FAQ - Ask a Consultant

Points regarding Draw vs. Base Pay.

•  Both have similar impact on taxes and other contributions
•  Draw can be set to be for a certain period. For example, first 6 months after hire.
•  It is very hard to change a Base Pay structure to anything else. But a Draw can be set and then cancelled.
•  Base Pay is guaranteed income.
•  Draw can be either guaranteed or recoverable against future earnings.

Is a draw safe? We want to be sure we have a set income each month. We also want to be sure we don't have to pay it back if for any reason we are under the amount of the draw for the year. I am confident in my sales but certainly know things can happen and I wouldn't have anyone to fall back on.

From a salesperson’s perspective salary is always safer. But many companies will not provide that option.

A draw where you don’t have to pay back should be called a “Guaranteed draw”. It is pretty much negotiable. The amount of the draw per period, the number of periods for the draw (how long the draw will be active), the fact that it is not recoverable (you should not have to pay back), all of these factors should be negotiable.

Most companies would like to keep the draw at a small amount per period (enough to take care of basic needs like food/rent, but not enough where salesperson does not have the motivation to sell). They would also like to keep the draw only long enough for the sales person learn the ropes of selling in that particular marketplace. 6 months to a year is common.

Answer: Draw is always applied against final commission calculated. You first have to calculate the commission amount as if there was no draw, then the commission amount has to be compared to the draw to see if it falls below the draw amount. If it falls below, the difference is given as a loan to the rep and recovered in future from the rep.

Example:

Draw = $3000 a month.
If calculated commission is $2,500, then you would ‘loan’ $500 so that the check cut is for $3,000.

The idea is that the Draw provides a livable income for the rep involved, especially during their learning period. That is why it is calculated after commissions.

Volusion:

• can integrate to QuickBooks 
• can export data as .CSV files

QCommission can directly integrate to QuickBooks and pick up date loaded into QuickBooks by Volusion. This could work if you are using QuickBooks. You could export the data as CSV files and we can do some configuration work to import those files into our commissions solution.

Our commission solution is very flexible and should calculate most commission plans.

We have a solution that can calculate the payments to the tutors, after reducing by your cut.

The payout amounts in detail can be reported to the tutors in form of a statement sent through email. The actual payment amounts by tutor, can be provided as a file (or can directly update Accounts Payable, if you are using QuickBooks) . But it does not directly update Paypal.

Let us assume that the total income from the loan was $1,000.
The first step is called crediting, this is where the credit is split between two people. Since the credit for the loan is split between rep A (35%) and rep B(65%); the credit will be as follows:
Rep A - $350
Rep B - $650

The second step is the commission calculation. Splitting 50/50 really means that the rep is getting 50% commission. So for Rep A, the calculation would be
Rep A : $350 x 50% = $175

1) A report can generate the data we need from Peachtree and we can import it.
2) We can build an adapter to get Peachtree data-in.

There isn’t anything like a standard rate of commissions that is generally available. Commission rates tend to vary by industry, by region of the country, by type of sales role expected. The best bet is to discuss with individuals who do a similar role for the specific kind of products you are interested in selling.

It maybe a type of draw. This is where a firm will agree to pay a certain minimum amount every period, regardless of the commission a salesperson earns. If the salesperson earns less, they will provide additional amounts up to the minimum amount. If earned commission is higher then the guarantee will be ignored.