How Can I Analyze Liabilities?

How Can I Analyze Liabilities?

Definition
A liability is the difference between an estimated and actual commissions.

Example:
  1. An estimated of $100 was issued to rep "John Doe" on deal #123
  2. Only $20 has been paid to "John Doe" on this deal so far
  3. As a result, there is a liability of $80


Alternative definitions exist:
  1. Actual commissions can also be called "paid commissions"
  2. Estimated commissions can also be called "earned commissions", "expected commissions", "on-payment commissions", etc.
  3. Liabilities can also be called "holds", "withheld commissions", "pending commissions", etc. 

Why Analyze Liabilities?
Analyzing liabilities:
  1. Helps you forecast potential commission costs (budgeting)
  2. Helps you identify deals which haven't fully converted
  3. Helps you answer questions from reps about "missing" commissions

Please note that not all estimated commissions may be paid - for example:
  1. You issue estimated commissions when invoices are open
  2. An invoice is open and an estimated commission was issued
  3. However, this invoice was never paid by the client, so no actual commission was issued
    1. Or the invoice was partially paid by the client, so the actual commission was less than estimated
    2. No additional payment is expected on this invoice  
Sales Cookie provides you with options to choose which liabilities are meaningful and which should be ignored.

Applicability
If you do not have estimated commissions, there is no financial liability, since there are no "earned" or "potential" commissions. Please reach out to our team if you would like to establish estimated commissions. Also, we only support liability reporting when actual commissions and estimated commissions are issued on the same records. If, for example, estimated commissions are issued over sales records, but actual commissions are issued over payment records, the liability report will not work and will always show 100% liability. Our team is working to improve liability reporting for this type of scenario. Withholdings shown on incentive dashboards however will reflect liability correctly for this scenario.

    Liability Report
    To analyze liabilities:
    1. Navigate to Reports > Get Report
    2. Select "Liabilities Report"

    In this example:
    1. We are analyzing liabilities for all payees
    2. We are only interested in liabilities from estimated commissions issued in the last 6 months
    3. We want to group liabilities by customer, without any further grouping
    4. We want to see the full list of transactions with a liability
    5. We can click on tiles to expand or contract them
    6. We can click on transactions to see more details



    Advanced Options
    The following describes advanced options:
    1. Exclude deactivated user commissions
      1. When users are terminated, estimated commissions may never be paid. You may choose to ignore liabilities associated with terminated users.
    2. Include negative commission liabilities
      1. This option includes liabilities from deals with negative estimated commissions. For example, if an estimated commission was -$100, but only -$10 was issued in actual commissions, a liability of -$90 remains.
    3. Exclude partially paid commissions
      1. Sometimes, an actual commission was issued, but is less than estimated. For example, a rep received an actual commission of $90 instead of $100 estimated because a discount was given to the customer. This option allows you to focus on deals without any actual commission paid.
    4. Only show partially paid commissions
      1. Sometimes, an actual commission was issued, but is less than estimated. For example, a rep received an actual commission of $90 instead of $100 estimated because a discount was given to the customer. This option allows you to focus on deals with some actual commission paid.
    5. Use latest commission estimate
      1. Check this option if your plans are repeatedly re-estimating commissions, and so multiple estimates are issued on the same deal. We will lookup the latest estimates instead of normally calculating the sum of estimated commissions. This is uncommon.
    6. Also apply date range to actuals
      1. By default, estimated commissions from the selected period, are compared to all actual commissions (regardless of period). This option makes it possible to also restrict actual commissions to the same specified period. For example, if you selected "This Quarter", when this option is checked, we will compared estimated commissions from this quarter vs. actual commissions from this quarter. Without this option checked, we will compared estimated commissions from this quarter vs. actual commissions from <any period>.
    7. Ignore liabilities lower than <value>
      1. Sometimes, the actual commission may differ from the estimated commissions by a few cents due to rounding errors, exchange rate conversion, etc. This option allows you to ignore small liabilities which may be distracting.
    8. Plans
      1. This option lets you narrow down your analysis to a specific set of plans. Make sure to select both plans issuing estimated commissions AND actual commissions. This could be 2 or more plans, or the same plan.


    Applicability
    The liability report only works when the estimated and actual commissions are issued on the same transaction.

    For example, it will not work if you have this configuration:
    1. Estimated commissions are issued on "closed won" SalesForce opportunities
    2. Actual commissions are issued on paid QuickBooks Online invoices.
    Reach out to support for assistance.

    Helping Reps Track Liabilities
    Sales Cookie has the ability to show withheld commissions to your reps - learn more here.

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