Salesperson Commission - Calculate based on Gross Profit not Sales

It is much better for your business to calculate Salesperson Commissions:

  • Based on Gross Margin rather than Total Sales
  • Based on Invoices Paid not just Invoices raised.

This provides your Salespeople with a key incentive to achieve a better Gross Margin and to collect payments fast.

With BI4Cloud can easily report Gross Margin by Salesperson.

We can also help with adjustments to remove Invoices not yet paid. 

Each Month Calculate the Commission based on:

  1. Invoices issued for the month
  2. Add back all unpaid Invoices at the beginning of the month
  3. Less all unpaid Invoices at End of Month


For Example: Assume a new Sales Person starts 1 July, they have one sale in July $2000 and one in August for $1000 and one in September for $4000.  No amounts are paid until September.

  1. Invoices issued for the month
    Run an Analyze Type report in BI4Cloud:

    - Analyze by "Invoice No - Detail" (or by Customer if you have a large vol of invoices)
    - Filter by Salesperson (or by Customer Sales rep if you do not use Invoice Salesperson)
    - Group by Invoice Status (Closed = Paid and Open = Not fully paid) or by Customer
    - Sales Date  - "Last Month" to always report for the previous months sales.





  2. This report will show the Total Sales and Gross Margin for all invoices for this Salesperson for the Sales Date range you set. - $4000

  3. To Calculate Commission based on Gross Margin for Invoices paid in full for the period.

    Deduct the balance of all unpaid Invoices at End of Month        - ($5,000)

    Run an Analyze Type report:

    Analyze by "Invoice No - Detail" (or by Customer if you have a large vol of invoices)
    Filter by Salesperson (or by Customer Sales rep if you do not use Invoice Salesperson)
    Filter by Invoice Status = Open  -  this is to pick up All invoices still not fully paid.
    Group by Sales by Month or by Customer if you like.
    Sales Date  - needs to go back as far as the oldest Open invoice date




  4. Add back the balance of all unpaid Invoices that you calculated at the End of the previous month        - $3,000




  5. In Summary - 
  • Invoices for September               Sales $4,000 - Gross Margin    $2710.50
  • Less: Open Invoices at 30 Sep     Sales($5,000) - Gross Margin ($3256.00)
  • Add:  Open Invoices at 30 Aug     Sales $3,000 - Gross Margin    $1636.49
  • Invoices Paid in September          Sales $2,000 - Gross Margin   $1090.99

    6. MYOB does have a good Customer Sales Report by Salesperson

 This report only shows Total $ Sales, not Gross Margin and the total includes GST.  However it is still useful to use to reconcile to the above calculations. Especially if you have a large volume of invoices.

7. Note if your customers part pay invoices this can complicate things.  However as the BI4Cloud reports show an Invoice as "Open Status" until it is either paid in full and/or credited in full this method will only include part paid invoices into the Commission calculation in the month they are fully paid. It does not pick up part payments.

8. Try to run the Open Invoices report each month end as soon as you have allocated all Customer Payments for the previous Month, but BEFORE you start entering Customer Payments for the new month.

Don't forget to save the two reports above as Favourite Reports once you have set them up, so you can just run them each month.

See also the Article on the Difference between Customer Sales Rep and Invoice Salesperson in BI: Click Here

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