FAQ - Ask a Consultant

01. What are the advantages/disadvantages of a draw vs. base pay?

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.

02. When is draw applied?
03. When is the proper time frame to pay commissions to a salesperson? On invoicing or upon payment from the client?
04. We are currently using QuickBooks Enterprise 6.0 and we are having problems calculating salesman's commissions. The profit is being miscalculated, because the profit is being calculated from the average cost of the item. Sometimes the average is wrong. How does your program calculate the profit? Can I have it base it upon the items fixed cost in the description?
05. I am using volusion now - how can I integrate it with a system that calculates the commissions for the salespersons?
06. I have an online tutor and student system - I am trying to find a way to pay tutors after I take my cut. money comes into my bank via a gateway. I was planning on paying out to tutors every 2 weeks into their pay pal account. do you have any solutions?
07. Does a "draw" get applied to gross revenue or net revenue after the rep pays for lights, phone, rent etc.? Gross revenue/sales 500,000 -75,000(draw) or 500,000*50% payout(lights, phone, fax,etc) less draw 500,000 -250,000 -75,000.
08. Is this software designed solely for staff commission, what about sales commissions through an agency? Such an Insurance agency that receives revenue through commissions from their carriers.
09. I need MLM software that is not web based. One time purchase. Can you help?
10. We are in the process of setting up a commission based website in the accommodation industry. We will be charging our clients 10% commission on sales generated through our website. Our program offers everything, except accounting. Could you please let me know what you can offer.
11. In a particular office, the broker will get a 12.000 commission, there are two sales agents involved, one of them split the sale 35/65 the broker is 50/50 with the agent getting the 35%, how much each can get?
12. Does your product integrate easily with Peachtree?
13. We are a medium sized telecommunications company and we need a compensation system, so write to me in brief what you can do to help us. Thank you in advance for your cooperation. Hope to use your services as soon as possible.
14. How much commission should be asked to put product into stores?
15. What is a guaranteed commission?
16.“I do an accrual based on sales and pay based on collections. Can the systems do both calculations?”