Sales Commission and International Currencies
Let’s say you’ve enjoyed a steady growth in the local scene. You now feel it’s the right time to spread your wings and taste the international markets for new growth opportunities. This is great news for any business. But, it comes with its own challenges. One of the major headaches in the international marketplace is handling sales commissions in multiple currencies. Fortunately, with good tools such as QCommission, this can be a thing of the past and here is how:
1. Balancing the global business view and local execution
When running an international business, you want to maintain a steady profit margin in every market. This means that you must have a common currency to compute the cost of production, other costs such as sales commissions, and then determine your profit. This is called the base currency of the company upon which all other transactions are anchored.
In the local set up, you will need a mechanism to track daily fluctuations of the local currency exchange rates. This way, you can know the effective conversion rate of the local currency with respect to the company’s base currency on any given day. It is, however, the responsibility of the company owner to make sure that the exchange rates for various currencies across the markets are updated in a timely manner. This enables you to make all payouts at the correct rates and chances of revenue leakage are minimized.
2. Managing individual transactions
Besides the global business perspective, each transaction in the local market is unique. By including currency code and rate fields in each invoice, your software can accurately calculate the cost of the transaction. This helps you determine the payable commissions at the transaction level.
3. Managing Multi-currency payouts
QCommission has the ability to manipulate the trading currency at the transaction level. It becomes easy to handle various teams in different countries and track individual sales in both the base and local currencies. This has huge benefits especially when it comes to managing cross-border sales campaigns. You can easily tell which teams are performing and those that are struggling without going through tons of currency conversion calculations.
When it comes to paying these teams, you can do so in the base currency but apply local currency conversion at an individual payee level. This is possible only if your commissions-payout software allows you to set a specific currency for each payee. The good news is that QCommission comes with this functionality making multi-currency payouts a breeze.
4. Tracking compensation payouts
One of the important features of a sales compensation management system is the ability to keep track of all transactions that go through it. This makes it easy for the business owner to account for all costs. Now, things get a little bit complicated when international currencies are involved.
This is because the system is supposed to track currency conversion rates, the applicable effective dates, and details of the actual transaction. In addition to these, the system should be able to generate statements that show the base, transaction and payout currencies. These multi-currency statements act as references for business reporting.
5. Adaptation to local currency formats
Currencies across the world are represented differently. This also applies to key transaction components such as date and time formatting. To make your international operations smooth, you need a system that is flexible enough to adapt to the local markets you operate in. This means that your software must support various currency formats and date formats to make it relevant to needs of your local business partners.
The international marketplace is complex owing to the ever-fluid forex rates. To avoid incurring losses, international companies need robust systems that track multi-currency transactions as well as perform effective conversions. QCommission happens to be one such system with multi-currency capability at both transaction and payee levels. It’s also designed for customization of local currency formats. See more under the “Internalization” features section of this robust sales commission management tool.
When it comes to compensating sales staff, there are various options at your disposal. You can opt for a base pay plus variable commissions or commissions only. In addition to this, you can consider motivating your employees with non-cash benefits. Whatever method you choose, your system should track the numbers accurately because they are direct costs to your business. Go for customizable software that will conform to your preferred compensation plan.
You should never compromise on the financial reporting features of such software. There are various reports you are expected to generate depending on the type of business, for instance: financial institutions require compliance reports. Transactional reports are also important for calculating tax returns, aiding general ledger entries, and giving an overview of the status of your business.
This gets complex when you are running an international company, as you have to take care of multi-currency sales computations. This is where the need for a robust software with a comprehensive reporting mechanism comes in. Your system of choice should also connect to external tools such as Excel, Salesforce, QuickBooks, MS Dynamics CRM, and more, for advanced reporting and flexible data access.
As you shop for a sales commission software, consider a system that’s user-friendly, eliminates manual processes, and tracks daily sales entries. Go for flexibility too. This way, you can set your compensation plan as desired and generate various reports that are relevant to your business.