Sales Commissions

Sales Commissions

Using Minxware 146

Overview

This chapter shows you how to enter sales agents and sales teams. It also discusses how Minxware calculates and pays commissions.

Sales Agents and Sales Teams

Commissions are calculated by sales team. When a sales order is first entered, each sales order line can be associated with a sales team (consisting of one or more sales agents). Each agent on the sales team then receives commissions from the order, based on the percentages you assign.

Commissions

Commissions can be calculated at booking, invoicing or cash receipts (you select the percentages) for each agent on a sales team. You can base commissions on products (commission table by product groups) or on sales teams. This is accomplished by first searching for commission tables by product group, and if none, using the commission levels by sales team (agent).

Sales Commissions

Using Minxware 147

Setup

The following chart outlines the necessary steps for setting up your agents, commission structures, and sales teams. This section covers each of these steps in detail.

Figure 8 Set Up Commissions

Set Up Products

and Product Groups

Enter Sales Agents(OM,5)

Enter Commission

Levels by Agent

Enter Sales Teams

(OM,16)

Create Sales Team for

Single Agent

Enter Commission

Table by Product Group

Set Default Sales Teams for Bill-to & Sold-to

Customers

Sales Commissions

Using Minxware 148

Enter Product Information

Before processing sales orders, invoices or service orders, you must have product information available. Product records store various codes that are used when entering GL posting codes, customer category codes and pricing structures. The product record also maintains list and exchange/repair prices.

See Products for a Part Maintenance (IN,14) in the “Part Maintenance & Tracking” chapter to add new products or change the product description, part number, print options or shipping weight. See Sales Order Product Maintenance (OM,10) in the “Product Pricing” chapter to change the order management fields of a product (product group, product price code, list price, exchange/repair price, or the warranty information). See the “Bills of Material” chapter to add feature groups, dependent parts or bill of products (product structures).

Enter Sales Agents and Commission Levels

Once products and product groups are set up, you can enter sales agents and their commission levels. Since commissions are calculated for each sales order line by sales team, you must either create a sales team with a single agent, or create a sales team with multiple agents using Sales Team Maintenance (OM,16).

NOTE: You will have the option of creating a sales team consisting of a single agent at the end of the entry cycle.

1. Select Sales Agent Maintenance (OM,5).

2. Enter an ID to use for the sales agent.

3. If the ID is not on file, indicate whether to add it.

Sales Commissions

Using Minxware 149

The following screen is displayed:

4. Enter the agent’s type.

This code is for information purposes only, and is helpful if you have both direct and third party sales personnel.

5. Enter an inactive date if you want to ‘inactivate’ the employee (they are no longer with the company or not an active sales agent).

If you press [RETURN], this field is set to 00/00/00 indicating that the sales agent is active.

NOTE: Setting the inactive date ensures that no new postings are made to this commission record after this date.

6. Enter the agent’s name, address, ZIP or postal code, city, state, country, telephone, and FAX number.

7. Enter this sales agent's territory.

This field is not verified and for reference only.

8. The PTD and YTD Comm Base and PTD and YTD Sales fields are system-maintained.

9. Enter the sales agent's annual sales quota.

This field is not verified and for reference only.

10. Enter the agent's commission percentage on bookings, invoices and cash receipts. The total of these three fields must equal 100%.

Sales Commissions

Using Minxware 150

The actual percentages depend on how you establish and pay commissions. For example, you could require that commissions be paid only after the cash receipt, in which case you would set the percentage ‘on Receipts’ field to 100%.

Enter Commission Levels

1. Enter the commissionable base amount for the sales agent to receive a commission at this level.

Amounts from zero to this first base amount are used with the commission percentage to calculate commissions for the first level. When the sales agent exceeds this amount, they move to the next commission level.

In the above example, sales agent Ken receives a 6.0% commission for a commissionable earned base up to and including $10,000. When the commissionable earned base is between $10,001 and $20,000, he receives a 7.0% commission for the amount over $10,000 plus a $150.00 bonus, and so on.

See Definitions on page 159 for a complete explanation of commissionable earned base.

2. Enter the agent’s commission percentage for this level's monetary break.

3. Enter any bonus amount (levels two through ten) that you want to add.

This amount is added to the total commission paid to the agent, but subtracted if the order is de-booked.

4. Repeat steps one through three for as many levels as you require.

NOTE: When you want to stop commission level entries, press [ESC] at the break amount.

5. When you have finished with the commission levels, (A)ccept the information.

Create Sales Team

6. If you are adding a new agent, indicate whether to create a sales team with this agent’s information.

If ‘yes’, a new sales team is created using the agent’s ID as the sales team ID.

If you do not want to create a sales team now, you can do this later with Sales Team Maintenance (OM,16). However, remember that commissions are calculated by sales team.

