COMISSION FROM SALES

[pierre]

Hello, we are trying to setup compiere for a client and he is in the Beverage industry.
Our client receives a commission for selling his providers products. When he receives the envoices of his providers, he receives the amount for which the beverage have been sold minus the comission he got.
The commission is the revenue for my client and should be post only when he receives the envoice for finances reasons.
It is similar to the concept of commission for sales representative but in this case it is my client who receive the comission.
Do you have any idea?
If this would require a dvellopment, we are ready to finance your expertise.

Thankyou

[red1]

Hmm, ok, hmm. Now, let me first put forward a key issue that is the core of the matter, then i will try to paint the scenario around it best to my understanding. Correct me if my assumptions are way off. At the end of it, i will indicate how much this consultancy will cost ya and what extra development if viable that can be done to Compiere.

The key to the solution is the Charge. You create a Charge giving it a name, say Commission, which you can put into the InvoiceLine during Invoice (Vendor). The first line is of course the Vendor's qty and priceAmt that was eventually sold.

The most important thing is defining the default Accounts Posting of that Charge to the SAME account, which has to be a revenue account element under Trade Revenue. Thus it is not a charge in the strict sense of the word. We are just making use of the concept. Its like giving a negative discount.

Now the scenario your client goes through, based on version 251e:

1) Client receives goods from Vendor. Let's say its 100 bottles.
2) Client just make the usual Material Receipts but need not Generate a Invoice (Vendor).
2.1) On-Hand Qty is updated to 100 bottles automatically.
3) Client moves goods from Locator to Sales (Org) Locator.
4) Client sells goods. Let's say 15 bottles.
4.1) Client generates a Sales Order of 15 bottles.
5) Client now go to Invoice(Vendor) and Create Lines From from Material Receipts. (the only way if in version 251d, not so in 251e where u have two ways)
5.1) Go into the InvoiceLine and adjust the qty to 15.
5.2) Create another InvoiceLine with the Charge (negative amt).
5.3) Print that and give to the Vendor.

You can modify the look and feel to fit the terms and wordings used for that Print Format.

The main advantage of the Charge model is that the commission revenue is recognised during Invoice to Vendor.

I also assume you know the present Compiere's accounting consequences.

Automation to develop:

A) Make the Sales Order control the Vendor Invoice generation.
B) Constrain the Matching so as not to take the Vendor figure but instead the Sales figure.

I will advice against modifying Compiere's codes too fast, but instead test out the scenario and mature the understanding of processes involved and see whether they jive to the big picture. Once business processes issues crop up then they can be reviewed, so that a final solution is clear. Then only, should we look at the gaps and plan the development.

Now please pay to my Swiss Account ************, with the amount of ##,###,###.##

Otherwise just sign my guestbook. Become a member here so that i can post you my latest articles.

red1

[n2n]

Hi Pierre,

This is an easier alternative solution.

Actually, due to the flexibility of Compiere, commission need not be an expense. It can be a revenue! Yes, it can be a revenue.

Create a charge called Commission Revenue and set the default accounts for this charge. Thereafter, setup your commission and commission run. After the commission run, an Invoice (Vendor) will be created. Go to Invoice (Vendor) and call out the Invoice (Vendor) created. The important thing is to change the Doc Type for the Invoice Vendor from AP Invoice to AP Credit Memo. Complete the document and Post the accounting. Click on the Posted button and the postings should be DR Commission Revenue and CR Trade Creditors.

This makes sense as you are actually issuing a Credit Memo to your Vendor.

You want to pay for modifications????

Regards!

n2n

[benny]

Hi n2n and Red1,

your workaround for the sales commission is great and useful for monitoring Sales commission earned.

Just to share a similar scenario that we have encountered.

The client earns commission by acting as the agent between the factory and the customer. The client is required to monitor the fulfilment status of the transaction. ie they need to know if the product ordered by the customer has been delivered by the factory. At the same time, they want to recognise commission revenue based on the goods delivered by the factory. They will also need to issue a customer statement of account to the customer.

Well, to meet these requirement, we have built a monster out of Compiere.

First, we key in the factory as a project with predefined commission margin in project order window. Then we also created document type like project orders, project delivery orders and project invoice. This is to segregate this type of trading transaction from the normal transactions. Thus the entire process will be like the normal quote to invoice process whereby the order is entered and can be generated into shippment and eventually generated into invoice.

The project orders fulfilment can be monitor via a custom-made report (we call it SO_delivery report). It will matched the order against the shippment and compute the outstanding balance.

When we receive a copy of the factory invoice, we'll generate the invoice from the delivery order and key in invoice details. At this point, we have also customised a little button to compute the commission earned by the Client based on the project/factory commission margin. It will thus show the commission amount earned which can be reflected in another customised report - Commission report. Since we dun keep stock for this type of transaction, all product type will be service and always show availability of 999999....

The tricky issues all arise when we wanna trace back to the accounting consequence of the transaction. It's clear that the only accounting transaction in this case is the commission revenue. But since we need to monitor fulfilment status, it will invite accounting entries from shippment.

Well, we did another little trick to prevent posting of such transaction. As such it will always remain unposted for such transactions. This is to prevent the costings of the product (in this case $1) to factor into the accounts.

The final touch on the accounting for commission is solved via changing the posting behavour according to document type. I think the Partner relation in 2.51e can help us to carry out aging analysis for the Factory as well.

Sounds like a lot of work? It sure did.
But it enable us to track fulfilment status and compute commission. The client gets to issue a customer statement of account and is satisfied!

Of course, there will surely be a easier way out or workaround which i hope you guys can share and make Compiere invincible!

[n2n]

That's the thing bout' Compiere. There's always more than 1 way to solve an issue and the question facing us is always which way is easier for the user, less cumbersome and practical.

Well, guess that's why they say flexibility has its price!

n2n

[hema]

Hi,

I would like to know how commissions can be calculated in Compiere for an agent who is not an employee of my client and act as :

1. an intermediate between my client and its customer(s)
2. an intermediate between my client and its vendor(s)

I understand that the Commission Run feature is available only for sales representatives who are employees but I cannot figure out how this is done for external sales representatives such as agent.

Thank you very much,
Hema