This document explains how to compile invoiced customer orders covered by a bonus and commission (B/C) agreement. It also explains how to pay out advances and settle the final bonus/commission for a recipient.
A bonus and commission agreement is created, and one or several advances and a final settlement are calculated and carried out for the recipient(s).
The advance and final settlements for B/C agreements create invoices automatically via M3 batch order entry. These invoices can be credit, debit or zero. The bonus or commission can be settled either after the agreement has expired or in advance before the end date of the agreement.
Enter B/C Agreement
The same M3 routines are used for bonuses and commissions, so they are both managed in the same programs. However, bonuses and commissions can be separated with regards to agreements, items, statistics and internal reservations in the general ledger.
B/C agreements can be valid for a facility or for a whole division. If a facility is not specified when entering an agreement then the agreement will be valid for all facilities within a division.
B/C agreements can be separated into different types. Types 1-8 are commission agreements and type 9 is for bonus agreements.
B/C agreements are entered in 'Bonus/Comm Agreement. Open' (OIS412). The user defines which customers and items are connected to the agreement, and the customers can even be business chains. During invoicing, a bonus/commission is affected if both the ordering customer and the ordered item are covered by the agreement. If a business chain is used, the program checks whether the customer is part of a chain that has a valid B/C agreement.
The B/C recipients are retrieved from the following programs and in the following order during order entry:
|1||'Customer Order. Connect B/C Recipients' (OIS400). The recipient entered manually by specifying option 19=B/C recipient or option 9 in the panel sequence in 'Customer Order. Open' (OIS100). Recipients entered manually during order entry get the highest priority.|
|2||'Bonus/Commission Agreement. Open' (OIS412)|
|3||'Bon/Com Customer Table. Connect Customers' (OIS408)|
|4||'Bonus/commission Customer Table. Open' (OIS407)|
|5||Customer number from the customer order when using agreement type 9=Bonus agreement.|
During invoicing, the B/C agreement's generating value and paying amount are affected. Each B/C agreement can have one or more bonus/commission recipients, but an order line only affects one recipient per B/C agreement.
A B/C agreement can handle different currencies. Regardless of the currency, all sales are converted to the agreement's currency. Advances and settlements are also based on the agreement's currency.
A percentage for reservations is entered in each B/C agreement and is used when the recipient is updated with the paying amount from an order line. The reserved amount is stored in the balance sheet and income statement in the general ledger during invoicing.
Reservations allow continuous follow-up on the accrued debt and costs for a bonus/commission. When advances and final settlements are calculated, the reserved amounts are adjusted with the actual amounts advanced or settled. Reservations are entered in 'Bonus/Comm Agreement. Enter Reservations' (OIS414).
Percentages to be used when calculating a bonus/commission can be entered in an ascending scale according to the generating value reached.
|Generating Value Net Weight||Percentage|
Assume that customer order lines are invoiced and the net weight is between 1,000 and 1,999 within the agreement period (annual). The recipient is entitled to 3 percent of the paying amount reached. A net weight of 2,000 and up gives a 5 percent bonus. If the net weight falls below 1,000 within the period, no bonus is offered.
Monitor B/C Agreements
The following figure illustrates how an invoice updates a B/C agreement.
The numbers used to calculate a bonus/commission are generated when an invoiced order line matches one or more active B/C agreements. The invoice date must be within the agreement's validity period. Customer order lines update the recipient's paying amount and/or generating value. 'Settings Customer Order Invoicing' (CRS722) is used to define when the bonus/commission is updated.
An invoiced customer order line can affect several B/C agreements, but only one recipient per B/C agreement is affected.
The customers are validated against the B/C agreement as follows:
The items are validated against the B/C agreement as follows:
The customer order lines affecting one or more B/C agreement's paying amounts are reserved on a continuous basis in the general ledger. The reservation is calculated using the percentage specified for the recipient and the order line's paying amount. The reservations are recorded when other invoices are recorded.
Either invoiced amounts or paid amounts can be used to calculate an advance or a settlement. Paid amounts are the value of those invoices that have been fully paid. This is set in a parameter called "Check paid invoices" in 'Settings - Bonus & Commission' (CRS724).
