NetSuite offers an employee commission feature as part of its Incentive Management module (available as an additional purchase). This feature allows you to automate commission calculations and payments for your sales reps and other employees.
Here’s a breakdown of how employee commissions work in NetSuite:
Setting Up Employee Commissions:
- Enable the Feature: An administrator needs to activate the feature at Setup > Company > Setup Tasks > Enable Features (Employees subtab).
- Commission Preferences: Set your overall commission preferences at Setup > Sales > Sales Management > Commissions. This configures how commissions are paid and calculated across your organization.
- Employee Commission Schedules: Create individual commission schedules at Forecast > Commissions > Employee Schedules > New. These schedules define the rules for calculating commissions for each employee. Schedules can be based on factors like:
- Total Sales Amount
- Percentage of Quota Met
- Quantity of Items Sold
- Total Profit or Profitability
Commission Calculations:
- NetSuite calculates commission amounts automatically based on the defined schedules whenever a commissionable sale occurs.
- Factors like commission rates, contribution percentages, and sales rep contribution are considered during calculation.
Commission Processing and Payment:
- NetSuite allows you to configure when commissions are triggered for calculation. This can be set to occur upon invoice creation, invoice payment, or upon approval of a sales order.
- Commission approvals can involve sales managers and/or accounting personnel.
- NetSuite provides options for manual overrides during the approval process.
- Once approved, commissions can be paid through:
- Accounts Payable
- Integrated Payroll Processing
Benefits of Using NetSuite Employee Commissions:
- Automation: Saves time and reduces errors compared to manual commission calculations.
- Transparency: Sales reps can view their estimated and actual commissions in real-time through their NetSuite dashboards.
- Motivation: Clear commission structures can incentivize better sales performance.
- Accuracy: Ensures consistent and reliable commission calculations.
- Reporting: NetSuite offers reports to track estimated, earned, authorized, and paid commissions