Commissions

General

A commission is a fee paid to an agent (an external company) or an employee (internal salesperson) for transacting a piece of business or performing a service. It is fairly common to pay commissions for sales.

Basic Data

To make this possible, you must connect the customer to one or more commission receivers. You start by setting up basic information about commission receivers and commission receiver groups. Depending on the setup, you can calculate commissions to individual commission receivers as well as to commission receiver groups. In the information about the commission receiver, you state, among other things, information about the salesperson if an internal salesperson is entitled to receive commissions. You can also enter the currency of the commission receiver, which is the currency in which the commission amount is being paid. If you enter a commission agreement with a different currency this will only change the calculation currency.

Commission Agreement

The next step is to create a commission agreement to exactly control how and when commissions are to be calculated. You can enter more than one agreement line to each commission agreement. You can set a wide range of terms, consisting of any combination of the following:

• Validity Period: The date between which the commission agreement is valid.
• Calculation Base: Whether the commission calculation should be based on customer order or customer invoice information. The calculation base decides which quantity, amount and date to use for finding a valid agreement revision. If you select Order Entry, the commission will be calculated immediately, based on information from the order line. If you select Invoiced, on the other hand, the commission will not be calculated until the order line is invoiced. If there is an existing invoice the information from the invoice will be used for the calculation of the commission, and the invoice date will be used to find a valid commission agreement revision. If no invoice is created, the total due commission amount will be calculated using the data from the order line as a basis for calculation and for finding a valid commission agreement revision.
• Currency: The currency in which the commission is being calculated. N.B. If you have connected a different currency to the commission receiver the commission amount will be paid in this currency.
• Sequence Order: The order in which the different agreement lines are taken into consideration. Lines with lower sequence numbers are considered before lines with higher numbers.
• Percentage: The commission percentage to be used, unless overridden by a valid range line in the Commission Agreement Line window. This means that the percentage on the agreement line will be used until the first valid range is reached, i.e., the percentage entered in the commission agreement line does not have any influence. The percentage can be left open if a commission range is to be applied.
• Range Type: Every agreement line can be set to apply within a defined interval only. The possible range types are:
  Quantity - The commission is applicable only for sales exceeding a set minimum quantity, expressed in the sales unit of measure. The quantity will be either the quantity from order line or the total invoiced quantity, depending on previous settings. You must have defined a sales part to be able to select this range type. You must go to the Commission Agreement Line window to specify the details about the interval.
  Amount - The commission is applicable only for sales exceeding a set minimum amount, either the order line amount or the total invoiced amount, depending on previous settings. You must go to the Commission Agreement Line window to specify the details about the interval.
  Discount - The commission is applicable for sales exceeding a set minimum discount, either the total order line discount or the total invoiced discount, depending on previous settings. You must go to the Commission Agreement Line window to specify the details about the interval.
• Calculation Method: If you have chosen Additive, the system will apply all commission lines that meet the set conditions. If you have entered Exclusive for some lines, the system will first check if any of these, in sequence number order, meet the requirements. It will apply only the one with the lowest sequence number and will disregard all others.
• Sales Part Number: The commission will be calculated only for the entered sales part number.
• Customer Number: The commission will be calculated only for sales to the entered customer number.
• Customer Statistic Group: The commission will be calculated only for customers with the entered customer statistic group.
• Customer Type: The commission will be calculated only for customers of the entered customer type.
• Customer Group: The commission will be calculated only for customers belonging to the entered customer group.
• Country: The commission will be calculated only for sales to the entered country.
• Market: The commission will be calculated only for sales to the entered market.
• Region: The commission will be calculated only for sales to the entered region.
• Sales Price Group: The commission will be calculated only for sales parts belonging to the entered sales price group.
• Sales Group: The commission will be calculated only for sales parts belonging to the entered sales group.
• Commodity Group 1: The commission will be calculated only for sales parts with the set value as commodity group 1.
• Product Code: The commission will be calculated only for sales parts with the entered part product code.
• Product Family: The commission will be calculated only for sales parts belonging to the entered product family.

Commission on Customer Order

When you enter a customer order line matching the above set criteria, the system will generate one or more order commission line(s). You can later manually create additional order commission lines and change the ones created by the system.

You can change any commission line considerably, such as commission percentage or amount and other features. If required, you can also add or remove commission lines.

For each order line commission there is a defined line source. The line sources are:

• System - the system has generated the commission in accordance to set rules.
• Modified - the user has manually modified a system generated commission line.
• Manual - the user has manually entered the commission line from the customer order line registry.
• Correction - the commission has been changed after the original entry, but the original commission line is in status closed and cannot be updated. A correction line has been generated by the system to correct the original commission.

