The advance percentage is used to avoid crediting advances during the agreement period that are too high. If an advance percentage is specified in a bonus/commission (b/c) agreement, only a part of the estimated b/c amount is credited as stated by the percentage. The rest becomes due at a later time.
Advances are calculated automatically based on the bonus/commission advance method specified in a b/c agreement. The advance is specified as a percentage for each b/c agreement in 'Bonus/Comm Agreement. Open' (OIS412). The method can be either fixed or dynamic.
When final settlement is made, the actual bonus/commission amount reached is calculated. This amount is adjusted with any previously paid advances, and the recipient receives the difference.
The advance percentage for a b/c agreement is 75%. This means the recipients will receive 75% of the calculated advance on the accumulated bonus/commission.
If the calculated advance is 1,025.00 the recipient receives 768.75 (0.75 x 1,025).