Sales Commissions: D365 FO

Commission Setup

The five essential setups for commission. These setups will work together to determine what items, and customers are included in the calculation, how to divide commission if they need to be shared across a sales group, how the commission should be posted and much more.

Commission On Customer Groups

The first setup is the commission customer group. The commission customer group can be used identify customers who should be included to the commission calculation. You will see later in the “Commission Calculation” section that you can choose to include all customers, a group of customers, or a single customer that should be included in the commission calculation. Grouping customers together using the commission customer group is the most common way to set up commissions.

·         To create a commission customer group, navigate to Sales and marketing > Commissions > Customer groups for commissions.

·         Click the “New” button.

·         Give the group an ID and a name and click the “Save” button.

The next step is to assign the commission customer group to the customers where we want to calculate commission.

·         Navigate to Sales and marketing > Customers > All customers.

In this example I will assign it to one customer but in reality, you would assign it to all customers you wanted to include in the commission calculation.

·         Click the customer ID hyperlink to open the customer master record.

·         In the “Sales order defaults” fast tab in the “Commission group” field select the commission customer group you created above.

Commission On Item Groups

Commission item groups are how you can identify the items that are eligible for commissions.

·         To create a commission item group, navigate to Sales and marketing > Commissions > Item groups.

Click the “New” button and give the group and ID and a name.

The next step is to assign this commission item group to all the items that are eligible for this commission calculation. 

·         Navigate to Product information management > Products > Released products.

Click the item ID hyperlink to open the item master.

In the “Sell” fast tab in the “Commission group” field select the commission item group we created above.

Sales Groups

The sales groups are used to identify groups of sales representatives. This is usually by sales territory but there could be cases where sales representatives in different groups overlap. The sales group is used in the commission calculation to determine which group of sales representatives the commission should go to.

·         To create commission sales group, navigate to Sales and marketing > Commissions > Sales groups.

·         Click the “New” button to create a new group.

·         Give the group an ID and a name and click save.

In the “General” tab in the ribbon click the “Sales rep.” button.

In this form we need to identify the sales representatives that are part of this sales group. 

·         Click the “New” button to add a sales representative to the sales group.

·         In the “Name” field select the representative. 

In the commission field identify how the commission should be split. In this example I have two sales representatives and the senior representative will be receiving 60 percent of the commission while the junior representative will be receiving 40 percent of the commission.

The last step is to assign this sales group to all the customers that this sales group is responsible for and will receive commissions for selling to.

·         Navigate to Sales and marketing > customers > All customers.

In the “Sales order defaults” fast tab of the customer master there is a field called “Sales group”. Select the sales group we created above.

Commission Calculation

In the commission calculation we put all the pieces together and define how the commission should be calculated.

·         To create a commission calculation, navigate to Sales and marketing > Commissions > Commission calculation.

·         Click the “New” button.

·         In the “Item code” field we can define if the commission should be calculated for a single item (Table), a group of items (Group), or for all items (All). In this example we want it to calculate only for items assigned to the commission item group that we created in the section above.

In the “Customer code” field we can define if the commission should be calculated for a single customer (Table), a group of customers (Group), or for all customers (All). In this example we want it to calculate only for customers assigned to the sales group that we created in the section above.

In the “Sales rep. code” field we can define if the calculation should be calculated for a group of sales representatives (Group), or all representatives (All). In this example we want it to calculate only for the sales group we created above.

·         In the “Discount” field we can define if we want the commission to be calculated “Before a line discount”, “After a line discount”, or “After total discount”. In this case I want the commission based on the amount before any discount is applied.

·         The “Basic” field determines if the commission calculation should be based on pure revenue or only on the sale margin (difference between cost and sales price).

·         The “Commission percentage” takes whatever you defined in the “Discount” and “Basic” fields multiplies it by the percentage you define here to get your commission.

·         The “From” and “To” fields let you define a validity period. So, if you revise your commission structure yearly you can set a validity period and set up a new commission for next year’s commission structure whenever you know it.

·         The “Find next” flag if enables tells the system to keep looking for another applicable commission after this one. The system looks for the most granular level commission it an find and then if the “Find next” flag is set to “No” it stops looking if it is set to “Yes” and there is another commission that is applicable it will include that commission as well.

Commission Posting

Now that the commission calculation is set up, we need to tell Dynamics 365 where to post the commission. 

·         Navigate to Sales and marketing > Commissions > Commission posting.

·         In the commission posting form you are able to use combinations of items, item groups, sales categories and customers, customer groups, and all customers to define main accounts that the commission should post to. 

·         The commission tab will be the debit and the commission offset tab will be the credit.

Process Commissions

Commissions are calculated upon sales order invoice so we will go through and process a sales order all the way through invoicing and then look at the resulting calculation and ledger postings for commissions.

