Salesperson and Manager Pay Plan — Commission Accrual
Accruing monthly sales commissions and bonuses for vehicle salespeople, F&I managers, and service advisors.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Sales Commission Expense | Expense (+) | 185,000.00 | - |
| Commissions Payable | Liability (+) | - | 185,000.00 |
💡 Accountant's Note
Automotive retail compensation is heavily variable — salespeople earn a percentage of vehicle gross profit (mini commissions on low-gross deals, flat bonuses on high-gross deals) plus volume bonuses. F&I managers earn a percentage of F&I income. Service advisors earn a commission on service labor sold. Monthly pay plans must be accrued in the period the performance is earned, typically paid in the following month.
Practitioner & Systems Framework
💻 ERP Architecture
Pay plan calculations are performed in the DMS or payroll system based on each salesperson's deal log for the month. New vehicle salespeople typically earn 20-30% of front-end gross profit plus back-end (F&I products on their deals). F&I managers earn a percentage of total F&I PVR. The DMS generates a pay plan worksheet per employee at month-end, which is approved by the general manager before payroll processing. Vehicle sales commissions are accrued in the month the vehicle is sold and paid in the following month's payroll.
⚠️ Audit Flags
Auditors test commission accruals against the DMS deal log and pay plan worksheets. Confirm that the commission rate applied matches the current pay plan document. For F&I commissions, test the PVR calculation against the deal records. Review sales manager over-rides (additional commissions for management) for authorization. Confirm that commissions accrued in December are paid in January (timing difference) and not recognized in both periods.
📄 Required Documentation
Pay plan agreements per employee (signed), DMS deal log for the month, pay plan calculation worksheet, commission accrual journal, payroll records for the following month, general manager approval of pay plan calculations, and pay plan change documentation.
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