The commission module (‘incentive compensation management’) is available as an additional module to NetSuite customers. This feature allows employers to easily pay their sales reps/partner reps commission either as part of their wages or by payable cheque (treated as an accounts payable transaction).
This can be a really useful module for companies who need to motivate their sales team with an effective incentive. We don’t have to work with complicated spreadsheets or import data between applications, as our sales compensation can be easily handled within NetSuite.
Commission Functionality
With NetSuite, we can design complex, multi-tiered commission plans that complement our company’s sales strategy.
The NetSuite sales compensation feature is seamlessly integrated with its accounting features. When deals are entered, the commission is automatically calculated by the system based on how we have set it up.
Our team benefits from this integration because they will know how much commission they have earned before they receive it. With their NetSuite dashboard, sales reps can view estimated and actual commissions in real-time.
Set Up employee commission feature in NetSuite
To begin using the Employee Commissions feature, an administrator needs to turn on the feature at Setup > Company > Setup Tasks > Enable Features (Administrator). The feature is on the Employees subtab.
To begin using the Employee Commissions feature there are 3 key things we need to do:
1.Set our commission preferences at Setup > Sales > Sales Management > Commissions (Administrator). These preferences determine how and when you pay employee commissions and affect all commissions set up in your NetSuite account.
2. Create employee commission schedules at List > Commissions > Employee Schedules > New (Sales Administrator). Commission schedules define the rules that determine how commissions are calculated. Schedules can be based on total sales, percentage of quota met quantity sold, total profit, or profitability.
3. Create and assign employee commission plans at List > Commissions > Employee Plans > New (Sales Administrator). Employee commission schedules are placed in commission plans that are assigned to your sales reps. You can include multiple commission schedules in a single plan, and you can assign more than one sales rep to a plan. You cannot, however, assign a sales rep to more than one commission plan for the same date range.
Commission Preference Set Up
An administrator can set the following company commissions preferences at Setup > Sales > Sales Management > Commissions:
- Commissions Paid By Default On – Choose when commission schedules pay commission to your sales reps by default:
- Collections – Commission is paid on sales transactions when payment is received.
- Billings/Bookings – Commission is paid on sales transactions when they are invoiced or, in the case of commission based on alternate sales amounts (ASA) when sales orders are booked and approved.
- or select the proportion of commission that is paid upon collections and upon billings/bookings.
If you enable the Allow Overwrite in Schedules preference, we can choose when commission is paid on individual schedules.
If you do not allow overwriting on schedules, your selection in this field applies to all new schedules we create. This preference does not affect existing schedules.
2. Allow Overwrite in Schedules – Check this box if we want to overwrite commission schedules when commissions become eligible.
If we do not check this box, the Eligible Amount field on commission schedules is read-only. It shows the eligibility selected in the Commissions Paid By Default On the field.
3. COMMISSION ELIGIBILITY PERIOD
If you pay commission upon collection, enter the number of days that must elapse after payment is received before the sale is eligible for commission.
If you pay commission upon billing, enter the number of days that must elapse after billing before the sale is eligible for commission.
Enter 0 if you want transactions to be eligible for commissions upon billing or collections.
4. CALCULATE COMMISSIONS ON SHIPPING ITEMS
Check this box to include shipping costs when calculating a transaction’s commission amount.
This preference will be applied to new transactions only. Commission amounts on existing transactions are not changed by turning on this preference.
5. REQUIRE ACCOUNTING APPROVAL OF EMPLOYEE COMMISSIONS
Check this box to require your accounting department to approve employee commissions.
Supervisor authorization of commissions is required regardless of whether or not you require accounting approval.
6. MAXIMUM COMMISSION BRACKETS
Enter the maximum number of brackets to include in commission schedules.
7. DEFAULT EMPLOYEE COMMISSIONS EXPENSE ACCOUNT
Select a default expense account for employee commission transactions. You can select a different account for each transaction.
Leave this field blank if you do not want a default account.