Start with the written compensation plan
Finance needs to know what event earns commission, which deals qualify, how rates change by quota or product, treatment of discounts, split deals, renewals, cancellations, clawbacks, and when payment occurs.
Do not build the calculation from sales expectations that are not in the approved plan.
Use one source for eligible sales
Choose the CRM, billing platform, collection report, or another system of record for the commission trigger. Reconcile the eligible population to finance data so duplicate or cancelled deals are not paid twice.
Keep manual adjustments on an exception list with approval.
Accrue material earned commissions when needed
If commissions are earned in one accounting period and paid later, a month-end accrual may be needed under the company's accounting policy. Reverse or true up the estimate when payroll is finalized.
Separate the accounting accrual from the payroll tax and employee-payment process.
Give employees a reproducible statement
Commission statements should identify the deals, calculation, adjustments, prior true-ups, and final payment. A transparent statement reduces disputes and gives finance a stronger audit trail.
Archive plan versions because compensation rules can change during the year.
Questions buyers usually ask
What should finance keep for sales commissions?
Retain the approved compensation plan, eligible sales data, calculations, manual adjustments, approvals, payroll records, and any later true-ups or clawbacks.
Should commissions be accrued before they are paid?
They may need to be when they are earned in one period and paid later, depending on the company's accounting policy and applicable reporting framework.
Check provider facts at the source.
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