Configure Commission Rules¶
This guide explains how to configure Commission Rules in the Incentive Compensation Engine.
A Commission Rule defines:
- what a commission applies to
- which value must match for the rule to apply
- how the commission is calculated
- which rule takes precedence when multiple rules match
Commission Rules belong to a Commission Plan.
Before You Begin¶
Before creating a Commission Rule, make sure:
- the Commission Plan exists
- the Commission Plan is configured for the correct Company and Currency
- you know what transaction condition should trigger the commission
- you know which calculation method should be used
The Commission Plan provides the context in which the rule is evaluated.
Create a Commission Rule¶
Open:
Commission Rule → New
Configure the rule using the following fields.
| Field | What to Enter |
|---|---|
| Rule Name | A clear, unique name for the rule |
| Commission Plan | The Commission Plan under which the rule applies |
| Priority | The precedence of the rule when multiple rules match |
| Rule Applies To | The transaction attribute used for matching |
| Item | Item to match when Rule Applies To is Item |
| Item Group | Item Group to match when Rule Applies To is Item Group |
| Sales Person | Sales Person to match when Rule Applies To is Sales Person |
| Customer | Customer to match when Rule Applies To is Customer |
| Customer Group | Customer Group to match when Rule Applies To is Customer Group |
| Territory | Territory to match when Rule Applies To is Territory |
| Calculation Method | Percentage, Fixed Amount, or Tiered |
| Rate | Percentage used by the Percentage method |
| Fixed Amount | Fixed commission amount used by the Fixed Amount method |
| Tiers | Commission tiers used by the Tiered method |
| Enabled | Whether the rule is active |
Only the condition relevant to Rule Applies To should be configured.
1. Rule Name¶
Give the rule a descriptive name.
Good examples:
Smartphone Commission
Enterprise Customer Commission
North Territory Commission
Electronics Item Group Commission
Avoid vague names such as:
Rule 1
Test Rule
Commission Rule
A meaningful name makes the rule easier to identify during configuration and commission investigation.
2. Commission Plan¶
Select the Commission Plan to which the rule belongs.
For example:
Commission Plan: Standard Sales Commission
The rule is evaluated within this plan's context.
The plan determines which commission configuration applies to the transaction, while the rule determines the matching condition and calculation.
3. Priority¶
Set the rule's priority.
Lower priority numbers are evaluated first when multiple rules match.
For example:
Rule A → Priority 1
Rule B → Priority 5
Rule C → Priority 10
If all three rules match a transaction, Rule A has the highest precedence.
Recommended Priority Pattern¶
Leave gaps between priority values when practical:
1
10
20
30
This makes it easier to insert another rule later without renumbering every existing rule.
For example:
Priority 1 → Specific Item
Priority 10 → Item Group
Priority 20 → Territory
4. Rule Applies To¶
The Rule Applies To field determines which transaction attribute the rule uses for matching.
Available options are:
Item
Item Group
Sales Person
Customer
Customer Group
Territory
Choose the option that best represents the business condition for the commission.
Item¶
Use Item when the rule should apply to a specific item.
Example:
Rule Applies To: Item
Item: Smartphone
Item Group¶
Use Item Group when the rule should apply to items belonging to a particular group.
Example:
Rule Applies To: Item Group
Item Group: Electronics
Sales Person¶
Use Sales Person when the rule should apply to a specific Sales Person.
Example:
Rule Applies To: Sales Person
Sales Person: John Doe
Customer¶
Use Customer when the rule should apply to a specific customer.
Example:
Rule Applies To: Customer
Customer: ABC Industries
Customer Group¶
Use Customer Group when the rule should apply to a category of customers.
Example:
Rule Applies To: Customer Group
Customer Group: Enterprise
Territory¶
Use Territory when the rule should apply to sales associated with a particular territory.
Example:
Rule Applies To: Territory
Territory: North
Matching Conditions¶
Once Rule Applies To is selected, configure the corresponding condition field.
