At the Commission Type field in the Salesperson Maintenance module, you have two options. The Standard Base option will allow you to access the next two fields, and the Scale Base option will place the cursor at the Scale Base field (explained below).
The options for the Standard Base field are as follows: M for Margin, T for Total, L for Total Less Labor, P for Margin Less Labor, and G for Gross Profit.
- If the Salesperson receives a percentage of the profit, select M.
- If the Salesperson receives a percentage of the total job, select T.
- If the Salesperson receives a percentage of the total job excluding any labor, select L.
- If the Salesperson receives a percentage of the profit excluding any labor, select P.
- And finally, the “G” for Gross Profit option is based on the Gross Profit of the Invoice.
- When select this option you will see a Min and Max field to the right of the field. Determine the Minimum and Maximum Gross Profit spread you will pay commission on and enter that in the Min and Max fields. Using 15 and 40 as an example, if an Invoice has a GP of 15%, the salesperson will receive 15% of the Gross Profit, and so on up to 40%. Anything above 40% Gross Profit, will still earn 40%. Anything below 15% will earn 0.
- When select this option you will see a Min and Max field to the right of the field. Determine the Minimum and Maximum Gross Profit spread you will pay commission on and enter that in the Min and Max fields. Using 15 and 40 as an example, if an Invoice has a GP of 15%, the salesperson will receive 15% of the Gross Profit, and so on up to 40%. Anything above 40% Gross Profit, will still earn 40%. Anything below 15% will earn 0.
**PLEASE NOTE: Options that exclude labor will not work properly if you enter an installed price on a material line and a zero-sale price on the labor lines. This is because all the profit will then be figured in the material total. The system has no way to distinguish between labor profit and material profit when it is lumped together on a material line.
In the Rate % field, enter the standard percentage amount, in whole numbers, that applies to the Salesperson. For example, if the Salesperson receives a percentage of the profit margin, say 20 percent, enter “20” in this field. In the case of a Salesperson or other employee who sells but is paid a salary instead of a commission, simply enter “0” in the Rate % field.
The Sub Contractor checkbox field and the A/P Vendor ID field are only for businesses that pay their Salespeople as 1099 subcontractors. If this is the case, click the checkbox and perform a Vendor Lookup of the ID set up for this Salesperson. If this does not apply, leave these fields blank.
Click the Save button to keep the data and continue adding another Salesperson.
The Scale Base option, which is basically a Sliding Scale Commission Rate, can be used to program a range of commission percentages to pay based on the total profit margin on each job. Once the system calculates a commission rate based on the sliding scale information you input, you will not be able to make any adjustments via the Cost Maintenance module. You can, however, switch the Commission Type in that screen to Standard Base and then make a change.
At the Scale Base field, use the drop-down arrow to select how you wish the commission to be figured, using the same guidelines explained above, but using the associated letters in this field:
- C for Margin
- O for Percentage
- N for percentage of the Total Less Labor
- or R for percentage of the Margin Less Labor.
In the A-O fields, you can program up to 15 different commission percentages. However many you choose to program, you have to program a range from 0-999.99. Also, there is a Company Control 2 prompt in the System Control Maintenance module that, when enabled, will eliminate the need to program negative sliding scale commission levels for the Credit Memo program (see Sliding Scale (Auto. Neg. Comm.) option explained in the System Control Maintenance section of the documentation). If you enable this option after Scale Base fields have been completed, make sure you delete any existing negative sliding scale commission levels that have previously been set up. On Invoices with negative margins, with the above option enabled, the system will find the positive margin range in the Sliding Scale you have programmed and use that commission percentage. If one or more Invoices appears on a Job and a Credit Memo is processed, the commission calculation will use the commission percentage of the total Invoice the Credit Memo lines were originally invoiced on and calculate a negative commission for those lines. If you wish to enforce a different negative commission scale, then you will need to set that up in this screen rather than use the option described above.
The following is an example of a sliding scale using a Margin scale base as opposed to a Total scale base. (Margin ranges and commission percentages shown are purely for example and should not be considered industry standard):
As you will note from the example above, line A should be used to program the highest margin range for which you will pay the highest commission percentage. Regardless of the figure you type in the first field, you must type 999.99 in the second field of line A. The second field of each subsequent line must be no more than one tenth of a percentage point lower than the first field in the previous line, e.g., 49.99 if the previous line figure is 50.00, etc. In other words, there can be no gaps between the margin figures from one line to the next. Finally, you must type .00 in the first field of the lowest margin line—see line E in the example above. Although the example above uses five lines, you can set up a sliding scale using less than five lines or as many as 15—you just need to make sure you program a range from 0 to 999.99. Be sure to click the Save button at the bottom right of the screen to save the data before exiting.