Creating Commission Plans

Use Commission Plan Maintenance to create and edit commission plans to pay your salespeople. You can set up sales areas for commission plans, such as showroom sales, inside sales, outside sales, or counter sales. You can use one commission plan ID to create many commission plans that are based on different product commission groups, the system-defined Default group, or an order.

Commission plans, commission groups, products, and salespeople are connected in the system as shown in Commission Plan Work Flow.

You must be assigned the COMM.PLAN. MAINT authorization key to view or edit the Commission Plan Maintenance screen.

To create a commission plan:

1. From the Maintenance > Price Maintenance > Commission Plan menu, select Commission Plan to display the Commission Plan Maintenance window.

2. To create a new plan, click New Plan and enter the name of the commission plan at the prompt. A plan ID is a user-defined, free-form alphanumeric name, up to 10 characters long. For example, Showroom or Sales15%.

Note: To display or edit a current commission plan, in the Commission Plan ID field, enter the commission plan ID.

3. Complete or change the following fields as needed.

   Field	Description
   Commission Base	Enter the commission base dollar value to use with the range's commission percent to calculate the commission: GP $ - Gross profit dollars. The gross profit dollars depend on cost or cost of goods sold cost (COGS) when you run the Commissions Report. Sales $ - Sales dollars. Net Sales $ - Sales dollars less cash discount allowed. This selection does not work when the Pay Commissions On field is set to Line Item or Group.
   Pay Commission On	Enter the portion of an order considered when calculating commissions: Order - All items are totaled on the order. Group - Items are totaled by product commission group, and commission is calculated for each commission group. This selection activates the Product Commission Group field. Select File > Display Active Groups to display the list of product commission groups for this plan. Important: If a Commission Plan is set to pay at the order level, then Commission Group must be set to Default. Line Item - Items are totaled by line item according to the commission group to which the item belongs. This selection activates the Deduct at Line Item Level option in the Unbilled Freight field. Additionally, this activates the Product Commission Group field. Select File > Display Active to display the list of product commission groups for this plan. All - Commission dollars are calculated on the total of all orders for the inside/outside salesperson, writer, or group. Note: To run the Commissions Report for tier date by commission plan, set this field to All.
   Product Commission Group	This field is available only when Line Item or All are selected in the Pay Commissions On field. Enter a product commission group ID. Select File > Display Active to display the list of product commission groups for this plan.
   Commission Range Type	Enter one of the following to determine the type of range for the commission percentages: GP% - Gross profit percent. Sales$ - Sales dollars. GP$ - Gross profit dollars.
   Unbilled Freight	Select one of the following to determine how to handle unbilled freight on commissions: Leave it blank - No unbilled freight is deducted from the commission pay out. Adjust GP - The amount of unbilled freight on commission orders is subtracted from the gross profit dollars. This option displays when All is selected in the Pay Commissions On field. Selecting this option deters salespeople from giving away freight. Deduct % - The system calculates commissions earned and then deducts the percentage of freight specified in the Unbilled Freight Deduct % field. Deduct at Line Item - The system calculates commissions earned by line item and deducts from the line item just a proportion of the total unbilled freight on the sales order. The system uses the total unbilled freight and matches the proportion amount of cost on the line item and applies the same percentage of commission earned on the line item to calculate the amount of freight to deduct. This option is only available if the Pay Commission On field is set to Line Item. Note: If the commission plan pays at the Line Item level and the Unbilled Freight field is set to Line Item, then the Subtract Frght column on the Commissions Report displays how much has been deducted at each line item.
   Unbilled Freight Deduct %	Enter the percentage of unbilled freight to deduct from the commission plan pay out on an order, group, or product. This percentage can be different for each commission group. This field is active when Deduct % is selected in the Unbilled Freight field.

    

4. To calculate commission at the defined rates for each range reached, select the Tiered Calculation check box; otherwise the system calculates commissions at the defined rate for the final range reached. See example:

   For example, if a salesperson sold $14,000, he would receive the following commission:

   • 5% on the first $5000

   • 10% on the next $4999

   • 15% on the final $13,999

    For more information, see Tiered Commission Plan Details.

    

5. In the Range Minimum and Range Maximum columns, enter the ranges for which to determine percentages. See example:

   For example:

   • 0.00 to 499.00

   • 500.00 to 999.00

   • 1000.00 to 1499.00

   • This column heading changes to match the entry in the Commission Range Type field as follows:

   • GP% Range

   • Sales$ Range

   • GP$ Range

   • Basis Field and Formula - Click the List button and select a global basis name for each commission percentage. Enter a formula to use with each basis name.

   

   1. Commission % column is used with the commission base to determine the commission.

   2. The commission based on sales dollars.

   3. The dollar ranges.

   8. The sales total of the defined ranges is the amount applied toward commissions. The commission percent is then used with the commission base to determine the dollar sales commission, as shown in the diagram above.

Note: You must create a line item for zero dollars  (0.00 to 0.00) paying commission when deducting freight at the line item level.

1. Commission % column is used with the commission base to determine the commission.

2. The commission based on sales dollars.

3. The dollar ranges.

The sales total of the defined ranges is the amount applied toward commissions. The commission percent is then used with the commission base to determine the dollar sales commission, as shown in the diagram above.

6. In the Commission % column, enter the sales commission percentage for each range.

7. Save your changes and exit the window.

More Options for Creating Commission Plans

The following options are also available when creating commission plans:

8. Menu Item	Description
   File > New	Displays the Enter new plan ID prompt. Enter the name of the new plan and click OK. Then complete the instructions in this topic to create a commission plan.
   File > Delete	Deletes the commission plan ID and all associated plans for commission group . You are prompted for confirmation. For example, if the commission plan PLUMBING contains eight commission groups, this action deletes the PLUMBING commission plan including the eight commission group setups under PLUMBING. The commission groups still exist to use with other plans.
   Freight	Deducts a percentage of unbilled freight from the commission plan on an order, group, or product. This percentage can be different for each commission group.
   File > Display Active Groups	Displays the list of commission groups for this commission plan. Select a commission plan and click OK to display the commission plan for the group.
   File > Pool Information	Calculates commissions for a group of salespeople. Each salesperson can earn a different percentage.
   File > % By Collection Days	Base the commission percentage on the maximum collection days. If the account is over their maximum collection days, the system takes commission dollars away from the salesperson.

See Also:

Commission Group Workflow

Assigning Products to Commission Groups

Assigning Commission Plans to Users

Calculating Commissions for a Sales Pool

Running the Commissions Report