The more complicated your commissions and incentive payout processes get, the more likelihood there is that you’ll start to miss payrolls and end up with some angry reps on your hands. All it takes is one missed deadline to lose the trust and confidence of your team, and once that’s lost, it’s almost impossible to get back.
Missing incentive compensation payouts can be just as damaging as a late paycheck, especially since for most salespeople the compensation IS the paycheck.
There are various factors that can contribute to late payments—if it were just one variable, late payments probably wouldn’t be an issue.
Here are the four main things you can do to avoid missed payments:
1. Get clarity on what the problem is
If you’ve missed a few payroll deadlines or are regularly late on incentive compensation payouts, you need to do a little audit—or maybe even a significant audit—of your incentive compensation plan to determine where the problem areas are. Once you have a handle on what’s been happening, you can start to make plans on how to correct it.
2. Set rules and stick with them
Clear incentive compensation policies make for easier execution and faster remedy when and if a mistake is made, because so often it’s the mistakes that cause the payment delays. Your incentive compensation policy should be clear and concise and should outline the specifics of how your commissions are calculated and paid. Also— ensure your commission payout policy is easy to understand for all employees, and make reading and understanding it a part of the onboarding process.
3. Stay on top of the latest regulations
With new rules now in play, such as ASC 606, corporate accountability around payouts and commissions is going to be a huge issue this year. Be sure to be audit-ready by knowing how you trace actions within your incentive compensation tool and what changes you may need to make to be compliant with the latest regulations.
4. Automate your commission payout processes
Having a good commissions automation tool on your side is key to having a seamless incentive compensation system that doesn’t lead to missed or late payments. A great automated commissions tool will significantly improve traceability, reporting, accuracy, and ultimately morale, because your reps will know precisely when and why they are getting compensated they way they are.
If you want to hear a real-life story on a sales compensation professional who went through the journey of using manual process and spreadsheets, and nonoptimal software—finally settling on a robust Cloud solution—please listen to our upcoming webinar on June 6 featuring Pivotal, a software and services company.
Incentive Compensation Management: Build versus Buy
Is your custom system using too much of your resources?
This guide will provide questions to ask and evaluate where you stand with your current sales compensation management needs.
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