Why You Shouldn’t Use Excel For Sales Commission Calculation

why not to use excel for commission processingExcel is known to be a powerful and useful tool. With it, businesses can collect, track, and manipulate data. But it was never designed to meet all of your business needs, and it certainly isn’t the best choice for tracking or processing sales commissions for your sales team.

Excel is a powerful mathematical tool. But, processing commissions isn’t just math; it’s a process in which you want to ensure accuracy, identify missed commission payments, communicate accuracy to your agents, and analyze overall sales performance.

Let’s now discuss the downfalls of processing commissions using Excel.

Are You Still Manually Calculating Commissions? Not After Reading This, You Won’t!

Downfalls of Processing Commissions in Excel:

  • Error-Prone
  • Time-Consuming
  • Ineffective Audit Trail
  • Restricted Analyzation

1. Error-Prone

First, and most notably, Excel spreadsheets are error-prone. Research shows that 88 percent of Excel spreadsheets contain errors. While Excel has intuitive formulas you can use to calculate commissions, that doesn’t stop humans from making errors through manual data entry, accidental deletion, forgetting to save, and many more.

Errors can be greatly reduced when a company moves from Excel spreadsheets to a commission management software by 90%.

errors in excel

With commissions management software, the data needed to run the calculations are set up once, and you generally don’t have to update them again and again. You can easily make edits to percentages or amounts paid. The number of errors that occur with Excel will be decreased dramatically with a sales management software.

Excel Spreadsheets are all manual. You have to set up all those calculations, Excels can do only the math for you. Excel gets messed up so easily with just one wrong click or just when a single cell gets deleted accidentally.

2. Time-Consuming

It takes considerably more time to process commissions in an Excel spreadsheet than it does in a commission management software. One sales manager had already admitted that he spends 90% of his time creating and/or editing the spreadsheet with the new numbers, and, thus, has no time to actually analyze the data.

Check out the confessions made by the sales compensation analyst here 

In much worse conditions errors, become acceptable. Employees mostly start realizing there are errors and start having disputes with the one paying them.

Companies who switch to commissions management software save hours of time going through a manual process to an automated one. When sales reps are not doing shadow accounting, they can spend more time doing sales related tasks that can be more beneficial to the company.

3. Ineffective Audit Trail

When you want to quickly pull up a past payment that you received, there is actually no great way to do it in Excel. But with a sales commission software, it is very easy to check monthly payments, each sales rep’s payments, commission percentage, etc. With this sales management software, you can easily check the payments for each sales rep and you can even send their commission statements separately in the form of a PDF.

4. Restricted Analysis

The main reason for processing commissions is to pay people their commission correctly, but what about analyzing the information?

Performance analysis is very important in any business. After all, you have to at least know where you’re heading right? Analyzing with Excel is very difficult and time-consuming.

Analyzing with commission management software is very easy. You can even get real-time graphs for you to monitor. With analyzed data, you can find top performing sales reps as well as get to know those whom you need to focus on and give more guidance to.

5. Excel = Complex Formulas

It is true that Excel is a useful tool, but it is not meant for managing commissions. Certain formulas are too difficult to execute, and it’s hard to track complex sales compensation plans. Moreover, with increasing users, it becomes more difficult to manage. Sales commission management software overcomes these problems easily.

I’m Currently Using Excel—What should I do?

If you’re looking for a more efficient and simple way to manage your commissions, a sales commission software is what you’re looking for. Though moving to a new system seems daunting, you’ll thank yourself a million times over when your life is made easier when it comes to processing, tracking, and analyzing commissions.

Want to see what commissions processing looks like inside a sales commission management software? Get a free demo here with Easy-Commission – Simple sales commission software. Feel like your compensation plan is pretty complex? We also have QCommission.

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