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Avoid These 5 Most Common Commission Mistakes

By May 29, 2020 No Comments

Dates, rates, splits, and plan alterations make a commission manager’s head spin. Commission calculations confuse even the smartest administrators when there’s even a fifth of a percentage point missing. But knowing which common commission issues to look out for can simplify the whole process.

Since we’ve been doing this for over 15 years, we’ve come to find that commission managers struggle with a few universal issues. These are the numbers that most commonly get messed up or overlooked and they cause the most mistakes in commission pay. Check and double-check them before processing a commission cycle and you’ll have fewer errors to fix later.

A commission administrator looks over a spreadsheet on a computer, reviewing commission calculations for errors.

Dates are the number one cause of commission mistakes.

So what are those common issues? 

Dating Errors

In fact, dates are the number one cause of commission mistakes. Much of this originates with how well dates are recorded by departments across the company. 

If the salesperson who made the sale turned it over to an approval department or a finance department that then took its time finalizing the sale, each of those departments may have recorded a different effective date. It’s almost like a game of telephone because, by the time the effective date is reported to the commission manager, it may be outside of the frame of that commission cycle. 

Miscommunication about when a commission will be paid (whether it’s upon the date of a sale or the date when a bill is paid in full by the buyer) can also unnecessarily ignite frustration between the sales rep and the commission manager. 

A date may have also just been recorded incorrectly and the commission manager will need to seek out the correct timeline on their own.

Providing employees with clear and transparent details on how quickly a sale is approved and when they’re eligible for a commission on a sale will help clear up any confusion or potential for mistakes. 

This is where having access to Core’s powerful tools can help an administrator recognize mistakes or catch discrepancies. Dashboards and reports give them a comprehensive view of how dates are being applied and can easily check that data with the team to confirm.

Rate Variations

Since sales reps in most organizations earn different rates for different types of sales, products, or time frames, rate variations may also lead to mistakes. 

Some sales organizations offer higher rates for sales earlier in the year. An evolving rate can trip up an administrator if they fail to change the calculation throughout the year. Additionally, products with higher margins often yield higher rates for sales people. If this gets overlooked, it’ll also result in a miscalculated commission payment.

Most sales organizations know that rates vary for a number of reasons. From rates dependent on performance metrics or quota targets to competitive rates and hierarchical rates, there are as many opportunities for mistakes as there are rate variations. 

Commission administrators need to stay vigilant of how rates are being applied at that time of year, for that specific product, and to that specific team member. A rate table can be easily uploaded to Core to ensure that rates are consistent with whatever the sale, product, or team member needs to receive. 

Commission Plan Changes

Adjustments to a commission plan happen. It may be a legal requirement that has to be applied or a brand new sales contest plan from the CFO, but wherever they come from, they have to be applied correctly to the very next commission cycle. 

For this reason, the commission manager or administrator must be involved in any commission plan change. Not only do they need to know that it’s happening, they need to be prepared to apply it effectively. 

Core has flexible and powerful tools that will allow the administrator to make those plan changes. The building blocks tool is easy to manipulate even if you don’t normally use software like Core.

Hierarchical Adjustments

Just like plan changes, the hierarchy in a sales organization shifts constantly. Whether salespeople are leaving, getting promoted, or getting hired, they need to be paid properly for their level of seniority or performance. 

For an administrator working with Excel sheets, this constantly changing structure can be tough to keep track of. Luckily, there’s an easy way to upload that structure into Core and then move it around however you need each month. Core’s advanced rules can take it from there.

Merging Data from Multiple Sources

Every single commission cycle means lots and lots of paperwork, spreadsheets, and records in all formats that need to be joined together. That can result in hours and hours of data entry for one person working with Excel documents. And a lot of potential for errors.

Once again, Core can simplify all of this. Our advanced tools can easily merge data from multiple sources and systems. That quick conversion process reduces errors almost entirely.

If you want to see how Core can help you eliminate errors entirely, even aside from the common issues we talked about above, send us a note. We’ll walk you through the software and all of the tools you’ll get access to.

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