Effective January 1, 2013: California’s New Compensation Law
California’s revised Labor Code §2751 sets forth the requirements that companies must follow in communicating commission plans to California employees.
Two US states rule commissions are earned when an order is obtained…
Paying commissions only when the customer has paid – this may not work any more in some states. Illinois and Maryland have awarded commissions to terminated employees for sales that were booked before they left, but for which payment from the customer had not been received.
At what point should sales people be paid?
Finish paying when: (1) the sales person has done what you need them to do, and you are ready for them to focus on closing another one, and (2) you have a solid basis for knowing the value of what was sold – but there’s a bit more to it…
We need to move from paying at booking to paying when cash is collected – how?
The business may have to deal with the problem that the lag created by the new sales crediting policy will mean a permanent loss of income for the sales people…
Payment timing for multi-year deals
Our sales people sell long-term deals, most of which span several years. When should they be paid for these – upon signing, as invoiced, when revenue is recognized, at completion, or a combination of these?