Sales representative commissions are calculated when sales orders are processed through program OESJ, Sales Orders End of Day & Journals. How these commissions are calculated is dependent upon several factors. The largest factor is the sales representative's commission scheme in program SMMM, Sales Representative Master Maintenance.
In this section
Volume Commissions for Sales Representatives
Product Commissions for Sales Representatives
Paying Sales Representative Commissions
Sales representatives whose commission scheme is volume are assigned to sales orders with the [Sales Reps] button in the sales order header. Volume sales representatives for sales orders are determined in the following order:
From the ship to code assigned to the customer.
From the customer master record, if no sales representative assigned to the ship to code.
Entered manually on the sales order by the user.
Volume sales representatives should never be set up in commission matrices with program SMCM, Commission Matrix Maintenance, or on contracts in program CMCP, Customer Contract Maintenance.
Volume commissions are calculated as follows:
The sales representative's commission code is displayed as DEFLT in the sales order header.
The sales order is entered, shipped, and processed through program OESJ, Sales Orders End of Day & Journals.
Commissions are calculated according to the gross invoice value of the sales order, which is the sum of the shipped sales order line extensions. This means that if the order is partially backordered, the sales representative will not receive commissions for the backordered quantity until it is shipped and processed.
The commission code for the calculation is derived from the sales commissions levels entered under the [Commission Levels] button in program SMMM, Sales Representative Master Maintenance, for the sales representative.
The commission code determines whether the sales representative's commission will be calculated according to the sales price or the gross profit.
Sales unit price is the price charged per unit for the item, as entered during sales order entry. The gross invoice value will be used to determine the commissionable amount.
Gross Profit is the difference between the sales unit price and the unit cost. The gross profit will be calculated as the gross invoice value - gross invoice cost, and the result will be used to determine the commissionable amount.
The commission percentage assigned to the selected commission code is determined from program SCCM, Commission Code Maintenance. Since commission codes have effective dates, the sales order due date is compared to the effective dates to determine the commission percentage.
The gross invoice value or the gross invoice profit (as determined above) is then multiplied by the value percentage for the sales representative on the sales order to determine the amount that the will be multiplied by the commission percentage, or the commissionable amount. The value percentage is entered separately for each sales representative using the [Sales Reps] button in the sales order header.
The Value Percentage defaults to 100 for sales representatives entered manually on the sales order header.
For sales representative assigned to customers, the value percentage defaults from the value percentage entered for the sales representative on the customer record.
The commissionable amount is then multiplied by the commission percentage to determine the commission earned for the sales representative.
Sales representatives whose commission scheme is product are assigned to sales orders with the [Sales Reps] button for each line item. When assigned to a customer, the product sales representative will be written to the sales order header and the sales order lines automatically. Each sales order line will create a separate commission record, even when the same product sales representative is used.
When replacing a product sales representative at the header level, you will be prompted to update the sales representative at the line level, and the commission code will be determined again.
Product sales representatives for sales orders are determined in the following order:
From pricing contract lines entered in program CMCP, Customer Contract Maintenance, for the item and customer.
From the commission code matrix in program SMCM, Commission Matrix Maintenance, for the item and customer price group
From the ship to code assigned to the customer.
From the customer master record, if no sales representative assigned to the ship to code.
Entered manually on the sales order by the user.
Product commissions are calculated as follows:
The default commission code for the product sales representative is determined in the following order:
If a contract line exists, the commission code assigned to the contract line is used.
If a commission code matrix exists, the commission code from the matrix is used.
From the commission code assigned to the ship to record for the customer and sales representative.
From the commission code assigned to the customer master record and sales representative.
The commission code that defaults to the customer record is the DEFLT commission code.
The sales order is entered, shipped, and processed through program OESJ, Sales Orders End of Day & Journals.
Commissions are calculated according to the shipped extension of each sales order line. This means that if the sales order line is partially backordered, the sales representative will not receive commissions for the backordered quantity until it is shipped and processed.
The commission code determines whether the sales representative's commission will be calculated according to the sales price or the gross profit.
Sales unit price is the price charged per unit for the item, as entered during sales order entry. The shipped extension will be used to determine the commissionable amount.
Gross Profit is the difference between the sales unit price and the unit cost. The gross profit will be calculated as the shipped extension - shipped cost, and the result will be used to determine the commissionable amount.
The commission percentage assigned to the selected commission code is determined from program SCCM, Commission Code Maintenance. Since commission codes have effective dates, the line item due date is compared to the effective dates to determine the commission percentage.
The shipped extension or gross profit amount (as determined above) is then multiplied by the value percentage for the sales representative on the sales order to determine the amount that the will be multiplied by the commission percentage, or the commissionable amount. The value percentage is entered separately for each sales representative using the [Sales Reps] button for each sales order line.
For contract sales representatives, the value percentage defaults from the value percentage entered on the contract line, and can be changed during sales order entry.
For commission matrix sales representatives, the value percentage defaults to 100, and can be changed during sales order entry.
For sales representative assigned to ship to codes, the value percentage defaults from the value percentage entered for the sales representative on the ship to code record, and can be changed during sales order entry.
For sales representative assigned to customers, the value percentage defaults from the value percentage entered for the sales representative on the customer record, and can be changed during sales order entry.
The value percentage defaults to 100 for sales representatives entered manually.
The commissionable amount is then multiplied by the commission percentage to determine the commission earned for the sales representative.
The commission code determines when the commission earned by a sales representative is changed to the commission to be paid.
The commission earned is the total amount that the sales representative has earned from sales orders.
The commission to be paid is the total amount that the company currently owes to that sales representative. When there is a commission to be paid amount, you can pay the sales representative using vouchers or credit memos in program SMQM, Sales Representative Quota Maintenance.
Commissions can be set up as payable when the sales order is shipped, or when the invoice is paid, according to the Commission Payment Timing Flag in program SCCM, Commission Code Maintenance.
For commissions set to Order Shipped, the sales representative can be paid as soon as the sales order is processed through program OESJ, Sales Orders End of Day & Journals. Both the commission earned and the commissions to be paid are updated.
For commissions set to Invoice Paid, the sales representative cannot be paid until the invoice has been paid. Invoice payment can be accomplished in many ways::
In program ARPM, A/R Parameter Maintenance, the Commission Release Pct field determines how much of the invoice amount must be paid by the customer before the sales representative can be paid.
When the sales order is entered, payments can be entered on the Summary screen. If a payment is entered that is equal to or greater than the release percentage in program ARPM, A/R Parameter Maintenance, when the sales order is processed through program OESJ, Sales Orders End of Day & Journals, the sales representative can be paid. Both the commission earned and the commission to be paid are updated.
For invoices payable in program ARPE, Cash Receipts Entry, when a cash receipt is applied to the invoice, and the payment is equal to or greater than the release percentage in program ARPM, A/R Parameter Maintenance, the sales representative can be paid. The commission to be paid is updated.
When two invoices are applied to each other in program ARAD, AR Adjustments Entry, the commissions are transferred to the apply to invoice.
When an invoice is paid by a credit in program ARAD, AR Adjustments Entry, and the payment amount is equal to or greater than the release percentage in program ARPM, A/R Parameter Maintenance, the sales representative can be paid, the commission to be paid is updated.
When an adjustment is made in program ARAD, AR Adjustments Entry, and the adjustment amount is equal to or greater than the release percentage in program ARPM, A/R Parameter Maintenance, the sales representative can be paid. The commission to be paid is updated.
Sales representatives are paid from program SMQM, Sales Representative Quota Maintenance. For more information, see the following sections:
Creating a Voucher for a single Sales Representative