A dynamic advance is an advance for bonus/commission calculated on a recipient's accumulated paying amounts at the time of the advance within the current year.
The bonus/commission advance method for each bonus/commission agreement (b/c agreement) regulates whether the advance is calculated with a fixed or dynamic bonus percentage.
The purpose of using dynamic advances is to minimize the risk of incorrect advances. The calculation of bonus/provision is based on actual sales (generating values) up to when the advance is calculated. A forecast for the entire agreement period is calculated based on sales reached. The calculated forecast for the generating value is used to obtain a bonus/commission percentage. Then, bonus/commission is calculated on the accumulated paying amount. Previous advances are deducted from the advance.
A seasonal curve can be used to influence the forecast with seasonal fluctuations.
When the advance is calculated, a forecast is also calculated for the recipient. This is done to obtain a percentage that represents a fair estimate of the bonus/commission for the entire agreement period.
The advance is paid out through credit notes, which are transferred to accounts receivable using the regular M3 invoicing routine. The advance calculated for bonus/commission can automatically be reduced by an advance percentage that is specified in the b/c agreement. A defined percent of the appropriate bonus/commission is then paid out. The final settlement of the bonus/commission takes into account the amount that was credited in advance.
The table of bonus/commission percentages is defined in 'Bonus/Comm Agreement. Enter Rates' (OIS413). This program is accessed by using option 12=B/C rates in 'Bonus/Comm Agreements. Open' (OIS412).