Distribution guide
Salesman Commission Calculation: A Practical Guide
Commission motivates salesmen and recovery men — until nobody can say how a figure was reached. A commission that is clear before the month starts, and checkable line by line after it ends, keeps both the shop and the staff on the same side.
By Rana Yasir Ali, Founder & CEO6 min read
1. Decide what the commission is paid on
Write the rule down for each person. Many businesses give a salesman a plan on sales and a recovery man a plan on collections.
- On sales — for counter salesmen and order bookers: the value of the sales credited to them
- On collections — for recovery men: the money actually received on their routes
- Which kinds count — cash sales, credit sales, instalment sales; or instalments, down payments and other receipts
2. Choose the rate
With slabs, make sure everyone understands that the higher percent applies only to the part above the line, not to the whole amount.
- A flat percent — for example 1% of sales
- Slabs — a higher percent only on the part above an amount: 1% up to Rs 5,00,000 and 2% above, so Rs 7,00,000 of sales earns 5,000 + 4,000 = Rs 9,000
- A fixed amount per sale — for example Rs 500 for every sale, whatever its size
3. Agree what counts as the sale value
Use the invoice less its discount, and leave GST and extra charges out — they are not the salesman’s work. Decide whether returns in the month come off the sales before the percent is applied, and say so in the plan.
Be clear on instalment sales too: if commission is paid on the sale, it is earned when the sale is made, on its full value. If you want to pay on money received instead, use a collections plan for the person who collects.
4. Credit every sale and receipt to one person
Commission is only fair if everyone agrees whose sale it was. A simple rule works: the salesman named on the sale, else the route’s salesman; for receipts, the person who collected it, else the route’s recovery man. When a sale was entered by the office, credit it to the person who made it, and note why.
5. Changes in the middle of the month
If a plan changes on the 16th, sales before the 16th earn the old rate and sales after it the new one. With 1% to the 15th and 2% after, Rs 5,00,000 of sales in each half earns 5,000 + 10,000 = Rs 15,000 — not 2% on everything.
6. Show the working, and pay it with the salary
At month end, give each person the list of sales and receipts behind his commission and the calculation. Pay it with the salary, as its own line on the slip, so commission, salary and advances never get mixed up.
HisabMate
Commission in HisabMate
HisabMate’s HR & Payroll module works commission out from the sales and receipts already in the app:
- Plans on sales or on collections, with the kinds that count
- A flat percent, slabs, or a fixed amount per sale; returns taken off if you choose
- Each sale and receipt counts under the plan in force on its date
- Sales and receipts credited by route and login, with the reason shown on every line
- A commission sheet for any period up to two months; wrong rows re-credited with a reason, and a history of every change
- Commission paid through payroll, as its own line on the salary slip and the ledger
- A Commission report, and a Credit to choice on the Sales / Recovery Man Report
Questions
How is salesman commission calculated?
Take the value of the sales credited to him in the period (invoice less discount, without GST), take off returns if your plan says so, and apply the rate: a percent, slabs, or a fixed amount for each sale.
What is slab commission?
A higher percent only on the part of sales above an amount. With 1% up to Rs 5,00,000 and 2% above, Rs 7,00,000 of sales earns Rs 5,000 + Rs 4,000 = Rs 9,000.
How should a recovery man’s commission work?
On collections: a percent of the money received on his routes in the period, counting only the kinds of receipts you agree, such as instalments and down payments.
Should returns reduce commission?
Usually yes — a sale that came back was not really made. Decide it in the plan and apply it every month the same way.
What if the commission rate changes in the middle of the month?
Pay each sale at the rate in force on its date. Sales before the change earn the old rate and sales after it the new one.
Is there commission software for distributors and showrooms in Pakistan?
Yes. HisabMate works out sales and collection commission from the sales and receipts already in the app, shows every line behind it, and pays it through payroll.
Roman Urdu
Salesman ka commission kaise nikalte hain?
Uske naam ki sale (discount ke baad, GST ke baghair) lein, plan ke mutabiq wapsi kam karein, phir percent, slab ya har sale par fixed raqam lagayein.
Recovery man ka commission kis par hota hai?
Wasooli par: uske route par mili raqam ka percent, sirf un qismon par jo aap tay karein, jaise qistein aur down payment.
Commission ka hisaab rakhne wala software?
HisabMate: sale ya wasooli par plan, slabs, har line ki tafseel, ghalat naam ki durusti wajah ke saath, aur commission payroll mein.