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Commissions Tracking System

This Help File Page was last Modified on 03/02/2017

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This Help File Page was last Modified on 03/02/2017

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Commissions Tracking System

This Help File Page was last Modified on 03/02/2017

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Commissions Management for High Sales Volume Companies

 

An Overview of the Commission Tracking System Rules

Calculating Commissions for Salespersons and Technicians

 

Commissions will not be Paid until the Invoice from which those Commissions were earned, has been Paid in Full.

 

I. Salesperson - This Commissions Tracking System is primarily designed for High Volume Sales and Installation organizations - those Companies who are marketing Fixed Price Packaged Systems (selected from among a group of predefined Proposal Packages) that are usually Installed immediately after being Sold, with no - or very few - changes made to the selected Fixed Price Packaged System.

Commissions (and sometime extra Bonuses) are earned based on the Salesperson selling an Alarm System that is as close as possible to a Fixed Price Packaged System - a set of components referred to as a Proposal Package - allowing the System's cost, and the subsequent time required for installation, to be standardized.

Each component making up the Proposal Package, or any component which may be added to the Alarm System, is assigned Commission Points.

Each Commission Point is assigned a "Dollar" Value - on an Employee by Employee basis - in the Personal tab of the Employee Form..

Therefore, this Commissions Tracking System is designed to Reward a Salesperson who sells a pre-designed Proposal Package at the designated Price (the Activation Fee) earning a pre-determined Commission (and sometimes a Bonus), and further Rewards the Salesperson for Up-Selling the "standard" Proposal Package with additional components at an additional Price.

The Up-Selling Reward (the extra Commission earned for this Up-Selling) is calculated by subtracting the "Dollar" Value of the Commission Points for the added component (which represents it's approximate cost) from the Price that was charged for that component, thereby earning the Salesperson the balance remaining as a Commission.  

There is a maximum number of Commission Points that may be earned ("Banked") for each Sale of that Proposal Package.

All components that may be added to a "standard" Proposal Package are defined in the Sale-Purchase Items Form and have a Retail Price and Commission Points assigned.

The Commission Points assigned to a Sale-Purchase Item should represent an approximate Cost for the acquisition and installation of the component.

As noted above, these Commission Points are assigned a Point Value - on an Employee by Employee basis - in the Personal tab of the Employee Form.

Typically, the "standard" Proposal Package would include:

An Activation Fee which is assigned the standard installation Price for this Proposal Package,

The required (and sometimes optional) components that make up that Fixed Price Packaged System - but with the Price for each component re-set to $0.00.

The end result is that the Salesperson will earn a Commission when he/she Sells what's included in the selected Proposal Package and will earn additional Commission Points (which will translate into dollars) if component(s) are added at an additional Price when the Proposal Package is sold.

These added components ("Add-On Sales") are recorded when the Invoice is created, using the Commission Points assigned to each Sale-Purchase Item in that Proposal Package.

When a component is added to a standard Proposal Package at the time of Sale:

oThe Commissions Points of that added Sale-Purchase Item will be added to that Salesperson's Banked Commission Points, the Retail Price that was charged will be added to their Add-On Sales

oThe Value of those Banked Commission Points (the approximate cost of the components that were sold as Upgrades) will be calculated.  

oThe Value of those Banked Points is deducted from the Amount of the Add-On Sales

oThe remaining balance is the Salesperson's Commission.

There is a defined maximum number of Commission Points that may be Banked for each Sale of a Proposal Package.

If a component is removed from a standard Proposal Package at the time of Sale, the Point Value of that removed Sale-Purchase Item will be deducted to that Salesperson's Banked Commission Points, ultimately resulting in an additional Commission (because there will be fewer "costs" deducted from their Add-On Sales).

At the end of a Pay Period, these Banked Commissions Points are converted to a "Dollar" Value (based on the Point Value of each Commission Point established for that Salesperson), then that "Dollar" Value is deducted from the Value of all of their Add-On Sales with the balance remaining earned as a Commission.

The Base Commission (and any Bonus) Amounts are calculated separately (Proposal Package Units Sold times the Base Commissions, plus any Bonus Amounts) by referencing the Commission related information on the Employee Form and on the Proposal Package Form respectively and added to the net earning from the Add-On Sales.

 

II. Technician - This Commissions Tracking System will also track the Commissions which may be earned by the Technicians who install these Alarm Systems.

Commission Points may also be Banked by the Technician for selling, and charging for, additional, extra cost components ("Add-On Sales") during an Installation.