Edit Sales Agents

1. Enter the agent’s name and indicate that you want to ‘edit’.

2. Select the line number of the field and complete any changes.

3. (A)ccept the changes.

Sales Commissions

Using Minxware 151

Delete Sales Agents You must first delete the sales agent from any sales teams (if applicable). You can then delete the sales agent information. 1. Select Sales Team Maintenance (OM,16) to delete sales agents from teams. (See Enter

Sales Teams on page 157 for instructions about entering and editing sales teams.)

2. Select Sales Agent Deletion Utility (OM,UT,13) to delete the sales agent. (See Delete Sales Agents on page 168 for complete instructions.)

Enter Commission Tables

If you calculate commissions by product group, you must enter commission tables. If you do not calculate commissions by product group (agents are commissioned at the same rate regardless of the product), you are not required to enter a separate commission table. 1. Select Commission Table Maintenance (OM,7).

2. Enter the sales agent ID for this commission table.

3. Enter a valid product group.

If the agent/product group combination is not on file, indicate that you want to add it.

The information on the left side of the screen is from the sales agents record or is system maintained.

4. For each commission level, enter the monetary amount of the product group this agent must sell to receive the selected commission percentage.

This process is the same as for entering commissions for agents.

5. Continue entering product groups until commission tables are set up for each product group handled by this agent.

Edit Commission Table

1. Enter the sales agent ID.

2. Enter the product group.

3. Enter the line number of the field to change.

4. (A)ccept your changes.

Sales Commissions

Using Minxware 152

Enter Sales Teams

After entering sales agents, you must enter sales teams. All transactions affecting commissions are associated with a sales team. The commissions are then allocated to the members of the sales team. As previously noted, you can have a sales team consisting of only one sales agent. However, in the following examples we set up a team with multiple agents. 1. Select Sales Team Maintenance (OM,16).

2. Enter the sales team ID.

If the sales team ID is not on file, you can add it now.

The following screen is displayed:

3. Enter the team name.

4. Enter the territory covered by this team.

5. (A)ccept the team ID, team name and territory.

6. Enter the sales agent’s ID to include on this team.

7. Enter the split percentage that this agent will receive on the team.

The percentages for all sales agents on the team do not have to equal 10%.

Sales Commissions

Using Minxware 153

For example, one sales agent can receive 50% and another 75%. When a sales order is booked, the split percentage is multiplied by the agent booking percentage to determine commissions payable. (See Commission Calculations on page 164 for complete information about commission calculations.)

8. (A)ccept this sales agent.

9. Continue entering sales agents until you have completed entering the team.

Edit Sales Teams 1. Enter the sales team name.

2. Indicate that you want to ‘edit’.

3. Select the line number to edit and make the necessary changes.

You can also add sales agents to the team.

4. (A)ccept any changes. Delete Sales Teams You can only delete sales teams if they are not associated with a sales order, invoice, or bill-to or sold-to customer. 1. Enter the sales team name to delete.

2. Delete each sales agent from the team.

3. When the final sales agent is deleted, the sales team is automatically deleted.

Add Default Sales Teams For Customers

You can add a default sales team for bill-to and sold-to customers. The sales team is then used as the default (for all line items) when entering sales orders for these customers.

See the “Accounts Receivable” chapter in Volume 1 for instructions about entering bill-to and sold-to customers and assigning default sales teams.

Sales Commissions

Using Minxware 154

Reports and Inquiries

The following reports and inquiries provide information on the sales agents, teams, and commissions entered.

Sales Agents Sales Agent Report (OM,RP,9) Sales Agent Inquiry (OM,6)

Sales Teams Sales Team Inquiry (OM,17)

Commission Tables Commission Table Inquiry (OM,8)

Sales Commissions

Using Minxware 155

Application

This section defines the calculation for commissions and provides an example of how a sales order affects commissions. It also shows how to adjust commissions for a sales agent.

Commission Calculations

Once you have entered the sales agents, sales teams and commission structures, Minxware calculates the correct commission due to each sales agent based on a sales order booking, invoice, or cash receipt. Commissions are calculated the same way regardless of whether the commission structure is set up by agent or product group.

Definitions

BIC % at Booking, Invoice, or Cash Receipt

Extended Line Amount Line amount * quantity

% Split Split percentage for this sales agent, entered in Sales Team Maintenance (OM,16)

Commission Rate Amount Extended line amount * % Split * BIC at any earned point

Commissionable Earned Base Extended line amount * % Split * BIC at any earned point

This amount is cumulative. For example, you might book a sales order. The Commission Rate Amount would be $50.00 for the booking. If you then invoiced the sales order, and the Commission Rate Amount was $75.00 for the invoice, then the new Commissionable Earned Base would be $125.00.

Sales Commissions

Using Minxware 156

Level Percent The Level Percent is determined by the Commissionable Earned Base. It determines where you are in the commission structure.