For example:
Rule Applies To: Item
Item: Smartphone
The rule then targets that Item.
Similarly:
Rule Applies To: Customer Group
Customer Group: Enterprise
targets the Enterprise Customer Group.
The other condition fields are not relevant to the selected matching dimension.
5. Calculation Method¶
Choose how the commission should be calculated.
The available methods are:
Percentage
Fixed Amount
Tiered
The fields required for the calculation depend on this selection.
Percentage Commission¶
Select:
Calculation Method: Percentage
Then enter the commission rate.
For example:
Rate: 5
For a base amount of ₹10,000:
Base Amount = ₹10,000
Rate = 5%
Commission = ₹10,000 × 5%
= ₹500
Configuration Example¶
Calculation Method: Percentage
Rate: 5
Use Percentage when the commission should scale with the applicable transaction amount.
Fixed Amount Commission¶
Select:
Calculation Method: Fixed Amount
Then enter the fixed commission amount.
For example:
Fixed Amount: ₹500
When the rule matches, the configured fixed amount is used for the commission calculation.
Configuration Example¶
Calculation Method: Fixed Amount
Fixed Amount: 500
Use Fixed Amount when each matching commission event should produce a fixed commission value rather than a percentage of the transaction amount.
Tiered Commission¶
Select:
Calculation Method: Tiered
Then configure the Commission Tiers.
A tier contains:
- From Amount
- To Amount
- Rate
- Description
For example:
Tier 1
From: ₹0
To: ₹10,000
Rate: 2%
Tier 2
From: ₹10,000
To: ₹50,000
Rate: 5%
Tier 3
From: ₹50,000
To: —
Rate: 8%
Leave To Amount empty on the final tier when there is no upper limit.
Tier Configuration¶
A simple tiered configuration might look like:
| From Amount | To Amount | Rate |
|---|---|---|
| ₹0 | ₹10,000 | 2% |
| ₹10,000 | ₹50,000 | 5% |
| ₹50,000 | Empty | 8% |
The calculation engine uses the configured tiers when calculating a Tiered commission.
Calculation Fields¶
The form shows the fields relevant to the selected Calculation Method.
Percentage¶
Configure:
Rate
Fixed Amount¶
Configure:
Fixed Amount
Tiered¶
Configure:
Tiers
This keeps the rule configuration focused on the calculation method being used.
6. Enabled¶
Set:
Enabled: Yes
when the rule should participate in commission calculations.
Disable a rule when it should no longer be used for new calculations but should remain available for reference.
For example:
Rule: Enterprise Customer Commission
Enabled: No
The rule remains stored but is not used as an active commission rule.
Example: Item Percentage Rule¶
Suppose a company wants to pay 5% commission on Smartphone sales.
Configure:
| Field | Value |
|---|---|
| Rule Name | Smartphone Commission |
| Commission Plan | Standard Sales Commission |
| Priority | 1 |
| Rule Applies To | Item |
| Item | Smartphone |
| Calculation Method | Percentage |
| Rate | 5 |
| Enabled | Yes |
A ₹10,000 eligible sale produces:
₹10,000 × 5% = ₹500
The result is stored in the Commission Ledger.
Example: Item Group Rule¶
Suppose the company wants to pay 3% commission on all Electronics items.
Configure:
| Field | Value |
|---|---|
| Rule Name | Electronics Commission |
| Commission Plan | Standard Sales Commission |
| Priority | 10 |
| Rule Applies To | Item Group |
| Item Group | Electronics |
| Calculation Method | Percentage |
| Rate | 3 |
| Enabled | Yes |
The rule can then apply to eligible items within the selected Item Group.
Example: Customer Rule¶
Suppose a company wants to pay 10% commission on sales to a specific customer.
