Page 166 - Accounting Best Practices

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8–1 Automatically Calculate Commissions in the Computer System
Exhibit 8.1 Summary of Commissions Best Practices 155
Best Practice Cost Install Time
Commission Calculations
8–1 Automatically calculate commissions
in the computer system
8–2 Calculate final commissions from
actual data
8–3 Construct a standard commission
terms table
8–4 Periodically issue a summary of
commission rates
8–5 Simplify the commission structure
Commission Payments
8–6 Include commission payments in
payroll payments
8–7 Lengthen the interval between
commission payments
8–8 Only pay commissions from cash
received
8–9 Periodically audit commissions paid

Commission Systems
8–10 Install incentive compensation
management software
8–11 Post commission payments on the
company intranet
8–12 Show potential commissions on
cash register

8–1 AUTOMATICALLY CALCULATE COMMISSIONS
IN THE COMPUTER SYSTEM

For many commission clerks, the days when commissions are calculated are not
pleasant. Every invoice from the previous month must be assembled and
reviewed, with notations on each one regarding which salesperson is paid a com-
mission, the extent of any split commissions, and their amounts. Further, given
the volume of invoices and the complexity of calculations, there is almost cer-
tainly an error every month, so the sales staff will be sure to pay a visit as soon as
the commission checks are released in order to complain about their payments.
This results in additional changes to the payments, making them very difficult to