Avoid overpayment with incentive compensation management software

Companies looking to save money where they can often make changes to the way they do business. Whether they are switching suppliers or implementing new tools and technology to bolster efficiency, the focus is now on reducing costs throughout every department.

Sales is no different than any other area in this regard. There is a lot of room for things to go wrong in a sales department, particularly when it comes to compensation and payment. For example, research from Gartner suggests bonuses and commissions are overpaid by an average of 8 percent due to errors and complications in the payment process.

Many of these errors stem from the fact that many sales departments use old or outdated tools to calculate payments and commissions. Three-quarters of businesses (75 percent) rely on basic spreadsheet programs that aren't suited to the complex nature of sales compensation, a separate report from Varicent added.

In terms of effectiveness of spreadsheets, the proof is in the pudding: 90 percent of businesses that relied on spreadsheets and other basic tools for sales compensation and commission payouts were dissatisfied with these solutions.

For businesses looking to reduce costs, overcompensation can be a huge issue. This can lead to hundreds of thousands or even millions of dollars being paid to employees for sales they didn't make. Often, these errors come from human mistakes as well – they did the wrong math, recorded incorrect data, miscalculated a formula on their spreadsheets, etc.

Sales performance management software is the answer to this problem, as it automates several payment processes and takes care of many calculations as well. This means there is less room for sales managers to make mistakes, which is easy to do when they need to be timely with commission payments and have limited time to spend on these tasks.

But doesn't sales performance management software cost money? Yes, there are initial costs, but in the long run, the software will help to reduce expenses, both by ensuring payments are accurate and reducing the time spent on tasks related to compensation management.