With some careful functional and technical thought, much can be accomplished without resorting to third-party additions that seem to be all the rage these days. Fact: SMEs cannot afford all these add-ons. They have to make do with standard R/3. And there’s enough in standard R/3 to keep one busy and satisfied for ages.
We have a customer who handles commissions unlike any other I have been at in my 19 years in SAP. I’ve spoken to other consultants and they too have not heard of it. When I suggest the following to other customers I receive resounding “we could never do that, our sales force would leave us” reply.
I doubt it.
Here’s what they do, why they do it and how we put it into SAP without having to visit a third party addition.
The customer only pays commissions on an invoice that has been paid by their customer. (most SAP customers I have worked for pay on invoice. Big mistake. What happens if you do not get paid? What happens with credits and other adjustments? Most give me the “we can’t do that our sales force would leave us” comment right here.
But this SAP customer takes it one amazing step forward. They get the sales force to help with dunning or customer payments.
“What?!” say you? “Get the sales force to do ANYTHING administrative?”
Yes and here is the incentive.
The sales reps get paid on sliding scale of commission dependent on when the customer pays. If the customer pays on time, the sales rep receives the normal 100% commission amount that was calculated. If the customer pays late, the commission amount is reduced proportionally to how many days the customer is late.
When I first heard this requirement, I was like “friggin’ awesome, I love it BUT I know standard SAP does not support it.” Maybe it does I thought, they have this mafia sounding “Incentive and Pay Module”. But I knew our customer could not afford to pay for looking at this functionality. (I’ll have another exciting blog about how SMEs really can’t afford or support all these fancy acronym add ons SAP needs to sell.)
We put in a combination of some statistical pricing conditions which accrue for the commission. And we implemented a custom report to support cleared invoices only with the math on the sliding scale of commission.
Total cost: Tens of thousands less than one of those add on third party packages. No consultants from them. No license fees.
We put it in about 7 years ago and I can’t remember making any fixes to it. It just works. Cheap and cheerful does exist in SAP..
So it’s in the sales reps best interest to chase customers for payment when they are out visting the customer. Sales reps are in contact with the customer. They know them personally. They take them out for meals. Why have someone from accounts call and chase for payment? They do not know the customer as well. And the customer is only having 100% negative conversations with an accounts person. They might have some neutral conversations with customer service on order placements, and some negative ones on the “where is my stuff?” call.
Only sales reps have a consistently positive experience with customers. They are the best suited to speak to the customer about payments without angering them.
If I was a sales rep, I would want complete control over who spoke to my customers.
This process enables sales reps, accounting, the owners and the company to be happier with each other and SAP on the daunting subject of collections and commissions.
Matt Bertino (SD/VC/MM) and Tess Prudencio (ABAP) implemented this for our wholesale distribution and manufacturing customer.
Contact Matt at firstname.lastname@example.org