to return to the Base Commission File screen.

Note: Refer to Commission Rate Exceptions File - COM 2 for more information.

4. To establish commission adjustments based upon invoice aging parameters, press F9. The Update Commission Aging Parameters screen appears.



5. In the example above, if an invoice is paid in less than 30 days 1.00% gets added to the base commission. If the invoice is paid between 30 and 60 days, the commission rate is not affected. An invoice paid after 60 days, but less than 90 days has its commission rate reduced by 1.00%. Invoices paid equal or later than 90 days are reduced by 2.00%. The S code means the adjustment is based upon sales. A P code means the commission adjustments are based on gross profit. An E code eliminates the commission altogether.

Note: The Aging Parameters screen is only applicable when the X by Y Commissions Report is run based upon payment date.

The fields on the Aging Parameters Screen are described in the following table.

Field	Description
Aging on ___ Due Date___ Invoice Date	Enter X before Due Date to calculate the age of a payment comparing the payment due to the due date. Enter X before Invoice Date to calculate the age of a payment by comparing the payment date to the invoice date.
Days fields	Fill in all of the days fields, even if some date ranges have the same commission % entries. You can enter any numeric values, as long as the days in the left column are always equal to the days in the right column of the entry just above. This ensures that there are no holes in the days covered.
Comm%	The commission % to add or subtract from the Base Commission Rate.
S/P/E	S calculates commission based on sales. P calculates commission based on gross profit. E eliminates commission on payments that meet the respective aging parameter.

6. Press F6 to return to the Base Commission screen, F1 to go to the next record in the file, F8 to go to the first screen (search), or F7 to exit.

Options for Calculating Commissions

Three options at the bottom of the Base Commissions Rate File (COM 1) allow you to decide how to calculate a salesperson's commission rate.

• GP% Span (shown above)- Commissions are based on a gross profit percentage. This is the default. In the example shown above:
  • Sales with gross profit percentage of 0.00% or less receive a commission equal to 2.00% of the sales value. (This entry covers all sales that have zero gross profit margin, or a negative gross profit margin.)
  • Sales with gross profit percentages between 1-17%, receive a commission of 15.00% of the gross profit value.
  • 17.00% of gross profit is paid on sales with gross profit percentages between 18-39%.
  • 18.00% of gross profit is paid on sales with gross profit percentages above 40%.
  • A 1.00% reduction in commission is applied to sales flagged as cuts.

• Disc% off LP - List Pricing is designated in the Customer Price List# field on the Order Header. With this option, the commission rate is based on discounts given during order entry, either from the Extra Charge/Discount field on the Order Header or by overriding the price at the detail level. Two things on the commission screen change when this option is selected:
  • The heading over the left hand column changes to Disc% From LP Scan.
  • The field Use 0 disc rate if price NOT Overridden appears. If the list price is not overridden/discounted, the top level commission percentage (in this example 10%) is used.



In the example above:

• All commission percentages are based on sales, as directed by the S/P field: S= Sales and P=Profit.
• If the sale price is equal to or greater than the List Price (999- to 0), the commission is 10%.
• Sales with a 1-5% discount applied earn 8% of the sale value.
• Sales with a 6-10 discount applied earn 6% of the sale value.
• 3% of the sale value is paid, if the list prices were discounted from 11-25%.
• No commission is paid for sales with discounts of 26% or higher.
• Disc% off Billto List Price - This pricing comes from the list price

• Disc% off Billto List Price - This pricing comes from the list price. With this option the commission rate is based on discounts given during order entry, either from the Extra Charge/Discount field on the Order Header or by overriding the price at the detail level.

Two things change on the commission screen when this option is selected:

• The heading over the left hand column changes to Disc% From Billto Last.

• The field Use 0 disc rate if price NOT Overridden appears. If the list price is not overridden/discounted, the top level commission percentage (in this example 10%) is used.