Quick Start¶

This guide walks through a complete commission lifecycle using the Incentive Compensation Engine.

By the end of the guide, you will have:

configured a Commission Plan
created a Commission Rule
configured a Commission Payee
created an ERPNext Sales Invoice
generated a Commission Ledger entry automatically
generated a Commission Statement
reviewed, approved, and posted the statement
created a Commission Payout
processed and paid the payout

Before You Begin¶

Make sure the application is installed on your ERPNext site.

You will also need:

a Company
a Currency
an Item
a Customer
an ERPNext Sales Person

For this walkthrough, the examples use a percentage-based commission.

1. Create a Commission Plan¶

Open Commission Plan and create a new record.

Configure the plan with:

Field	Example
Plan Name	Standard Sales Commission
Company	Your Company
Currency	INR
Valid From	Current date
Valid To	Leave empty
Status	Active

Save the Commission Plan.

The plan defines the overall configuration and validity period within which commission rules can apply.

2. Create a Commission Rule¶

Open Commission Rule and create a new record.

For a simple percentage commission, configure:

Field	Example
Rule Name	Demo Item Commission
Commission Plan	Standard Sales Commission
Priority	1
Rule Applies To	Item
Item	Your Item
Calculation Method	Percentage
Rate	5
Enabled	Yes

Save the Commission Rule.

The rule determines when a commission applies and how the commission amount is calculated.

For example, with a rate of 5%:

Sales Amount = ₹10,000
Commission Rate = 5%

Commission = ₹10,000 × 5%
           = ₹500

3. Create a Commission Payee¶

Open Commission Payee and create a new record.

For an employee-based commission:

Field	Example
Payee Name	E2E Commission Salesperson
Payee Type	Employee
Sales Person	Your ERPNext Sales Person
Enabled	Yes

Save the Commission Payee.

A Commission Payee represents the person or partner who receives the commission. It links the commission system to the corresponding ERPNext Sales Person or Sales Partner.

4. Create a Sales Invoice¶

Create a new ERPNext Sales Invoice.

Select:

your Customer
your Company
the Item used by the Commission Rule

Add the Item with a value that will produce a commission.

For example:

Field	Example
Item	Your Item
Quantity	1
Rate	₹10,000
Amount	₹10,000

In the Sales Team section, add the Sales Person linked to your Commission Payee.

Set the Sales Person's contribution to:

100%

Submit the Sales Invoice.

5. Verify the Commission Ledger¶

When the Sales Invoice is submitted, the Incentive Compensation Engine evaluates the transaction and creates a Commission Ledger entry when a matching commission configuration is found.

Open Commission Ledger and locate the entry generated from your Sales Invoice.

For the example above, you should see values similar to:

Field	Example
Sales Invoice	Your submitted invoice
Commission Payee	E2E Commission Salesperson
Commission Rule	Demo Item Commission
Commission Plan	Standard Sales Commission
Calculation Method	Percentage
Base Amount	₹10,000
Rate	5%
Commission Amount	₹500
Status	Calculated

The Commission Ledger is an immutable historical record of the commission calculation.

6. Create a Commission Statement¶

Open Commission Statement and create a new record.

Select:

Field	Example
Commission Payee	E2E Commission Salesperson
Company	Your Company
Currency	INR
From Date	Invoice transaction date
To Date	Invoice transaction date

Save the statement.

The newly saved statement remains in Draft status.

7. Generate the Statement¶

Open the saved Draft Commission Statement.

Click:

Generate Statement

The engine searches for eligible Commission Ledger entries matching the statement's:

Commission Payee
Company
Currency
date range

Ledger entries that have already been included in another non-cancelled statement are excluded.

After successful generation, the statement contains the commission snapshot.

For the example above:

Gross Commission    ₹500
Adjustments           ₹0
Net Commission      ₹500

The statement status becomes:

Generated

Once generated, the statement and its ledger entries form an immutable snapshot.

8. Submit the Statement for Review¶

From the Generated statement, click:

Submit for Review

The status changes to:

Generated
      ↓
Under Review

This represents the review stage of the commission process.

9. Approve the Statement¶

From the Under Review statement, click:

Approve

The status changes to:

Under Review
      ↓
Approved

The approved statement is ready to be finalized.

10. Post the Statement¶

From the Approved statement, click:

Post

The status changes to:

Approved
      ↓
Posted

A Posted statement is finalized and can be used to create a Commission Payout.

11. Create a Commission Payout¶

From the Posted Commission Statement, click:

Create Payout

The application creates a Commission Payout for the statement's net commission amount.

For the example:

Statement Net Commission = ₹500
Payout Amount            = ₹500

The payout starts in:

Pending

12. Process the Payout¶

Open the newly created Commission Payout.

Move the payout through its workflow:

Pending
   ↓
Processing

When the payment has actually been made, enter the required payment information.

For example:

Field	Example
Payment Date	Payment date
Payment Reference	Bank transaction reference

Save the payout.

Then click:

Mark as Paid

The payout moves to:

Processing
      ↓
Paid

The associated Commission Statement is also marked as Paid.

Complete Lifecycle¶

You have now completed the full commission lifecycle:

Sales Invoice
      ↓
Commission Calculation
      ↓
Commission Ledger
      ↓
Commission Statement
      ↓
Generated
      ↓
Under Review
      ↓
Approved
      ↓
Posted
      ↓
Commission Payout
      ↓
Processing
      ↓
Paid

What You Learned¶

The Incentive Compensation Engine separates the commission lifecycle into distinct records:

Record	Purpose
Commission Plan	Defines the overall commission plan and validity
Commission Rule	Defines when and how commission is calculated
Commission Payee	Identifies who receives the commission
Commission Ledger	Records the calculated commission
Commission Statement	Groups eligible commissions into a period-based snapshot
Commission Payout	Tracks the actual payment of the statement

For a deeper explanation of each component, continue to Concepts.