Apart from others an order line commission can also be fixed. Special conditions are applied when fixed commissions are used. Fixed order commission lines will neither be calculated nor considered in the recalculation process.

Commission calculation

However, the system will create only the commission lines. To copy the commission percentage or commission amount, you must actively initiate the calculation of the commission line.

You can initiate the calculation of order commissions as soon as they have been created. You can choose between:

• Update Calculated Commissions - All the selected (already) calculated commissions will be recalculated. This will be the case if some of the values have changed (quantity, price, etc.). Manually entered commissions or system generated commission lines with manual additions will not be changed.
• Update All Commissions - Same as above, but also the manually entered commissions will be deleted and replaced by the recalculated values. This also applies for system generated commission lines with manual additions. The system will ask whether you really want to overwrite the manual commissions.

As stated above, there are a few differences in the handling of manually entered commission lines and system generated commission lines in the recalculation process.

If you make manual changes in a system generated commission line, that line will be handled in the following way:

• Changed lines will be marked via the line source “Modified”.
• “Modified” lines can contain both percentage and an amount.
• If choosing to recalculate the commissions via Update All Commissions, the modified line will be handled as a purely system generated line, i.e., no consideration will be taken to the manual modifications. The commission calculation will then purely be based on the basic data setup and the information found in the applicable commission agreement. The manual changes will be overwritten by system created data. The line source will in this case be changed back to “System”.
• When using Update Calculated Commissions, the manually entered values will be used as a basis for calculating commissions. This means that the values will not be overwritten by current data from the commission agreement. In this case, a “Modified” line will work in the same way as a manually entered line.

Before you finalize the commissions, you must run the commission calculation for all required sites, commission receiver groups, and/or commission receivers. Once the commission calculation is finalized, you can no longer change or recalculate any affected commissions. Normally, you finalize them for a fixed period of time, e.g., you finalize January in February, if the chosen period is "'month." On finalizing, the system will consider the calculation period of the commission receiver as entered in the basic setup. The system will alert you if you finalize the calculations before the end of the calculation period of the commission receiver.

If you have finalized the commission calculation without a previous commission calculation the "neglected" commissions will be transferred to the next commission period. They will not be lost. The same applies if, for some reason, the basis for calculation is changed after a commission has been finalized. An example would be if you create a credit invoice for an order with invoice based commissions that have been finalized. In this case a correction of the commission will be transferred to the next commission period. In these cases the system will generate a correction line to the next commission period.

When an order line is canceled, the connected commissions will be removed automatically. All open commission lines will be canceled. Closed commission lines will be reversed by a correction line, that will be connected to the next open commission period. One correction line per receiver will be created.

Correction lines

Commission lines with line source “Correction” are system-generated lines created to correct earlier given commissions. Correction lines are created when recalculating commissions and the commission period for the original commission line amount is closed and finalized (Finally Calculated).

The system creates the Correction lines by calculating how much Commission the receiver is entitled to get by the time for the calculation. After that, a check is performed to find out how much commission the receiver already has gotten. If there is a difference, a correction line will be created for the amount that differs.

Correction lines have the following characteristics:

• Correction lines only contain an amount, not a percentage.
• The commission amount, calculated commission amount and total commission amount fields always show the same value on a correction line.
• Correction lines will only be created for system generated lines (lines with line source “System” and “Modified”) and not for “Manual” and Fixed lines.
• A correction line cannot be changed manually.
• It is not possible to create a line with line source “Correction” manually.
• Correction lines will be created both for invoice based and order based commissions.
• The correction lines have a connection to the original lines that they correct. The behaviour at recalculation of a correction line is dependent of the line source of the original line (“Original Line Source”).
  If the original line source is “System”:
  The current data from the commission agreement is used at both “Update All” and “Update Calculated”. This means that the amount and percentage from the commission agreement are used to calculate how much commission the commission receiver is entitled to at the time for the calculation.
  If the original line source is “Modified”:
  When using Update All Commissions, the current data from the commission agreement is used for the calculation. When using Update Calculated Commissions, the amount and percentage from the original line is used for the calculation. This means that manually changed values on the original line will have an impact on the calculation for correction lines.
• To make it possible to create correction lines even though there is a “Manual” open line, the system will allow one open “Manual” line and one open “Correction” line at the same time. This also makes it possible for the user to make manual changes despite the fact that there is an open correction line. Otherwise, only one open commission line at the time is allowed. An exception is “Fixed” lines that do not have this limitation.

Commission Reports

The system is not automatically producing any credit note or similar document. However, you can use any of the commission reports to initiate the payment of commissions and to serve as verification. You can design the reports to show commissions to a specific commission receiver or a commission receiver group during any period of time, and you can produce it in a more detailed or less detailed version.