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How can I apply a sales commission credit to a dealer (my customer) of my products?

Hi, My business manufactures and distributes products directly to consumers from our own website, but also sells wholesale through a network of dealers that re-sell our products for us. From time to time, customer's will learn about our products from one of our dealers, and then reach out to us directly to make their purchase. This is often with the intent of having questions answered by us, or sometimes to try to negotiate a discount if they bypass the dealer and come directly to us.

Because our dealer network is so important to our sales revenue, we always try to encourage customers to buy directly from their dealer whenever possible, but sometimes in order to ensure the sale doesn't fall through, we end up closing the sale and collecting payment directly. In those cases, if I know that they were referred to us due to the work or recommendation of one of our dealers, I still want to pay my dealer their sales commission to reward them for encouraging customer's to buy our products. Typically the dealer would just want a credit to be applied to their account to use against future purchases from us, but I am not sure of how to properly record the transaction in Quickbooks.

The transaction would look something like this: Customer purchases Widget directly from Manufacturer (my business) for $1,000. Normally the Dealer would have purchased Widget from Manufacturer (my business) at a 35% discount, and paid $750 to me, and collected the $1,000 payment directly from Customer, leaving Dealer with a $350 profit upon re-sale. But in this case, Manufacturer (my business) collected the full $1,000 from Customer and now wants to credit Dealer with a $350 sales commission/credit for the transaction.

Our system automatically generates an invoice and records payment received against it from the end user customer when they purchase from us, now how do I properly apply the sales commission/credit back to the dealer's customer account?

Thanks in advance!

Best answer a month ago

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Established Community Backer ***

Re: How can I apply a sales commission credit to a dealer (my customer) of my products?

@RoboSanLucas 

 

You sold a product, so you do not want it restocked when you create this credit memo, and that is exactly what happens if you use that product on the credit memo suggested by intuit.

 

Create a service item, name it good faith commission or something, select the sales income discount account on the item screen. Use that item on the credit memo for the dealer (customer), enter the amount

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QuickBooks Team

Re: How can I apply a sales commission credit to a dealer (my customer) of my products?

I can help you apply a customer's credit, RoboSanLucas.

 

Here's how to do it:

  1. Click Create (+) icon.
  2. Click Credit Memo under Customers.
  3. Choose the customer's name in the Customer drop-down.
  4. Enter the credit amount in the Amount column.
  5. Click Save and close.

Once you're ready to apply the credit memo, you can follow these steps:

  1. Click Create (+) icon.
  2. Click Receive Payment under Customers.
  3. Choose the customer's name in the Customer drop-down.
  4. Select the invoice to apply the credit. Then, mark the Credit Memo box under Credits.
  5. Click Save and close.

Please check out this article for more information: Enter and apply a credit memo or delayed credit.

 

If you have any other concerns about recording credits, please don't hesitate to reach out to me.

 

Established Community Backer ***

Re: How can I apply a sales commission credit to a dealer (my customer) of my products?

@RoboSanLucas 

 

You sold a product, so you do not want it restocked when you create this credit memo, and that is exactly what happens if you use that product on the credit memo suggested by intuit.

 

Create a service item, name it good faith commission or something, select the sales income discount account on the item screen. Use that item on the credit memo for the dealer (customer), enter the amount

Community Contributor *

Re: How can I apply a sales commission credit to a dealer (my customer) of my products?

@Rustler

 

The transactional "return" of good product that had actually been correctly delivered to the customer was precisely what I wanted to avoid with this credit memo. Your advice worked well and helped me solve the problem.

 

Thank you!

Established Community Backer ***

Re: How can I apply a sales commission credit to a dealer (my customer) of my products?

You're Welcome