Sales commission calculation is a topic that seems simple at first glance. However, anyone who has dealt with it knows its pitfalls. Even the smallest mistakes can lead to chaos, financial losses, and, above all, frustration for both employees and employers.
In this article, we’ll go through the five most common problems related to commissions, breaking them down into their prime factors. You’ll get tips on solving them, and we’ll also highlight a tool you can use to streamline the process completely.
5 biggest challenges with calculating commissions
1. Errors in input data
A sale is a dynamic process. Data changes from day to day and sometimes even from hour to hour. Unfortunately, this means that sometimes, commission calculations may be based on outdated data, which leads to many problems. Example: A salesperson made a large transaction on the last day of the month, but the data was not updated, which caused his total commission for the period to be underestimated.
The information may also be incorrect or incomplete because of human error. Typos, incorrectly entered values or mistakes when copying data from one sheet to another (e.g., mixing up columns, duplicating data) are the most common causes of problems.
Combining data from different sales systems is also problematic. Exported data often doesn’t have a consistent data standard – data from your CRM, ERP and other tools may have different formats (for example, one system uses net currency and the other gross, or two tools use a different date recording system, e.g., DD-MM-YYYY and YYYY-MM-DD).
The basic solution to this problem is to implement systems for automatic data import from spreadsheets – or integrations with your CRM or ERP systems.
2. Outdated formulas and rules

Companies often use spreadsheets that were created many years ago, sometimes by people don’t work in the organization anymore. As the company grows, the rules for calculating commissions change, and old formulas no longer correspond to the current reality. However, it’s hard to improve them because nobody knows how these complicated formulas and functions work.
Regular audits, transparency in rules and commission programs can eliminate this problem for good.
3. Problems with returns and cancellations
Returns and cancellations are the biggest challenge in commission calculations. A sales agent receives a bonus for a sale, but when a customer returns a product, a problem arises: should the commission be deducted? How to settle the clawback (i.e., recover the paid commission for returned products)?
The problem is that this process requires considering many variables – from the moment of calculating the commission, through monitoring returns, to making adjustments in financial systems. Any mistake in this area can lead to conflicts with sales agents, financial misunderstandings and losses for the company.
The main challenge is the lack of a flexible system that would be able to automatically track all transactions and adjust commissions in the event of returns or cancellations. In many companies, this process is done manually or using scattered tools, which leads to delays, frustration and errors. Additionally, there is a lack of transparency – salespeople often don’t know on what basis their commission was deducted, which weakens their trust in the company.
The best answer to this dilemma is implementing a system that makes rules for these scenarios transparent and lets you streamline and automate the calculations.
4. Lack of uniform standards
Settling commissions in organizations with extensive sales structures is a topic that can stir up quite a few emotions. Especially when we are talking about companies with a tree structure, where each level has its own specific tasks and goals. Although it sounds like a typical corporate problem, it can affect the entire organization in various ways – from employee motivation to financial results.
The growth of the organization and different models of settling commissions are problems that affect many companies. At first, everyone is motivated – the rules and goals are clear. However, as the structure grows, each manager starts to make minor modifications to the commission system, adapting it to their team and region specifics. On paper, this may even seem like a good idea, but in practice, it creates chaos. People start to compare their salaries, questions arise about equal treatment, and, worst of all, motivation drops.
So what can be done? First of all, it’s key to understand that the lack of uniform commission standards is not only an administrative problem but – in fact, above all – a human one. We all want to be treated fairly. That’s why it’s crucial to develop a transparent system that is both flexible and fair. However, introducing uniform rules doesn’t mean everyone must earn the same. Different regions and teams may have their own specifics, but these rules should be clearly defined and communicated. What’s more, it’s a good idea to involve the employees in the process of creating them.
5. Ambiguity in reports and lack of transparency
Imagine receiving a commission, but you do not know how it was calculated. Is it really the right amount? Was there a mistake? Did they include all your sales data?
The lack of transparency in the commission settlement process is one of the main reasons for the lack of trust between employees and the company. When employees do not have access to information about accrued commissions, they can lose motivation, feel insecure or even cheated.
MonkeyJar – a great tool for streamlining and automating sales commissions
It wouldn’t be fair (or helpful) to just list all these problems and challenges and leave you without a solution. Thankfully, there’s something we can offer you that will help you deal with all these woes – and more. MonkeyJar is our sales commission management system, which is offered as a SaaS product. It’s a result of our many years of experience with creating sales commission systems for enterprises, including market leaders such as BNP Paribas.
MonkeyJar offers a graphic web interface and allows you to implement data from various sources. It then verifies the information and uses it to automate sales commission calculations. It’s a secure, fast, scalable and very easy-to-use system designed for continuous control of the commission process – it ensures great data quality, offers full auditability and advanced reporting options. Here are some of the features it offers:
- Cloud – Access MonkeyJar as a web application (in the case of a dealer portal, also as a mobile app). No need to install anything.
- Data import – Import data from Microsoft Excel or Google Sheets automatically with just a few clicks to prevent manual errors.
- Settlement model – Automate commission settlement based on fully configurable models, taking into account various sales parameters and different billing periods (daily, weekly, monthly, quarterly, half-yearly and yearly) to avoid problems stemming from out-of-date rules and lack of transparency.
- Clawbacks – Calculate and manage clawbacks automatically in the event of changes or withdrawals from sales. It’s a great way to save time, and especially avoid problems and arguments caused by non-transparent and complicated processes related to returns and cancellations.
- Sales structure – Organize your sales team structure using a dedicated MonkeyJar module with a graphical interface.
- Dealer portal – Offer your sales reps a separate platform (available also on mobile devices) that allows them to access key information (sales history, paid commissions and bonuses, etc.) as well as submit complaints.
- Reports – Control the data on sellers, sales and commissions using an analytical reporting module.
- Roles and authorizations – Define user roles (administrator, billing specialist, billing acceptance specialist, etc.) and assign them specific permissions that regulate data and system access.
- Security – Log in securely using Microsoft or Google accounts (so-called single sign-on).
- Integrations – Use an API (REST) to send data from the system to other, external platforms used in your company.
Summary: Streamline your commission calculations right now
Sales commission calculation and management can be a challenge on many levels – from damaging data errors to unclear, outdated and everchanging rules and a general lack of transparency. However, there are things you can do to improve the situation. One of the best steps you can take is to invest in tools that’ll help you streamline commission-related rules and processes in your company.
MonkeyJar provides everything you need to manage your sales structure, define commission rules, and calculate commissions for your entire team. It’s a powerful solution that’ll save you many headaches, arguments, and costly errors – and it’s also incredibly easy to set up and use (of course, we help with the implementation and configuration). Interested? Contact us right now to schedule a free demo and see our product in action!