Configure:
| Field | Value |
|---|---|
| Rule Name | ABC Industries Commission |
| Commission Plan | Standard Sales Commission |
| Priority | 1 |
| Rule Applies To | Customer |
| Customer | ABC Industries |
| Calculation Method | Percentage |
| Rate | 10 |
| Enabled | Yes |
This makes the customer the matching dimension for the rule.
Example: Fixed Amount Rule¶
Suppose every matching transaction should generate a fixed ₹500 commission.
Configure:
| Field | Value |
|---|---|
| Rule Name | Fixed Sales Commission |
| Commission Plan | Standard Sales Commission |
| Priority | 1 |
| Rule Applies To | Item |
| Item | Smartphone |
| Calculation Method | Fixed Amount |
| Fixed Amount | ₹500 |
| Enabled | Yes |
The commission amount is the configured fixed amount when the rule matches.
Example: Tiered Rule¶
Suppose commission rates should increase as the applicable amount increases.
Configure:
| From Amount | To Amount | Rate |
|---|---|---|
| ₹0 | ₹10,000 | 2% |
| ₹10,000 | ₹50,000 | 5% |
| ₹50,000 | Empty | 8% |
The rule configuration becomes:
Calculation Method: Tiered
with the tiers configured in the Tiers table.
Overlapping Rules¶
More than one Commission Rule can potentially match the same transaction.
For example:
Rule A
Rule Applies To: Item
Item: Smartphone
Priority: 1
Rate: 5%
Rule B
Rule Applies To: Item Group
Item Group: Electronics
Priority: 10
Rate: 3%
If Smartphone belongs to the Electronics Item Group, both rules may match.
Priority determines which matching rule takes precedence.
In this example:
Priority 1
↓
Rule A selected
The 5% rule therefore takes precedence over the 3% rule.
Rule Evaluation¶
When an eligible Sales Invoice is submitted, the commission engine evaluates the applicable plan and its rules.
The process can be summarized as:
Sales Invoice
↓
Find Applicable Commission Plan
↓
Find Enabled Matching Rules
↓
Evaluate Priority
↓
Select Applicable Rule
↓
Calculate Commission
↓
Create Commission Ledger Entry
The rule is therefore responsible for both matching and calculation, while the Commission Plan establishes the overall configuration context.
Changing a Rule¶
Commission Rule configuration can change over time.
Changing a rule does not modify existing Commission Ledger entries.
For example, a rule may change from:
Rate: 5%
to:
Rate: 7%
A commission already recorded at 5% remains recorded at 5%.
The updated rule applies to future eligible calculations.
Troubleshooting¶
The Rule Is Not Matching¶
Check:
- The Commission Plan is correct.
- The plan is Active and valid for the transaction date.
- The rule is Enabled.
- Rule Applies To is correct.
- The selected condition matches the Sales Invoice.
- Another rule with a higher priority is taking precedence.
The Wrong Rule Is Selected¶
Check the Priority values of all matching rules.
Remember:
Lower number = Higher precedence
For example:
Priority 1 → evaluated before Priority 10
The Commission Amount Is Unexpected¶
Check the Calculation Method.
For Percentage:
Rate
For Fixed Amount:
Fixed Amount
For Tiered:
Tiers
Also verify the transaction amount being used as the commission base.
Best Practices¶
Make Rules Specific¶
When a rule is intended for a specific item, customer, or other dimension, configure that condition explicitly.
Use Priority Deliberately¶
Use lower priority numbers for rules that should take precedence when multiple rules can match.
Disable Unused Rules¶
Disable rules that should no longer participate in new calculations instead of deleting them unnecessarily.
Keep Rule Names Descriptive¶
A reviewer should be able to understand the rule's purpose from its name.
Test Overlapping Rules¶
When creating rules that could overlap, test a representative Sales Invoice to confirm that the intended rule is selected.
Next Step¶
Once Plans and Rules are configured, configure the people or partners who receive commissions.
Continue with Payees.