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What is Commission Management?

Mar 28, 2019
3 min read
Learn how effective commission management solutions can boost sales productivity, increase the visibility of commissions and improve business efficiency.

Commission Management software helps businesses manage and track the sales commissions sales reps earn by selling products and services, enabling the sales organization to quickly and accurately ensure that sales reps are properly compensated for their work.

Company payroll is a complicated process with many variables, to the point that many businesses prefer to outsource payroll to an external partner rather than managing it in-house. Accurately calculating compensation for sales reps, however, can be even more difficult, due to complex variable pay compensation plans that can include base salaries, sales commission structures, bonuses and other incentives.

Commission pay introduces more variability into a company's monthly wages bill, and the business organization must plan and manage effectively to ensure that it maintains cash flow while paying commissions to sales reps. Commission management software helps to automate and streamline the process of tracking employee commissions, ensuring reps are paid accurately and on time.

What are the Benefits of Effective Commission Management Software?

Large sales organizations can spend hundreds of hours per month manually calculating commissions. This time-consuming process is inefficient, lacks real transparency, and produces errors that lead to commission disputes, which distract salespeople from their main goal: driving revenue to the business.

Commission management software is an important part of sales planning that makes it easier for sales managers and their team members to keep track of commissions in real-time.

Commission Management Software Boosts Employee Performance

Commission management software can be used to motivate sales teams directly, allowing them to monitor their earned commission in real-time. In the past, sales reps would waste time shadow accounting and calculating their own commission to make sure payments are correct. An effective commission management platform shows sales repss how much they have sold this month, what that translates to in terms of commission earnings, and how those commissions complement their overall compensation package, or pay mix.

Sales reps can also use commission management software to plug in various "what if?" scenarios and see how their commissions would be affected if they sold 200, 500 or 1000 additional products this month. On the management side, commission management software enables sales managers to leverage deeper visibility into team and individual rep performance, leading to more accurate analysis and helping to identify areas of opportunity for improvement.

Commission Management Software Boosts Accuracy and Timeliness of Commission Payments

The average enterprise company spends 10% of its revenue on incentive sales compensation and many spend up to 20% - yet over 80% of these organizations have experienced issues with payment inaccuracies. Payment inaccuracies originate in the traditional, manual processes for calculating compensation that is often shared by the sales organization, HR, finance and other departments. The result is a lack of accountability for delivering accurate payments and teams of sales reps who waste time “shadow accounting” – verifying that their real sales stats match their latest paycheck.

Sales commission software allows enterprise companies to access real-time sales data with automated reporting and deliver more accurate payments through automated commission calculations. These gains in efficiency also helps to ensure that commissions are paid on-time: companies that use commission management software are forty times more likely to pay out commissions within two weeks of a sale than those that don’t.

Commission Management Software Saves Time with Automation

The single greatest benefit of commission management software is that it allows sales managers and payroll staff to automate commissions calculations for all employees, saving hundreds of manual work hours each month. Automated commission processes and complex commission calculations, including tiered and sliding-scale commission plans, can be easily and quickly calculated in a matter of hours.

With the administration of commissions handled automatically, sales reps can focus their efforts and attention on growing their team's capabilities and driving revenue rather than checking to see if their commission payments are correct.

Xactly Incent Offers Commission Management with Time Saving Features and Fewer Errors

Xactly Incent is the industry-leading commission management software that empowers its users to ensure error-free commission and compensation payments, enhance operational efficiency through automation, and drive employee productivity with performance management features and enhanced visibility into commission data.

With Xactly, sales organizations can automate their commission calculations, accurately forecast upcoming commission payments in real-time, and reduce disputes while ensuring that accruals are consistently done on time. Companies can also use Xactly Commission Expense Account (CEA), a tool that helps organizations manage the commission accounting process in compliance with ASC 606 (IFRS 15).

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Kelly Arellano, Senior Content Marketing Manager at Xactly
Xactly News Team

Led by Editor-In-Chief, Kelly Arellano, The Xactly News Team reports on the latest products, events, and market trends taking place within Xactly and throughout the revenue intelligence industry.