Commission Amount Extended Line Amount * % Split * BIC * Level Percent for that line item.

Example First, let’s look at the standard calculations used for computing commissions. Here is an example of a sales team composed of three agents.

Sample Sales Team Agent %

Split %

Book %

Invoice % Cash Receipt

Cathy 50 20 35 45 Harry 25 20 30 50 Marianne 50 25 35 40

Sample Commissions Calculation First, we have a booking for $2,000. Although commissions are calculated by sales order line item, in our example we use the sales order total and assume there was only one line item. We also assume that there are commission tables on files for these agents, for the product group ‘unix’. The break percentage, which comes from the commission table, is based on all sales agents falling into the first break, which has a maximum of $10,000.

Initial Booking

Agent Transaction Type

Commission Rate Amount

Break % Commission Amount

Cathy Booking 200.00 3 6.00 Harry Booking 100.00 4 4.00 Marianne Booking 250.00 5 12.50

Sales Commissions

Using Minxware 157

Invoice Sales Order

Now, the entire sales order is invoiced. Agent Transaction

Type Commission Rate Amount

Break % Commission Amount

Cathy Invoice 350.00 3 10.5 Harry Invoice 150.00 4 6.00 Marianne Invoice 350.00 5 17.5

The commissions are calculated on the invoice percentage.

Receive New Sales Order

Next, we receive another sales order for $12,000. Agent Transaction

Type Commission Rate Amount

Break % Commission Amount

Cathy Booking 1000.00 3 30.00 Cathy Booking 200.00 4 8.00 Cathy Bonus N/A N/A 100.00 Harry Booking 500.00 4 20.00 Harry Booking 100.00 4.5 4.50 Harry Bonus N/A N/A 200.00 Marianne Booking 1250.00 5 0.00 Marianne Booking 250.00 6 15.00 Marianne Bonus N/A N/A 100.00

The commissions’ calculation was done in three steps because each agent crossed a level break at $10,000. 1. The sales agent receives commissions for the first $10,000 of the order at the first break

level.

2. The sales agent receives commissions for the next $2,000 of the order at the second break level.

3. Since the booking crossed a level break, each sales agent picked up a bonus.

Sales Commissions

Using Minxware 158

Payment Received for First Sales Order

Next, full payment is received for the first sales order of $2,000.00.

Agent Transaction Type

Commission Rate Amount

Break % Commission Amount

Cathy Receipt 450.00 3 13.50 Harry Receipt 250.00 4 10.00 Marianne Receipt 400.00 5 20.00

De-book Second Order

Finally, $5,000 of the second order is de-booked. Agent Transaction

Type Commission Rate Amount

Break % Commission Amount

Cathy De-booking -200.00 4 -8.00 Cathy Bonus N/A N/A -100.00 Cathy De-booking -300.00 3 -9.00 Harry De-booking -100.00 4.5 -4.50 Harry Bonus N/A N/A -200.00 Harry De-booking -150.00 4 -6.00 Marianne Booking -250.00 6 -15.00 Marianne Bonus N/A N/A 100.00 Marianne De-booking -375.00 5 -18.75

The de-booking is done in reverse order of the booking, in three steps. 1. The commission for moving to a new level is backed out.

2. The bonus is backed out, since the de-booking moved the agent to a lower commissions level.

3. The commission for $3,000 at the first level is backed out. The above example shows you a simple commissions scenario. Most likely, your situations will be much more complicated, considering returns, credit memos, etc. The basic calculations, however, remain the same. Use the Agent Commission Report (OM,RP,11) to view the commissions transactions for a sales agent.

Sales Commissions

Using Minxware 159

Reports

The following reports provide information on commissions, bookings, shipments and cash receipts.

Commissions Agent Commissions Report (OM,RP,11) Sales Agent Commission Inquiry (OM,13)

Bookings Bookings Report (OM,RP,14)

Shipments Shipments Report (OM,RP,15)

Sales Invoiced Sales Report (OM,RP,16)

In the next section, we will outline the transactions that could affect commissions, and briefly explain what happens.

Sales Commissions

Using Minxware 160

How Minxware Calculates Commissions

The next section shows all the instances where commissions are affected, and what Minxware does with the transaction.

Function Commission Affected?

How

Sales Orders Create sales order (OM,1) Yes Booking Delete line item on order Yes De-booking Post sales order (OM,UT,15) Yes Booking Hold or release sales order No Change quote to sales order Yes Line becomes bookable Cancel sales order Yes De-booking Close sales order Yes Unshipped lines are debooked Invoices Invoice sales order Yes Invoiced Invoice special charges (inc. freight)

No

Cash Receipts Enter customer deposits No Cash receipts Yes Cash receipt Write-off invoice Yes Reduces commissions Reverse cash receipts Yes Reverses commissions Debit memos No Unrelated to line items Credit Memos Create applied CR against invoice

Yes Cash receipt

Create applied CR against line items

Yes Reduces line item commission. If CR is a tax adjustment, there is no effect on commissions.

