Tracking Commissions in an accounting system is not always a simple process. There are several issues related to awarding commissions:
1. Is commission awarded as a flat rate or variable based on product or service sold?
2. Are there line items that do not get awarded a commission?
3. Is freight or footer area miscellaneous charges included?
4. Do some sales rep get different commission rates for the same item sold?
To complicate it further:
Does the rep receive commission on shipped or paid invoices?
It is easier to track based on shipped invoices. You tabulate all the invoices of a selected range of dates. But when it is by paid invoices, the accounting becomes more complicated. What if the customer pays the invoice only partially? If so, you probably want to take the amount received and only apply the commission to it rather than
the full amount.
What about charge-backs when the customer returns merchandise and is given a credit or refund?
When doing commission tracking in an accounting system, expect
that it may not be a simple matter of printing a report. You may decide whether to save the system generated report into a spreadsheet and tweak the numbers accordingly. You may also consider using customized software for a business that requires less than simple commission processing.
You are looking for someone who understands your business and will help you navigate your needs. It’s your money and business on the line. Give us a call at (773)502-5771 to get you on the right track.
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