It is possible to create an advance proposal before it has been credited and transferred to financials. The proposal can then be adjusted manually. After the adjustment, the advance can be credited to the recipients.
Each B/C agreement indicates whether advances should be credited for the accrued bonus/commission amount. The advances are credited on a continuous basis during the agreement period at a set frequency. They can be credited with either a fixed percentage of the accrued paying amount for the period or a dynamic percentage used for the recipient's forecasted generating value (see the comparison below). The advances are calculated based on the accrued paying amount.
There are two methods for calculating advances. One method uses a fixed percentage and the other uses a dynamic percentage. The percentage is defined for each B/C agreement.
These two methods are compared in the table below.
|Fixed Advance Method||Example||Dynamic Advance Method||Example|
|Forecasted generating value||Not used||0||According to the last date in the advance period or the current date within the period. See 'Bonus/Comm Agreement. Change Status' (OIS410).||50,239.00|
|Percentage||According to recipient. See 'Bonus/Comm Agreement. Enter Reservations' (OIS414).||3.50%||Retrieved from percentage table according to forecasted generating value as shown above. See 'Bonus/Comm Agreement. Enter Rates' (OIS413).||3.00%|
|Paying amount||Period interval totals. See 'B/C Agreement. Change Recipient Status' (OIS411).||12,000.00||Retrieved total accrued paying amount up to the last date in the advance period or the current date within the period. See 'B/C Agreement. Change Recipient Status' (OIS411).||20,371.00|
|Subtotal 1||Paying amount * %||420.00||Paying amount * %||611.13|
|Previous advance||Not used||0||Previous advances are deducted. See 'Bonus/Comm Agreement. Change Status' (OIS410).||168.00|
|Subtotal 2||420.00||Subtotal 1 - previous advance||443.13|
|Advance percentage||According to B/C agreement. See 'Bonus/Comm Agreement. Open' (OIS412).||80.00%||According to B/C agreement. See 'Bonus/Comm Agreement. Open' (OIS412).||80.00%|
|B/C advance||Calculated amount can be changed manually if agreement status is 20 (OIS412).||336.00||Calculated amount can be changed manually if agreement status is 20 (OIS412).||354.50|
An advance percentage can be specified for each B/C agreement. When advance percentage is used, the recipient does not receive an entire advance, but only a specified percentage of it. For example, if the calculated advance is $420 and the advance percentage is 80 percent, then the recipient is credited $336.
The frequency indicates how often an advance is calculated within the period type, such as once a month, every third month, etc. The period type is specified in the B/C agreement and can cover a month, a year, etc.
Approved advances automatically generate a credit order for the recipient via M3 batch order entry.
Internal reservations for the expected bonus/commission amount are recorded when invoicing the affected order lines. The reservations are calculated on the order lines' paying amount and reservation percentage according to the customer ID of the recipient. A general percentage for all recipients can be specified in the B/C agreement. The reservations are adjusted by the actual advance and final settlement amounts credited.
Sales statistics are updated with the sum of reservations made for the B/C agreements that are affected by the order line. This allows continuous statistical follow-up since an expected cost for the bonus/commission can be included in statistical reports.
Even the invoices used for advances/settlements for the recipient are updated with the adjusted amount. This means that the actual costs for the bonus/commission can be used in statistical reports to calculate, for example, the net margin for sold items where the bonus/commission is included in the cost.
Handle Annual and Final Settlements
A final calculation of the bonus/commission is made for the recipient(s) included in a B/C agreement. After the B/C agreement has expired, a final bonus/commission settlement is made.
If the agreement covers more than one year, annual settlements are made at year-end or once after the validity period has ended. It is also possible to manually settle and close a B/C agreement before the end date.
If an advance has been credited to the recipient, the final invoice is reduced by this amount. When the advance is too high in relation to the final bonus/commission, a debit invoice for the difference is created.
Settlements automatically create invoices for the recipient via M3 batch order entry. These invoices can be credit, debit or zero.