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Accounting Best Practices, Fifth Edition by Steven M. Bragg Englewood, Colorado

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18–5. Commission Policies for Best Practices (Chapter 8)

  • The commission calculation system shall not be altered without approval by the chief executive officer. This policy requires high-level approval to make plan alterations, so there is less chance that the sales manager will gradually increase the commission plan’s complexity over time.

    Impacted best practices:

    • Simplify the commission structure

  • Commissions shall be paid based only on cash received. This policy supports collection efforts by giving the sales staff a considerable interest in receiving payment for invoices. This approach avoids the use of commission payments based solely on invoiced amounts.

    Impacted best practices:

    • Only pay commissions from cash received

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