There is a defined maximum number of Commission Points that may be Banked for the Sale of a Proposal Package.

At the end of a Pay Period, these Banked Commissions Points are converted to a "Dollar" Value (based on the Point Value of each Commission Point established for that Technician), then that "Dollar" Value is deducted from the Value of all of their Add-On Sales with the balance remaining earned as a Commission.

 

Understanding the Earned Commissions report's calculations:

At the end of each Pay Period, the Earned Commissions Report will calculate and list the Net Dollar Value of the Commissions earned for all of the Paid Sales.

These Commissions are derived from four different sources:

1.Each Sale of a Proposal Package earns a fixed "Dollar" Value for that Salesperson which is identified as their Basic Commission Rate

That "Dollar" Value must be predefined for each Commission Eligible Salesperson in the Personal tab of the Employee Form.

2.There may be Add-On Sales (when additional Components are added to the basic Proposal Package) which earn Banked Commission Points.

Each Proposal Package has the assigned number of Package Points identified, plus the maximum number of additional Commission Points which may be Banked for that Proposal Package.

oA Salesperson may Up-Sell an order (i.e., add one or more components to the selected Proposal Package), the Commission Points assigned to the components will be added to that Salesperson's Banked Commission Points.

The "Dollar" Value of a Commission Point is established for each Salesperson and Technician in the Personal tab of the Employee Form as their Commission Base Rate.

oThe "Dollar" Value of those Banked Commission Points is calculated for that Salesperson, and that Value is subtracted from the Sales Amount which was Paid for the components, with the balance remaining being the Commission that is earned.

During the Installation, a Technician may Up-Sell (add one or more additional components to the Installation), and these additional charges for the components will be added to the Sale

oThe Commission Points assigned to the components will be added to that Technician's Banked Commission Points.

oThe Value of those Banked Commission Points is calculated for that Technician, and that Value is subtracted from the Sales Amount which was Paid for those components, with the balance remaining being the Commission that is earned by the Technician..

3.Bonuses may also be earned by each Commission Eligible Salesperson for the Sale of specifically defined Proposal Packages.

Not all Proposal Packages offer a Bonus.

The "Dollar" Value of that Bonus - if a Bonus is available - is defined in the Proposal Packages Form.

4.Adjustments to the Commission earned for a Sale (or for an Installation) may be applied to the Invoice created for that Sale (specifically for that Salesperson and/or the installing Technician) using the Commission Adjustments Form.

 

A Sale must be Paid to qualify for Commissions.

 

Step by Step - How Commissions are tracked throughout the Commission Tracking System:

A new Account may be initially identified within MKMS as either a Prospect or a Subscriber

A Proposal is created for that Prospect or Subscriber and must include a predefined Proposal Package

The Proposal is accepted by the new Account

If the Account was entered as a Prospect, it is converted to a Subscriber record.

The Proposal may then be converted to a Service Request (Work Order) or directly into an Invoice

If converted to a Work Order, identify the Proposal Package that was sold (subtracting or adding items, if the predefined Proposal Package was modified) using the Packages Icon on the Inventory\Materials tab of the Service Request Form.

Complete the Work Order  

Invoice the Work Order

Regardless of whether a Commission Eligible Invoice is created from a Work Order or the Invoice is created by converting a Proposal, or an Invoice is simply created  - the resulting Invoice will contain all of the required Commission related information.

The Receipts for these Commission Eligible Sales must be Allocated on an item by item basis (see the "Itemized Receipt Allocation" section in the Allocating Receipts chapter) for the Commissions to be calculated properly.

At the end of each Pay Period, the Earned Commissions Report will calculate and list the Net Dollar Value of the Commissions earned for all of those Paid - and properly Allocated - Sale Invoices.

 

Forms used by the Commission Tracking System

Commissions are earned by the Salesperson and/or the Technician (Employee) who was responsible for the Subscriber purchasing a designated (Commission Eligible) Proposal Package and/or individual Commission Eligible Sale-Purchase Item(s).

All Commissions, Commission Points and Bonus Amounts (subject to certain Total Point limitations and/or Commission Adjustments) that are earned by any Commission Eligible Employee for Sales of Commission Eligible Proposal Packages and/or Sale-Purchase Items will be tracked by the Commissions Tracking System, automatically.

The Rules for calculating (and paying the resulting) Commissions, Commission Points and Bonus Amounts are defined, calculated, and/or stored in the Employee, Sale-Purchase Items, Adjustment Types, Service Requests, Proposal Packages, and the Invoice Forms - with the results showing what Commissions should be paid - reported in the Earned Commissions Report.

