What is commission run auditing? Why do it? Who should do it? How do you do it?
About Commission Run Auditing
Commission run auditing is a process of many steps using your MLM software to validate that your sales force is paid properly and accurately based on the rules of your compensation plan.
Stated another way, acceptance of responsibility for accurate payments = commission run auditing!
Watch our video below to learn what the steps are to auditing your commission run both properly and accurately.
How Do You Audit Commission Runs?
We recommend that the commission plan auditors develop a test plan that contains a checklist of items to test. Your checklist may include:
- promotions to each title level
- demotions to lower title levels
- “missed” promotions by a dollar in volume or a leg count of one, for example
- payment of each type of commission
- rollup
- compression
- exemptions
Each time, your live commission run should be fully audited.
Who Should Audit Your Commission Runs?
Should it be your software provider?
- Yes, when they deliver the initial compensation plan to you
- Yes, when they deliver changes in the plan to you
- Yes, when you ask them to perform this function as a response to an outstanding problem or concern
- No, at any other times
Should it be your direct selling company?
- Yes, every month (or week if yours is a weekly plan)!
As you can see, commission run auditing should be performed by both of you.
What are the skills required?
The following items are essential in order to do a thorough job at commission plan auditing:
- Full understanding of your compensation plan
- Knowledge of the tools available to audit the plan
- A testing mentality to exercise it fully
Commission run auditing is not a task to be assigned to the nearest warm body.
Two Types Of Education For Your Company
In addition to designing improvements to compensation plans and designing completely new plans, Sylvina Consulting is exceptionally skilled at advising companies on business strategies.
For new and young companies, Sylvina Consulting has published the 250-page “how-to” book, Start Here: The Guide to Building and Growing a Direct Selling Company available in English and Spanish.
Sylvina Consulting is also the co-sponsor of the Direct Selling Edge Conference, the only two-day school for new and young network marketing and party plan companies. Held two times each year, the DS Edge Conference is pure education.
Conclusion
Like President Reagan said, “Trust but verify”, commission run auditing is a necessity.
Did you know that Sylvina Consulting teaches companies how to audit their commission runs? For further information, contact us at 503.244.8787.
Jay Leisner, the President of Sylvina Consulting, is a top compensation plan and direct selling expert, a trusted adviser to new and established network marketing and party plan companies. For more than 30 years, Jay has enjoyed assessing and improving network marketing, party plan and referral marketing companies across the globe.
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