Incentive and Commission Management
The commission is a form of payment to the agent by the company for the services rendered by him. An incentive refers to the additional remuneration paid by the company to an employee for the services provided by him over a period of time. SAP is the biggest ERP solution provider in the world. SAP’s FS-ICM (INCENTIVE AND COMMISSION MANAGEMENT) module is built to manage the incentive and commission management system. In the following blog, we will see what are commission and incentives, why we should use SAP FS-ICM, a key feature of FS-ICM, some Insurance domain-specific features of FS-ICM, and the conclusion.
Rough Picture of Incentive and Commission
An agent is a very important entity for a company. He brings business to the company. The company can be dealing in any industry like the food and beverage industry, banking, insurance, automotive, stationery, real estate, manufacturing, paper industry, etc. Name the industry and they have multiple agents working for them. All these agents are paid commissions and incentives for the business they bring for the company.
Why SAP FS-ICM?
All the agent’s commissions and incentives are to be maintained in hard copy or as a soft copy using some file management system or some business automation solution. The process of incentive and commission payment is not that simple and may not be handled by many business solutions. SAP has a dedicated module, FS-ICM, for the incentive and commission management needs of the business. It is flexible and can provide the solution to any complex business scenario in the incentive and commission management.
SAP is the leading ERP vendor in the market. FS-ICM is the solution provided by SAP to cater to all the business requirements related to incentives and commission. FS-ICM can be used with both SAP and non-SAP applications as the SAP ERP is connected to SAP NetWeaver which is compatible to run in all the platforms. FS-ICM can give you automation, faster computation, flexibility which can reduce your cost of running the business. FS-ICM is integrated with FS-CD (Collection and Disbursement, accounting module of SAP), so there is no requirement of the additional accounting system.
Key features of FS-ICM
Multiple Business Objects can be created according to the business requirement and can be customized later according to the need. FS-ICM provides a very simple interface (NetWeaver portal) for the users to maintain the standard commission contracts. From standard commission contracts, individual commission contracts can be created. All commission contracts include multiple agreements that are further used to calculate the remuneration. In commission contracts, multiple agreements can be added while creation or can be updated later accordingly. The agreements can be participation, activity, valuation, remuneration, remuneration clearing, remuneration scheduling, flat rate, guarantee, target, retention, etc. Commission case is created from the contract whenever sales happen. The data can come from a high-level system or maintained manually. In commission case workspace one can calculate and check the remunerations, bonuses, Clawback amounts (if entered in the agreement), etc. The commission case is processed, cleared, and posted to an account in FS-CD.
There can be multiple partners involved in a sale. The multi-level participation data can also be maintained in the FS-ICM system. The participation can be direct or indirect participation. The participation can be determined using the organizational plan. The organizational plan can be maintained using FS- ICM customizing. It is also possible to connect multiple individual commission contracts via contact to contract relationships. FS-ICM system is able to collect all the participation details automatically and calculate the commissions and remuneration according to the agreement between the company and the agent.
The valuation process is the first step in calculating the remuneration after the commission case has been accepted by the system. The incentive and commission valuation can be triggered by a higher-level system or from the same level manually. The high-level system contains business objects, participants, etc.
The tasks are fully automated. Once the commission contract is created with all the agreements and a commission case is triggered, the system accepts the case, calculates the valuation amount (the amount on which the commission is to be paid) according to the agreement defined in the commission case. The remuneration amount is then calculated by the tool assigned by you. The remuneration tool, standard or customized, can be specified in the ICM customization. This process can also be performed by BRF Plus (Business Rules Framework) of SAP which is a calculation rules framework. If there are multiple participants than remuneration distribution calculates the remuneration for all the participants. Finally, the remuneration is cleared according to the clearing rules maintained in the agreement. If scheduling rules are activated in the agreement, the remuneration is scheduled. It is very little or no user interaction required.
ICM covers profit sharing, incentive payment, and target achievements also. Profit-sharing, bonuses, incentives can be achieved by the Additional Commission Case agreement and can be run periodically. ICM has various predefined reports than can give the overview of commission cases, list of commission case participants, remuneration for commission documents, etc. If any other complexity is to be simplified, it can be achieved using multiple BADIs available for customizing.
Features Specific to Insurance
FS-ICM is able to handle scenarios specific to the Insurance domain. FS-ICM can manage the liability process in the commission cases for the insurance policy. Clawback amounts can be calculated in case of cancellation or risk reduction of the policy. The liability process depends on the liability rules managed in the commission contract. The actual commission case, where the commission is paid only after the payment has been received, can also be maintained. Payment is released by FS-CD after it gets a trigger from the ICM system.
All sums up to
FS-ICM is a complete ERP solution for the commission and incentive management requirement of the business. It is simple to use, automate the systems, cross clients, flexible, customizable, and can produce various reports for business usage. You can maintain business partners, standard and individual commission contracts, commission cases, organizational structure, and multiple agreements. FS-ICM is also capable of managing the special cases of the Insurance domain. As we have seen, it would not be wrong to finally say that FS-ICM can support various scenarios related to the incentive and commission cases.