Each of these Commission associated Forms - and a brief description of their role within the Commissions Tracking System - are listed below:

a.Adjustment Type Form - Because Commission Adjustments are sometimes required, and because these Adjustments should be carefully tracked, an Adjustment Type Form is provided where any type of Commission Adjustment that is permitted by the Company will be predefined.

 

HelpFilesAdjustmentTypes

Adjustment Types Form

 

b.Employee Form  - The Commission Base Rate - the basic Commission Amount earned for the Sale of a Proposal Package is entered for each Commission Eligible Salesperson; and the Commission Point Rate - the "Dollar" Value of each Commission Point that is Banked - is entered for each Commission Eligible Salesperson and Technician.

 

HelpFilesEmployee

Employee Form - Personal tab

 

Salespersons are assigned a Commission Base Rate (the Amount of Commission automatically earned for each new Sale) and the Value of Commission Points  (added or subtracted based on the type of change to a fixed price Proposal Package) to determine the largest part of their Commission earnings for the Sales they make.

Technicians are assigned the Value of Commission Points (that are Banked for the Sale of additional, extra cost items sold during the Installation) which will ultimately determines the net Commission earnings of their Add-On Sales for the Installations they have completed.

 

c.Proposal Package - A Proposal Package - which must include an Activation Fee - includes the Package Points, any Bonus Amount that can be Earned, and the Maximum Points that may be "Banked" toward additional Commission Point earnings.

 

HelpFilesProposalPackagesFormWithActivationFee

Proposal Packages Form

 

d.Sale-Purchase Items - A Proposal Package and/or individual Sale-Purchase Items included or excluded in a Proposal - when Converted to an Invoice - will include the Commission Points (if any) that were Banked based on the Commission Eligible Proposal Packages and/or Sale-Purchase Items included in that Proposal, and/or when Sale-Purchase Items are (or a Proposal Package is) directly entered on an Invoice.

 

HelpFilesSale-PurchaseItems

Sale-Purchase Item Form

 

If using the Commission Tracking System and therefore charging an Activation Fee (which is included as part of a Proposal Package) that Activation Fee should not have Commission Points assigned, but the individual Inventory Items - and any other components - which could be included in a Proposal Package - should have Commission Points assigned but should not have Labor related information defined (because Labor is included in the Activation Fee and not itemized separately - see below).

 

HelpFilesSale-PurchaseItemsJobCostCategoriesNoLabor

 

Activation Fee - At least one Sale-Purchase Item record must be identified as an Activation Fee (but many - with different Prices and Descriptions - may be defined).

 

HelpFilesSale-PurchaseItemActivationFee

 

oAn Activation Fee Sale-Purchase Item has no Commission Points but must have a unique Item ID, Description and a Retail Price defined.

 

e.Proposal -  Among other things, a Proposal's Header contains the Name of the selected Package, Package Points, Assigned Points and the Points that will be Earned (Banked) based on any proposed modifications to Commission Eligible Proposal Package, while the Detail Line Item(s) will include the Name of the Salesperson (i.e., Commission To) who will earn those Commission Points.

Package Info option - For Proposals defined with a Proposal Package, the Commission Tracking System Points associated with that selected Proposal Package may be viewed by Clicking the Package Info field's Down-Arrow

 

HelpFilesProposalPackageCommissionInformation

 

oSelected Package, Assigned Points and Earned Points, and the earned  Package Points fields will be populated, as appropriate.

 

HelpFilesProposalHeader-DetailLineItemsTab

Proposals Form - Miscellaneous options - Package Info fields - Proposal Items tab

 

f.Sales Invoice - A Sales Invoice may include the Selected Package Name, the Package Points, Assigned Points and Earned Points - all of which will be tracked by the Commissions Tracking System, automatically.

 

HelpFilesSalesFormConvertedFromProposalOfProposalPackage

Invoice Form created from Proposal containing a Commission eligible Proposal Package

 

When a Proposal is Converted to an Installation type of Work Order, and items in that Installation list are marked as Used, when Completed and Invoiced, that Invoice will include all of the Commission Points information that is Banked based on the Proposal Package in that Proposal.

A simpler way to identify all of those items is to use the Packages Icon on the Inventory\Materials tab of the Service Request Form

When a Proposal is Converted to an Invoice it will include all of the Commission Points that may have been Banked based on any additions to, or subtractions from the Proposal Package in that Proposal.

