Craft & Maker > Business > Hire Your First Sales Rep > When & How Are Sales Reps Paid?

When & How Are Sales Reps Paid?

 

Hire Your First Sales Rep

 

Lesson Info

When & How Are Sales Reps Paid?

So when and how our reps paid, so we already talked about the commission's, we already talked about, some of the fees involved. Again, these you're you're paying these reps for service, you're paying them more money based on there. Well, henry phrases you are paying them based on their outcome, right, like the work that they do. So how are they paid their typically paid monthly, and then there's two formats that you would either pay so there's, something called pay on pay, which is what more common and that's. When you pay a sales, rob, when you receive payment from the retail shop, so the sales rep will go through that work flow we discussed earlier, you'll ship the orders. You'll collect payment on it. And when you receive that money from the shop that's, when you'll then pay the sales rep. And that, again, is most common for our smaller gift industry. It made everybody. Industry, though, and then paying on writing is different that's, when you pay erupt when they write the order so ...

that's before you've even fulfilled it that's before you've collected money from the shop, this is less comment, but I want you to know that what the difference is because this is something you would want to include in your contract. You would want to know that it's the payment terms are pay and pay or pan writing, and again, you would always it's always more beneficial to you to pay on pay, because then you're not unloading cash before you receive payment from the storm. Yes, so smartly had a question that's sort of contract relate in terms of how to stand top of the sales rep like, can you? We asked them to send us a weekly timetable of what stores they have been to see s o then we know, okay? They have visited x, y and z and stores and only got an order from stores he what do people normally do in terms of staying on top of that relationship? I personally wouldn't ask my sales up to do that just because I want to give them the autonomy teo, you know, meet with their stores, and I know that if there are successful transactions, I'll see them soon because they'll send those sorters in you don't want to create more work for your sales wrap, you want them out selling so if they're at their office, putting up together a little putting together, you know, weekly summaries for you that's taking them out of the sails field. So in my opinion, I wouldn't ask myself up to do that. I can see why a manufacturer would want that information just to be able, you know, checks and balances of are they being proactive and this nut, but you'll get a really great sense of whether or not your sales rep is active based upon the orders that are coming, and if they're out visiting the stores and nurturing their clients, you're going to see those orders coming in, assuming you have a strong product line that selling and if it's not, they're going to tell you is such and that's where the end come, is it with the relationship? But yeah, I wouldn't personally ask a sales are up to provide that sort of, you know, check in and documentation, you know, if you haven't seen anything for a while from them, I think it's totally appropriate to give him a colin just say, hey, we haven't seen anything for a while, how are things? Is going and that's a really great opportunity to ask feedback tio of you know have the store has been providing feedback about the line? Some reps are more likely to provide that feedback than others but it can't hurt to ask and if they're open to feedback then great and a related question sarah b was wondering if it's typical to give yourselves a quota or some sort of accountability no I mean I don't think so I think if you have your own internal goals of what you would like to accomplish you could share those goals with them but I think you know in stilling quotas and things like that it puts a different type of pressure on the relationship but kind of in my opinion creates an unbalanced this is a member of your team you know, this is somebody that's working with you and if you start to kind of say I expect this out of you I think it's really great to have goals and I think everyone should have sales goals for their business not just on individual red basis but an annual basis a quarterly basis things like that so these are things you should be measuring in your business but the relationship aren't typically like that I do think this the showroom reps with into internally in the showroom rap environment they have their own quotas, ingalls and things that are kind of dictated by the overarching company of that showroom but in terms of independent wraps in your relationship with them I wouldn't mandate something like that thanks yeah ok, so you're paying the monthly hopefully you're paying them on pay so he wants the money comes in you're paying them so when I do my monthly payouts to my reps I always do commission statement you can do this in a number of ways the simplest form is just a simple excel document some people can run reports through their accounting software and stuff like that. So do whatever work for you start small star easy make your life easy but set up a system so that you can redo this every month with ease. But you want to include on this commission statement basically a list of all the different orders that have come in through this rap during that month or anything that's outstanding that hasn't shipped out yet