·         Navigate to Sales and marketing > Sales orders > All sales orders.

·         We will create a new sales order by clicking the “New” button and select same customer that we assigned our commission customer group and sales group to.

·         Click “Ok” to create the sales order.

In the sales order line, I will select the item that we assigned the commission item group to. Notice that the net amount is $150,000.

·         Next I will fast forward through the shipping process and go ahead and invoice the sales order.

·         After we have posted the invoice, we can view the commission calculation by clicking the “Invoice” button in the “Invoice” tab in the ribbon.

Click the “Commission transactions” button.

Here we can see that Aren received $3,000 and  Alisa received $4,500. The calculation was 150,000 * 5% = $7,500. Then there was a 60/40 split between Aren and Alisa where Alisa received 60% and Aren received 40%. So, 7,500 * 60% = $4,500 and the remaining $3,000 goes to Aren.

Now we can also view the commission posting by going back to the invoice journal and clicking on the “Voucher” button.

As you can see, we have a debit of 7,500 to 602150 and a credit to 201110.

How To Get Commissions Reports

Now that we have our commissions set up and working correctly, we can track the sales commissions using a standard Dynamics 365 SSRS report called “Commission transaction list report”.

·         Navigate to Accounts receivable > Inquiries and reports > Commission transaction list report.

·         Click “Ok” to run the report.

·         As you can see, we have all our commissions calculations broken out by sales representative and the total at the end of the report.

 

Sales Commissions AX 2012

How to create a commission calculation.

First, go to the address Sales and marketing>Setup>Commission

Commission Posting Profile

Commission Posting ledger accounts these commissions will post to in Sales and marketing>Setup>Commissions>Commission posting.  Be sure to choose a main account for both the commission and commission offset.

The initial steps will require us to complete the setup for the three bottom groups:

• 1.      Customer groups for commission
• 2.      Item groups
• 3.      Sales groups. 

Let’s start with customer groups for commission.

Clicking on that link will bring up this form below.  This form will determine how you categorize customers that your salesperson(s) can receive commission on. 

The groups and their names are user defined fields, so feel free to be as creative as you want when coming up with these groups.

The commission customer group can be selected in the drop-down field shown below in the Sales order defaults fast tab of the Customer record. 

A commission group must be selected in order for the commission to be calculated on a sales order.

We are going to skip Item groups for a moment and go to the sales group form, which is shown below.  This form offers you the opportunity for more user-defined fields to create your sales groups.  You have the pick from all AX users to help you define your sales groups.

Click the Sales rep. link to open up this form below.  In this form, you determine which users are part of each sales group.  In addition to selecting each user, you can also determine their share of the commission.  Select as little or as many users as you want.

To assign a sales group, go to the customer record and click on the Sales order default fast tab (same place you went for the commission customer group). 

In the sales group field, you can select your commission sales group applicable to this customer.  This step must be completed in order for all the pieces of the commission calculation to function.

 

 

Next, click on Item groups from the location Sales and marketing>Setup>Commissions.

The Item groups form below will allow you to create user-defined fields on groups of items you want your salesperson(s) to earn commission on (very similar to the customer groups).  The only difference is where you assign these groups.

Product Information management>Common>Released Products.  Choose a specific product you would like your team to earn commission on and go to the Sell fast tab on that product.  Under the Administration section you can select the item group that you created previously.  Again, a commission group must be selected in order for the commission to be calculated on a sales order.

Now we have setup all the necessary configurations for commission.

Create a commission calculation

Go to the address Sales and marketing>Setup>Commissions>Commission calculation, it will bring up this form below. 

Using the previous three forms, you can create a number of different commission calculations. 

·         First and foremost, determine which item(s) you would like commission to be earned when that item(s) sells. 

ü  The item code Table will let you select only one item,

ü  Group is allows you to select an item group (which we just created),

ü  All is for all released items. 

·         In the customer code drop down

ü  Table allows you to select an individual customer,

ü  Group allows you to select a commission custom group (previously created),

ü  All is for all customer groups. 

For the Sales rep. code you can only select Group, or a commission sales group (previously created) or All, which would just be all sales rep. groups.

In the Commission based on section

Commission based on determine how the commission is applied given the sales order, factoring in discounts, on revenue or on margin, and the percentage of commission received from a given sales order.  Please note that this is a different form than the commission share in the commission sales groups. 

For example, if you had 10% for the commission percentage on a sales order with revenue of $1,000, the commission would be $100.  That $100 would be split based on the percentages defined by the commission sales group.  So if each sales rep. had a 20% share and there were five sales representatives, they would each earn $20.

In order to view this breakdown on a sales order, click the invoice tab on the specified sales order and then select Invoice Journals, which will open up a new form.  In that new form, select Commission and click Commission transactions.

In the Period section, you can make these calculations date sensitive so that they are only applied within a given time frame.