When a Service Request is Invoiced, the Invoice will include all of the Commission Points that may have been Banked based on any additions to, or subtractions from the Proposal Package identified in the Inventory\Materials tab of that Service Request (see g. below).

The appropriate Salesperson (Commission to) and/or Technician (Tech) information should be assigned to each Detail Line Item.

 

g.A Service Request with Inventory and Materials recorded for Commission Eligible Proposal Packages and/or Sale-Purchase Items that have Commission Points identified - when Invoiced - will be tracked by the system, automatically.

 

HelpFilesServiceRequestFormInventory-MaterialPackages

Inventory\Material Drop-Down Info Box - Packages Icon

Work Order Form

 

h.Receipts for these Commission Eligible Sales must be Posted and then Allocated on a Line Item by Line Item basis.

See the "Itemized Receipt Allocation" section in the Allocating Receipts chapter for important information about this step.

 

i.Commissions Adjustments may be made, as appropriate, based on each individual Company's predefined Adjustment Types and the pre-established Rules for Commissions, Commission Points and Bonus Amounts.

 

HelpFilesCommissionAdjustmentForm

Commission Adjustment Form

 

j.A Commission Approval Form is provided to finalize the Commissions owed to each Commission Eligible Employee for a specified Pay Cycle.

 

HelpFilesCommissionApprovalsSalesTab

Commissions Approvals Form - Sales tab

 

The Earned Commissions Report will include - for each Salesperson or Technician within a specified Date Range - the following information:

The Commission and Bonus dollars earned by each Salesperson

The Net Dollar Value of the "Banked" Commission Points and the Sales resulting from them, with the net Commission that was Earned by each Salesperson or Technician

 

HelpFilesEarnedCommissionsReportOptions

Earned Commissions Report - Options tab

 

See the "An Overview of the Commission Tracking System Rules " section above for more detailed information.
 

Setting Up and Using the Commissions Tracking System:

Each Employee who is Commission Eligible (indicated by assigning an Employee Type of Technician, Sales, or All) must have a Commission Base Rate and/or a Commission Point Rate defined on the Personal tab.

Salespersons earn Commissions and Commission Points, Technicians may only earn Commission Points.

 

HelpFilesEmployeeCommissionFields

Employee Form -  Commission fields

 

Almost any Sale-Purchase Item may be designated as Commission Eligible by assigning a Value to the Commission Points field, or be identified as an Activation Fee.

 

HelpFilesSale-PurchaseItemsCommissionPointsField

Sale-Purchase Items Form - Commission Points field

 

The Employees who are Salespersons earn Commissions and Commission Points, those who are Technicians may only earn Commission Points.

Commission Points should represent the approximate installation cost of the component.

Commission Points are tracked by MKMS for each Employee who can Bank those Commission Points by making a Commission Eligible Sale.

To be tracked properly, at least one Sale-Purchase Item within a Proposal Package must be defined as an Activation Fee.

No Commission Points are assigned to an Activation Fee.

 

HelpFilesSale-PurchaseItemActivationFee

Sale/Purchase Item Form - Activation Fee

 

Although an Activation Fee is not assigned Commission Points - it is assigned a Retail Price.

An Activation Fee may, or may not be Taxable, based on the local sales tax rules in force.

 

predefined Proposal Packages identify the basic Package Points, the maximum number of additional Commission Points that may be Banked, plus any Bonus Amount available for the Proposal Package.

 

HelpFilesProposalPackageCommissionInformation

 Proposal Info - Package Drop-Down Info Box

Commission related fields

 

Any number of Sale-Purchase Items may be included in a Proposal Package.

Sale-Purchase Items defined for a Proposal Package may, or may not be Commission Eligible.

Not all Sale-Purchase Items within a Proposal Package are Required to be installed.

The predefined Quantities for those Sale-Purchase Items may also be adjusted (up or done) when added to a Proposal or Sales Invoice.

At the time of Sale, adding to, or subtracting from the list of (optional - i.e., not Required) Sale-Purchase Items defined for a Proposal Package will change the Commission Points that are Banked.

The limit to how many Commission Points may be Banked is defined.

The resulting Commission Points information is displayed when the Proposal Package is Invoiced.

 

HelpFilesProposalHeader-DetailLineItemsTab

Invoice Form - Package Info:  Package Points, Assigned Points, Earned Points fields

 

When a Proposal is Converted to an Invoice, or a Sales Invoice is specifically created, any Sale-Purchase Item which was added to the Proposal or Sales Invoice - with Commission Points assigned - will be reported for the appropriate Employees on the Earned Commissions report for each Paid Sale.