Wholesale distribution
Commission software for distributors that pay on gross profit
Distributors moved their reps from sales to margin a long time ago, and for a good reason: a rep who cuts the price to win an order shouldn't earn the same as one who held it. The trouble is that gross profit by rep takes more work to pin down than revenue, and that work is usually where the monthly commission spreadsheet comes from.
How distribution sales reps are usually paid
A percentage of gross profit dollars is the standard plan, sometimes on top of a base and sometimes as straight commission for experienced outside reps. Many plans raise the rate once a rep passes a monthly or quarterly GP target.
Around that sit the exceptions every distributor knows. House accounts pay nobody. Inside and outside reps share some accounts, and some companies pay when the invoice goes out while others wait until it's collected.
Why the GP report never quite becomes a payout
The ERP report is only the starting point
Prophet 21, Eclipse and NetSuite will all give you gross profit by salesperson. Before anyone gets paid, someone still pulls out house accounts, deals with returns and credit memos, and fixes the orders booked to the wrong rep.
Shared accounts
When an inside rep and an outside rep both work an account, the split tends to live in someone's head or in a comment cell.
Deductions nobody saw coming
Reps rarely see the margin math, so the first they hear of a credit memo is a smaller check.
Paying on collection
The sales report doesn't say which invoices were paid this month, so somebody matches that up by hand.
How distributors run it in Earnest
Gross profit goes in as the amount. Run the GP report you already use, save it as Excel or CSV, and map the gross-profit column when you upload. Earnest then treats each line like a sale: it applies the rep's rate and any step-up above target (measured monthly or quarter-to-date) and drafts the payouts for you to approve.
If you pay on collection, upload paid invoices dated by payment date. A shared account can be split between two reps on the deal itself. Once you publish, every rep can log in and see the gross profit they were credited on, deal by deal, along with a statement that shows the calculation.
Limits worth knowing before you start
- Earnest doesn't calculate margin. It pays on the gross profit you upload, so the cost basis is whatever your ERP says it is.
- Rates that change with each order's margin percentage aren't built in; work out the commissionable amount in your export and upload that.
- Negative lines can't be uploaded. Net returns out of the file, or post them afterwards as corrections.
- Each upload holds up to 1,000 rows, so a busy month goes up as several files. They add together.
- There's no Prophet 21, Eclipse or NetSuite connector.
Common questions
- Will reps see our margins?
- They'll see the gross profit on their own deals, since that's what they're paid on, and nothing about anyone else's. If that's more than you want to show, upload a commissionable amount instead of raw GP.
- Our ERP has a commission module. Why would we need this?
- If its output goes straight to payroll without anyone touching it, you probably don't. Earnest is for the companies where that report ends up in Excel for adjustments every month.
- How do we keep house accounts out?
- Leave them out of the file you upload.
- What does it cost?
- Nothing for up to 5 reps and managers, and admins don't count toward that. After that it's $149 a month for 6 to 19 people, $299 for 20 to 50 and $799 above that, billed month to month with every feature on every plan.
Bring last month's GP report
Upload it to a free account and compare Earnest's payouts with what you paid. No card needed, and it's free for up to 5 reps and managers.