the husband paid it's just kind of that that's your telling mark of where things stand so if we were to do this and excel I would tell you to do a column for each of these items but you'd want to include the store name that the order came from the pio number that's usually something that the rep will hand right onto the pio on day usually have their own system for how they create that pew number on dh that just helps with accounting between yourself and the reb ah, it doesn't really have any bearing on the retail store. The order dates. So when did the rap right the order the ship date? If it's in the future you would note that it's you know, still upcoming you just put that ship date the order amounts. So what dollar amount was spent and then whatever payment was received, so if this order has already been filled, you've already collected payment and it's it's shipped out. You know what the payment is there in that calm and then the total commission. Oh, so you would then run your percentages fifteen percent twenty percent. Whatever it is it's agreed upon in your contract you would just run that number in the final column and that would show for that one single order how much commission was paid on the order? And then, of course, you tell it all for all of the different orders. But this commission statement allows you to kind of keep tabs on where things stand. So if things haven't shipped out yet, it can still be listed as a pending order that's going out and you could even put something like, you know, not sent yet, but then the next month you would want it update that if it did ship out and pay its that makes it ok, but again make this easy on yourself. I like excel because it will do the calculations and you can build in some of those percentages and total of them up at the bottom but make it easy so that you can recreate excuse me and you can recreate this document every month so I mentioned some accounting software this does help you keep track of orders that air coming in from different avenues. This gets particularly important when you do start working with multiple sales drops so some things that some services and software that are my community is using, you know, quickbooks fresh book outright zero tend to be the most popular ones you know, as these orders come in, you do want to flag them in a specific way that indicates that it came from a certain rep again, this becomes a little more complex as you begin working with more reps. So you want to kind of think about starting these things now, eh? So they're in place when you do start on boarding so you can use your accounting software to help you keep good records of not only all your orders but also they categorize which cames from the reps in which ones came in directly and then also what your commissions are, um are there any questions about some of this payment process? Because otherwise we're going to jump into an interview karen do you then neither issued ten ninety nine thank you I'm glad you're so yes so this is something I really encourage you to talk to you c p a or your accountant about if you have somebody doing your books you know you want to get that team on board for this whole process but typically you have to issue a ten ninety nine to anyone he paid more than six hundred dollars too in a calendar year so for instance all the two thousand fifteen ten ninety nines were due to your vendors by I think it's february first or january thirty first of two thousand sixteen so you're rubbed would be because you have a contract you know their dictators and you be setting this up is an independent contractor relationship if you pay them more than six hundred dollars in the course of that year you would likely have to send them a ten, ninety nine there are a few exceptions they just learned about this year like if you were to pay them via paypal or if they were to send you an invoice and he paid via an online order and quickbooks invoicing system or something like that there are some exceptions but that's where I really want you to talk to your accountant because I just what I did with my accountant was I laid out all the payments and I made to all my ribs and I sent they're the list. And then my count said yes, this person needs to know this person because it depended on how they were paid. People pay with check, needed them and stuff like that. So, yes, technically, you are supposed to be setting ten, ninety nines to anyone, including your sales reps, that you pay more than six hundred dollars to so that's. Really good practice, too, do in all aspects of your business.

Class Description

Bringing sales representatives on board can be an extremely effective way to grow a wholesale business, but the process of adding reps -- from recruiting to managing to creating a commission structure -- can be overwhelming, and even a little scary.


In this class, you’ll learn how to manage both road and showroom reps so you can spend less time on selling and more time on managing your business and designing new work. You’ll learn:

  • How to start, maintain, and end working relationships with reps 
  • What reps look for when scouting lines and ways to pitch effectively 
  • How much reps cost and when they’re paid 
  • How to frame contracts, structure agreements, and keep good records 
  • Ways to communicate clearly and effectively with your reps 
This class will give you a clear view of what a wholesale business looks like with sales representatives in the picture, and the tools you need to bring reps aboard and ensure a positive working relationship.