The dilemma

How do you know your commissions are correct?

When you receive a commission check for $6,000...
...should it be $5k?
...should it be $8k?
You don't know
You have to blindly trust that it's correct.

Do you check your commissions?

YES
If you do check
You shouldn't have to
spend the time
It's great that you check! But you shouldn't have to. Your time is better spent chasing your next deal, helping customers, and enjoying time with family. None of it should be spent in a spreadsheet, while you try and fix something your accounting department should've gotten right in the first place.
NO
If you don't check
You are likely
losing money
Commission errors are not uncommon, impacting your paycheck, commission escaltors, bonuses, and award trips. If you don't check, you are relying on your employer to get it right every time.

Comp plans are complicated

Commission errors are largely due to the ever-increasing complexity in compensation plans. Incentive structure complexity has accelerated as fast as the internet, with more lines of business and subcategories. Manually tracking performance and auditing for commission errors has become nearly impossible.

Employee Relations

Lack of transparency in commission pay results in stress and anxiety for the salesperson. They know that mistakes are likely occurring, yet they can do nothing about it. If the salesperson raises this issue to anyone, they are seen as greedy and selfish. This creates tension between reps and management that ultimately causes mental strain. When reps feel this way, sales teams struggle to retain top talent.

Examples of commission errors

Misclassified Deal

Deal was classified in the wrong category, resulting in a lower commission rate. For example, a salesperson had a large customer that was coming off a 3 year, $1 million managed service contract for help desk support. The customer informed the company that they were not renewing the arrangement and were moving forward in a different direction. After several months of hard work, the salesperson was able to sell a new contract to the existing customer, with new terms, new services and a reduction in scope.

Inherited Account

A new salesperson joins a company and inherits several existing "house" accounts that previously belonged to a former salesperson who left the company. Several months into the new person's tenure, there are additional costs, product returns, and a reduction in the scope of the original engagement that the previous salesperson sold. The employer attempted to charge back to the new salesperson the credits associated with the earnings from the previous salesperson.

Deal Split

On occasion a sales manager will decide to split the commission on a new customer deal between two sales people, but have one salesperson own the account moving forward and receive full YTD quota credit for the deal.

Customer never invoiced

Accounting department mistakenly didn't invoice the customer, so no commission was paid. This kind of error is not uncommon, especially when inter-departmental communication is required to successfully complete the deal lifecycle. Whether you are paid on invoicing or paid on revenue, these kinds of errors can negatively impact earnings.

Chargebacks

Sometimes there are errors made by the salesperson's support team in configuring a quote, missing cables, omissions, wrong pricing, etc., and at times after the deal has been booked, these additional costs are tacked on the salespersons deal and reduces gross profit and commissions, often without the salesperson's knowledge or approval.

Vendor Rebates or Spiffs

Vendors will offer rebates paid after the deal closes on specific products. This allows the salesperson to be more aggressive on pricing knowing that there will be rebate dollars coming after the deal to make up for it. If a salesperson does not track it, a company can overlook it at times and not allocate it back to the salesperson.

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