OVERVIEW
The commission system enables you to set up any number of agents and commission pools to which sales commissions can be logged and posted automatically when invoices are created.
Commissions are logged in a commissions log file when they are earned and optionally posted to the appropriate account if you have the ledgers license option. Postings can alternatively be posted manually or as part of the A/R month-end process.
The commission system revolves around two tables. There is a commission class definition table in which you define classes of commissions that you subsequently assign to parts. You then create a table of commissioned agents with associated rules including a list of commission classes that are applicable. Agents can then be assigned to customers and dispatch additional addresses so that when a sales order or job is created, agents are assigned to line items where they are listed for the customer or dispatch address and the class associated with the line item is an applicable class for those agents.
For example:
Agent: MAT classes D
Agent: POOL classes D,O,T
Agent: PWS classes T
Customer: MAT,POOL,PWS
therefore of a sales order:
Class for Item: D agents will be MAT,POOL
Class for Item: O agent will be POOL
Class of Item: T agents will be POOL,PWS
TIP: There is a system level option optCommissionRoyalty that, if set to 1, when applying agents on a SO, Job or Invoice, agents entered in the User character field 4 (PTMUSE4) parts field are added to the agent list. This provides for circumstances where you want to use the commission system to account for royalties that need to be applied for parts regardless of commission class or customer agents.
Commission systems adopted by businesses vary significantly. The program logs earned commissions when invoices are created. If this is fundamentally contrary to your approach either modify your commissioning system or do not use the program’s built-in system.
NOTE: Commissions are not logged on dispatch when the sales order is marked as No Invoice on Dispatch nor for a Cash-Before-Delivery Invoice until it is dispatched.
TIP: Commissions equally operate for Returns for Credit or ad-hoc Credit Notes and these produce negative log entries which reduce the agent’s net entitlement.
TIP: Commissions are earned when invoices are raised which is when the sale is recorded. No account is taken of whether the invoice is subsequently paid by the customer. In the event of bad debts that cannot be handled by credit notes, where your commission rules demand, you must manually adjust the payments to agents or apply reverse postings (see the Sales Commissions Review window for these functions).
WARNING: Without the Ledgers program license option Commission Logging can only be processed manually and reports used to determine agent payments.
Pool Commissions
The concept of pool commissions is simply that commissions earned are collected in a ‘pool’. At the end of a period the funds accumulated in the pool are shared amongst the ‘pool members’. Each member is allocated a number of ‘pool points’. Each member’s allocation from the pool is a proportion based on their pool points divided by the sum of all pool member’s points. So if the there are 3 members with respectively, 4, 3 and 5 pool points, the first member gets 4/12ths, the second member gets 3/12ths and the third gets 5/12ths.
Pool agents are not themselves identified as such. They are, however, referred to by their members as ‘Pool membership’ agents. You can have any number of pools, and with mixed memberships.
When pool commissions are distributed to their members, credit commission entries are created from the pool so that a properly maintained pool should have a net zero pool value after full posting.
Ledgers Postings
Posting Commission
When commissions are posted to the ledgers, either automatically or from the Sales Commissions Review window, the following transactions take place. When commission log entries are made, one entry for each agent is made for each line item. However, ledger postings are consolidated for each agent’s account combination. When postings are made from the Sales Commissions Review window or at A/R Month-End, commission log entries are consolidated into the least number of resulting ledger transactions.
This process applies the commission as a charge to a trading cost account and accrues it to an appropriate asset accrual account, for distribution later. In this way the commission cost of the sale is properly accounted for and accrued as a debt to the agents on the balance sheet.
| Transaction process | Commission Posting Transaction | Type 045 |
|---|---|---|
| Debit | Commission amount | to G/L cost posting account |
| Credit | Commission amount | to G/L accrual a/c |
Distributing Pool Commissions
These postings are made from the Sales Commissions Review window or at A/R Month-End, commission log entries are consolidated into the least number of resulting ledger transactions.
This process looks at only those agents that are ‘pool’ agents. Agents that are ‘pool’ agents are those that are listed in other agents details as ‘Pool membership’ agents. This process takes the commissions earned by these agents and distributes it amongst its members on a pro rata basis according to the member’s pool points. The process transfers accrued commission from the pool agent accrual account to the members’ accrual accounts. This should have no affect on the asset balance sheet as it simply moves accruals from one asset account to others.
| Transaction process | Commission Posting Transaction | Type 045 |
|---|---|---|
| Debit | Total pool commission amount | to Pool Agent G/L Accrual account |
| Credit | Commission amount appropriate to each member of the pool | to Pool Member’s G/L Accrual a/c(s) |
Posting Commissions to Supplier Invoices
These postings are made from the Sales Commissions Review window or at A/R Month-End, commission log entries are consolidated into the least number of resulting ledger transactions.
This only affects those commission agents where there has been a supplier assigned. The process takes such agent’s posted commission and generates a standard A/P invoice entry, posting the cost to the agent’s accrual account.
| Transaction process | Purchase Invoice | Type 030 |
|---|---|---|
| Debit | Total Commission + Tax amount | to A/P supplier a/c |
| Debit | Net amount only | to Pool Agent G/L Accrual account |
| Debit | Tax amount only | to G/L tax control a/c(s) |
| Credit | Net + Tax amount | to G/L creditors control a/c |
NOTE: There is a function in the Advanced Data File Integrity Maintenance window to archive and delete unwanted historic commission log records.