Create unapplied CR memo No Apply unapplied CR to invoice No Unrelated to line items Apply unapplied CR to line items Yes Same as cash receipts Apply CR memo to DR memo No Core receipt No Void Payments Void invoice Yes Commissions reduced for voided

amount. Void credit memo Yes Reverses the commission

adjustment made when product returned.

Void Debit Memo No Product Returns Return for replacement Yes Reduces the commission payable for

an invoiced sales order for the returned line item.

Return for credit Yes Reduces the invoiced commissionable amount plus the booking commissionable amount.

Sales Commissions

Using Minxware 161

Adjust Commissions

After the commission for a sales agent is calculated, you can adjust it later if necessary. You can adjust the commission for a specific line item or make an adjustment to the entire sales order. 1. Choose Adjust Sales Agent Commissions (OM,TR,13).

2. Enter the sales agent ID to adjust.

3. Enter the sales order number to adjust.

The following screen is displayed:

Adjust Commission for Line Item 1. Select the line item you want to adjust.

2. Select (E)dit.

3. Enter a new commission amount.

4. (A)ccept the new commission amount. Adjust Commission for Sales Order 1. Enter (A)dd.

2. Enter a new line number or (N)one.

To adjust the entire sales order, add a new line number.

Sales Commissions

Using Minxware 162

3. Enter the transaction date for this adjustment.

4. Enter any comments about this adjustment.

5. Enter the adjustment amount (positive or negative).

6. (A)ccept the adjustment.

CAUTION: Once you accept the information, you cannot edit it. You must enter a new adjustment line.

Sales Commissions

Using Minxware 163

This is how the line item screen looks with the adjustment:

This adjustment was for $50.00 to the entire sales order. Note that the total order commission was increased by $50.00. Since the adjustment was not associated with a line item, the sales order number line is blank.

Sales Commissions

Using Minxware 164

Database Maintenance

This section discusses deleting sales agents and sales teams. It also shows how to zero commission buckets.

WARNING: Always do a complete database backup before selecting any rebuild, archive or deletion utility.

Delete Sales Agents

When you want to remove the sales agent from your databases, use Sales Agent Deletion Utility (OM,UT,13). This selection produces a report showing you which sales agents were deleted.

1. Enter the starting and ending sales agent you want to remove.

2. (A)ccept your entries to delete these agents and generate the report.

Sales Commissions

Using Minxware 165

Delete Sales Teams

See Delete Sales Teams on page 157 for instructions on deleting a sales team.

Zero Sales Agent Buckets

Periodically, you will want to zero out the sales and/or commissionable earned base buckets for your sales agents so that commissions are accurately calculated. For example, you might want to do this after paying your sales agents. 1. Shut down Minxware using Minx Shut Down (SU,2).

2. Choose Zero Sales Agent PTD or YTD Sales (OM,UT,8).

3. Enter the report destination and accept it.

4. Indicate whether you want to zero sales or bookings or both.

5. Decide whether to reset the period-to-date buckets or both the period-to-date and year-to-date buckets.

6. (A)ccept the options to zero out the buckets selected and generate the report.

Sales Commissions

Using Minxware 166

Appendix

Sales Agent Worksheet

Sales Agent ID: ___________________ Agent Type: _____________________

Inactive Date: ___________________ % on Bookings:_____________________

Name: ________________________ % on Invoices:_____________________

Address: ________________________ % on Receipts:_____________________

________________________

City: ________________________ Booking Quota: _____________________

State: ________________________ Sales Quota: _____________________

Zip Code: ____________________ Country: _____________________

Telephone #: ____________________ FAX: _____________________

Territory: ___________________

Sales Agent Commission Table

Level Monetary Break Commission % Bonus Amount

1 Not applicable 2 3 4 5 6 7 8 9 10 Not applicable

Sales Commissions

Using Minxware 167

Commission Table Worksheet

Sales Agent ID: ___________________ Agent Type: _____________________

Inactive Date: ___________________ % on Bookings:_____________________

Name: ________________________ % on Invoices:_____________________

Address: ________________________ % on Receipts:_____________________

________________________

City: ________________________ Booking Quota: _____________________

State: ________________________ Sales Quota: _____________________

Zip Code: ____________________ Country: _____________________

Telephone #: ____________________ FAX: _____________________

Territory: ____________________

Level Monetary Break Commission % Bonus Amount

1 Not applicable

2

3

4

5

6

7

8

9

10 Not applicable

Sales Commissions

Using Minxware 168

Sales Team Worksheet

Sales Team ID:

Team Name:

Territory:

Sales Agent Split Percentage

Sales Team ID:

Team Name:

Territory:

Sales Agent Split Percentage