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Sales commission calculations are based on the following:

• The selection in the Commission Rate field in Salesperson Maintenance.

• The selections in the Commission Rate, Commission Method, and Base Commission Amount fields in Item Maintenance.

• The information entered in Line Item Commission Maintenance.

Before calculating sales commissions, you must make the appropriate selections in the Inventory Management and Accounts Receivable modules.

In Accounts Receivable Options, the following fields determine how sales commissions are calculated:

• Salesperson Commission Reporting

• Commissions Paid on Paid Invoices Only

• Commission Calculation Based On

In Inventory Management Options, the Calculate Commission by Inventory Item field determines how sales commissions are calculated.

If any of the following conditions are met, all sales commissions are based on the selection made in the Commission Rate field in Salesperson Maintenance and are subject to the selections in Accounts Receivable Options:

• The Inventory Management module is not installed.

• The Inventory Management module is installed and No is selected in the Calculate Commission by Inventory Item field in Inventory Management Options.

• The Inventory Management module is installed, Yes is selected in the Calculate Commission by Inventory Item field in Inventory Management Options, and Standard is selected in the Commission Method field in Item Maintenance.

If the Inventory Management module is installed and Yes is selected in the Calculate Commission by Inventory Item field in Inventory Management Options, then each inventory item can be independently configured to be subject to sales commission based on the selection in the Commission Method field in Item Maintenance. If the inventory item is subject to sales commission, the following calculations methods can be used:

• Standard (subject to settings in Accounts Receivable as noted above)

• Percent of Cost

• Percent of Gross Profit

• Percent of Price

If None is selected in the Commission Method field in Item Maintenance, sales commissions are not calculated for the item.

If commission percentage rates are defined in Line Item Commission Maintenance, they will override percentage rates set up in Salesperson Maintenance and Item Maintenance, but any base commission amount entered in Item Maintenance will still be included in the commission total. If a commission amount is entered in Line Item Commission Maintenance, it will override both the amounts calculated using percentage rates entered in Salesperson Maintenance and Item Maintenance and any base commission amount entered in Item Maintenance.

 Examples

The following examples show which rates and/or amounts will be used for sales commission calculations based on entries in Salesperson Maintenance, Item Maintenance, and Line Item Commission Maintenance.

Note If a value appears in one of the Item Maintenance columns, the example assumes that an option other than None or Standard is selected in the Commission Method field in Item Maintenance.  

Sales Person Maintenance Commission Rate	Item Maintenance Commission Rate	Item Maintenance Base Commission	Line Item Maintenance Commission Type	Line Item Maintenance Commission Rate or Amount	Rate and/or Amount Used
5%	N/A	N/A	N/A	N/A	5%
5%	7%	$20.00	N/A	N/A	7% plus $20.00
5%	7%	$20.00	Percent	9%	9% plus $20.00
5%	7%	$20.00	Amount	$30.00	$30.00

A record created in Line Item Commission Maintenance for one specific salesperson, customer, or item will take precedence over a record created for All salespersons, customers, or items. The following table shows the hierarchy used when multiple records exist for the same salesperson, customer, or item, assuming that no records are eliminated based on the effective date.

Salesperson	Customer	Item	Order of Precedence
Specified	Specified	Specified	1
Specified	Specified	All	2
Specified	All	Specified	3
Specified	All	All	4
All	Specified	Specified	5
All	Specified	All	6
All	All	Specified	7
All	All	All	8

For more information, see Sales Commission Calculation Methods.

Note When calculating sales commission on a per item basis, reports do not display the commission rate per item when the report is generated by invoice (summary). Because the commission rate for individual items may be different, the reports will display 0.00% for the commission rate, even though the commission amount is correct for that invoice. In addition, the Gross Profit Journal, which displays the item detail, prints the salesperson commission rate in the sub-header for the Standard type line item, but does not print the commission rate for items using the Percent of Cost, Percent of Gross Profit, or Percent of Price calculation methods.