File Path
File > System Manager > Commissioned Agents…
This file path takes you to the Commissioned Sales Agents Maintenance window. This window has two tabs.
Commissioning Class Tab
Before you can add a commissioned Sales Agent, you must define your commissioning classes.
To do this, click on the New Class button and enter a single character into the class box eg. G or W.
Click on the description box and enter the name of the commission type eg. General Commission or Warranty Commission.
Click Save. Your new commissioning class will appear in the list on the left.
BUTTONS AND FIELDS
Commission Class List
Here you will see a list of all commissioning classes. You can edit the description field here.
Class
The name of the commission class should be entered here.
Description
Enter the description of the commission class here.
New Class Button
Select to add a new class to the system.
Revert Button
Selecting this button will revert to the last saved data.
Save Button
This will save the new edited class and commission data to file.
Print Report Button
Select this button to print a report of the class and commission set up.
Commissioned Agents Tab
Entering a New Commissioned Sales Agent
Select the New Agent button.
In the Agent code field enter the unique identifier for the new agent.
Enter the agents name in the description field.
Cost Posting a/c
In this box you would enter the cost postings account code you would like this allocated to. This can be completed later.
Accural a/c
Here you would enter the accrual account code. This can be completed later.
Ledgers Posting
Tick this box if you would like the system to automatically post to ledgers when commission is earned. This can be completed later.
WARNING – This has no operating value without the Ledgers program license option. When this option is used the cost and accrual postings are made at the same time as invoice postings. This can greatly increase the transaction rate for sales.
Supplier Posting
Related supplier code is needed to generate postings of accrued commission to an A/P account. This can be completed later.
Tax Class
Enter the tax class for this commission.
Pool Membership
Commission pool commissioning agent Id list (comma separated if a member of more than one pool).
Pool Points
The commissioned Sales Agent’s pool points for each pool they are a member of will be entered in this field.
Classes Applicable
Enter the commissioning class for your agent in this field.
% Rate
This is the percentage rate of commission allocated to the agent.
Calculation Method
Click on the dropdown list and choose the method you would like to calculate the commission by.
Flat Rate £
You can enter a flat rate per sale commission in this field.
Deleting a Commissioned Agent
To delete a commissioned agent, highlight their name in the list and press delete on your keyboard.
Creating a Pool Commissioned Account
A commission pool is created in the commissioned agents tab the same way as an agent. Enter the up to three-character code you would like the commission pool to be known as, in the agent code field eg. WP
In the description enter a description of the pool eg. Warranty Pool.
Leave the pool membership and pool points fields empty.
Enter the class code and the rate of commission as appropriate.
Choose the calculation method and if applicable, the flat rate for this commission pool.
Select save. Your commission pool is now set Cost Posting account Cost Posting account
BUTTONS AND FIELDS
List Field
This is a list of all agents. Highlighting an agent will bring up all their details on the right-hand side.
Agent Code
The agent’s unique identifier is entered here.
Description
The description of the commissioned sales agent.
Cost Posting a/c
G/L account for cost posting of commission on invoicing.
This field only has a value for custom reports when you are operating without the Ledgers program license option.
Accural a/c
G/L account for accrual posting of commissions on invoicing.
This field only has a value for custom reports when you are operating without the Ledgers program license option.
Ledgers Posting – Automatically when commission earned
Tick this box to automatically post to ledgers when commissioned earned.
WARNING This has no operating value without the Ledgers program license option. When this option is used the cost and accrual postings are made at the same time as invoice postings. This can greatly increase the transaction rate for sales.
Supplier Posting
Related supplier code needed to generate postings of accrued commission to an A/P account.
Tax Class
Supplier posting tax class when commissions are posted as invoices.
Pool Membership
This field is for entering the unique commissioning class code for the pool memberships the agent is part of if applicable.
Pool Points
The points the agent has for each pool is entered here.
Classes Applicable
This shows which commissioning classes the agent is part of.
% Rate
The % rate of commission the agent is entitled to is entered here.
Calculation Method
This field has a dropdown menu for you to select the type of commission for this agent.
Flat Rate £
You can enter a flat rate to pay the agent per order in this field.
NOTE: Commissions are not logged on dispatch when the sales order is marked as No Invoice on Dispatch nor for a Cash-Before-Delivery Invoice until it is dispatched.
TIP: Commissions equally operate for Returns for Credit or ad-hoc Credit Notes and these produce negative log entries which reduce the agent’s net entitlement.
TIP: Commissions are earned when invoices are raised which is when the sale is recorded. No account is taken of whether the invoice is subsequently paid by the customer. In the event of bad debts that cannot be handled by credit notes, where your commission rules demand, you must manually adjust the payments to agents or apply reverse postings (see the Sales Commissions Review window for these functions).
WARNING: Without the Ledgers program license option Commission Logging can only be processed manually and reports used to determine agent payments.
This article is part of the Vision Setup Guide. Click Here to return to the Setup Guide.
Compiled in Program Version 6.00.
Class wComMaint (Commissioned Sales Agents Maintenance) FP: File > System Manager > Commissioned Agents…