Get rid of spreadsheets and use NetSuite for calculating and paying commissions

By - June 29, 2015

Many companies share similar processes for a number of different accounting functions. For example, a standard billing and collections process may not vary significantly between companies in a variety of industries.  Other processes, however, are unique by definition.  Incentive compensation is one of these processes. Paying commissions to employees and independent contractors is a key to providing an incentive for them to increase sales for the company.  This type of incentive compensation is typically tied directly to the drivers behind revenue and ultimately net income. Although most commission plans are based on these drivers, the drivers themselves can be completely different, even for different companies within the same industry.

The intricacies of calculating commissions often push companies to export sales data to spreadsheets for a manual commission calculation.  More spreadsheets means more time spent on calculating payroll and closing periods.  NetSuite’s Incentive Compensation module may be able to automate the process.  Companies who use NetSuite for calculating and paying commissions experience several benefits, including:

  1. Ability to pay both employees and independent contractors (Partners), including generation of Form 1099-MISC at year end.
  2. Flexibility over commission plans, including certain sales reps on different plans during different time periods.
  3. Robust commission schedules that can calculate different commission amounts for different types of transactions. Schedules can even be defined by a custom saved search.
  4. Commissionable basis can be defined based on dollars sold, quantity sold, profitability of inventory, or sales vs. quota.
  5. Control over the accrual process, with the ability to define commissions as earned on bookings, billings, collections, or a pro-rata combination of billings and collections. You can also set commissions to be eligible only when invoices are paid in full by the customer.  For very custom calculations, commissions can be based on Alternate Sales Amount, a scriptable field on the transaction.
  6. You can assign multiple sales personnel to customers and transactions, and define a percentage-based split of a commission between two or more individuals.
  7. Once commissions are earned, a batch process within NetSuite generates the commission transactions which can be paid through Accounts Payable or payroll.
  8. Several standard reports for estimated commissions, commissions pending authorization

If you would like to hear more about how RSM can help you more efficiently manage your commission process, please contact RSM at erp@rsmus.com or by phone at 855.437.7202.

By: Jay Figgins – Iowa NetSuite Solution Provider

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