12 Benefits of Automating Sales Commissions

Posted on 14th Jun 2021

A lot of people use spreadsheets for just about everything from tracking expenses, billing clients, payroll, and even for calculating sales commissions. But as we discussed in a separate blog post, using spreadsheets can come with quite a cost in errors and time inefficiency.

So, are you still using (and struggling) with Excel in getting your commission process completed? Here are 12 reasons why you should seriously consider putting more value on your time and automating your sales commission calculation:
Automated Sales Commission Calculation…
1. Reduces Errors in Sales Commissions Calculation
Doing commissions in Excel introduces a tremendous number of errors into the calculation. A structured commissions system like QCommission.com or Easy-Commission.com can reduce the number of errors in commissions and consequently save the company a lot of money.

2. Pays Commissions on Time
Manual processes to calculate sales commission can take significant amounts of time and payments can sometimes be thirty or more days late. This causes reconciliation issues and dissatisfaction among the salespeople. An automated sales commission system can allow calculation of payments as quickly as you want. Calculations can even be done during the period to estimate potential payments and for accruals.

3. Uses Commissions Plans that Fit Your Business Need
Sometimes commission plans that suit the needs of the business may not be implemented because of the difficulty of establishing the plan and administering them. Commission automation allows the establishment of complex plans and eases the administration. It enables  the business to design and implement plans that suit the current needs of the business.

4. Communicates Compensation Clearly
Commission systems maintain all the data involved in calculating commissions. This allows the production of clear and complete commission statements to the field. More transparent communication means less confusion among the salespeople and less queries and problem solving effort regarding commission issues.

5. Has a Complete Reporting Ability
With all transactions and calculations stored in the system, commission systems allow the ability to report comprehensively on sales commission information. Analytical and dashboard functions allow the user to slice and dice the information available in various ways. Additional reports can be easily created from the basic system.

6. Avoids Double Data Entry
If you have account applications such as QuickBooks™ , MAS 50 or 500™ or MS Dynamics™  or CRM systems such as Salesforce.com™ and SugarCRM, a lot of time and effort can be saved in getting the data directly into your commissions system. The number of errors in data entry can be reduced.

7. Tracks Sales, Commissions and Bonuses
Commission systems allow the loading of all sales and other performance data. Sales information can be tracked using the system. In addition commissions and bonuses can be tracked independently for the full plan duration. Tracking sales and performance allows management to clearly identify good and poor performers whether in the products/services or among the sales people.

8. Reduces Administrative Time and Effort
Due to the reduction in errors, the automated nature of calculations, data integration, clear reporting, Commission Administrators can expect to reduce the effort required to calculate and pay commissions significantly.  They can be redeployed to do tasks that add more value to the company rather than simple administration.

9. Reduces Administrative and Over Payment Costs
Savings of time spent in administering the compensation plans and resolving issues can help in reducing administrative costs. Errors in sales commission calculation favoring salespeople typically does not get reported, whereas errors favoring the company gets reported typically. Accurate calculations can save the company significant expenses in over payment of commissions.

10. Promotes Increased Trust and Morale
Having been burned by inaccurate calculations, the salespeople usually distrust the commission calculation process. The automation of the calculation process, with access to all the data, and clear reporting of any calculation allows the salespeople to develop trust in the process and increase their morale. Hiring and retention of employees is enhanced with a clear reliable process. Commission administrators have a hard job with the frustrations of calculating commissions and tend to have high turnover. With drudgery removed from their jobs, there is less turnover in this role.

11. Ensures Business Process Continuity
In many cases commission rules are embedded within individuals responsible for commission calculations. This puts the company at risk. By extracting the rules and storing it in a system, it is easier to make sure the commission process can always be executed regardless of individual availability.

12. Increases Productivity
With salespeople not engaging in ‘shadow accounting’ of their commission statements, they are more likely to focus on selling activities with potential increases in revenue to the company. With the clearer line of sight between the sales rep goals and the rewards by means of clear commission statements, sales people can be more focused on the sales activities that the business deems important.

By: David Carlson