What Are Deductions?

What Are Deductions?


Deductions typically apply when you use a YTD or QTD plan. Deductions allow you to re-evaluate all commissions earned YTD / QTD, but deduct what has been paid previously YTD / QTD. 

This approach is often used if transaction data can retroactively change. For example, if amounts retroactively change, a full re-evaluation of all commissions YTD / QTD may be warranted.

Suppose that you have a YTD plan with monthly payment.

Each month, we will re-evaluate commissions earned on each deal YTD:
  • In January, calculate all commissions earned from Jan. 1 to Jan. 31st
  • In February, calculate all commissions earned from Jan. 1 to Feb. 28 
  • In March, calculate all commissions earned from Jan. 1 to Mar. 31



Without deductions, it's quite clear that you would double-pay commissions!

What we have to do is deduct what has been paid before:
  • In January, calculate all commissions earned from Jan. 1 to Jan. 31st
    • Nothing to deduct
  • In February, calculate all commissions earned from Jan. 1 to Feb. 28
    • Deduct what was paid in Jan.
  • In March, calculate all commissions earned from Jan. 1 to Mar. 31
    • Deduct what was paid in Jan. AND Feb.

Here is how deductions will appear visually on incentive dashboards. You can of course choose your own terminology.



 

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