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Sales Compensation

Calculating Commissions: Sales Compensation Software vs Excel

Ishangi Agrawal
Content Specialist
Published On:
May 17, 2023

When Microsoft first released Excel in 1983, it changed the way businesses dealt with calculations and record-keeping. Suddenly, all sorts of data that had previously been difficult to handle were finally possible. 

The adoption was rapid: by 1986, an estimated 65% of Office users were using Excel. 

The ease of use and flexibility led to Excel being used for use cases it was likely not intended for - such as accounting, bookkeeping, sharing data, and workflows that involve multiple users. 

As the (mis)use of sheets rose exponentially so did the business losses it resulted in:

1. Barclays Capital lost millions on worthless contracts because an Excel reformatting error led them to believe the new contracts were worth millions more than they actually were.

2. The UK's MI5 made typos on a spreadsheet, which caused them to misidentify and bug the wrong phones.

3. The 2012 London Olympics oversold tickets and suffered embarrassment because of a  faulty keystroke that entered ‘20,000 instead of 10,000 into the spreadsheet.

In fact, in a front-page article, Forbes once called Microsoft Excel, the most dangerous software on the planet. 


We are now in the 2020s and yet one of the most common uses of Excel is calculating and paying sales commissions (that often run into millions of dollars annually). Not only this, all the major decisions of the company are based on those wrong calculations. 


Spreadsheets vs SaaS Software

1. Excel is not designed to calculate Sales Commissions 

Excel is known to be easy to use, and flexible to changes but is also prone to errors (Missing a decimal place, putting in an extra minus sign, or screwing up one of the basic cut-and-paste functions) and not fit for sharing (The company cannot share the master spreadsheet to all the sales reps and creating an individual spreadsheet for each sales rep can be very time taking process). 

Companies have been using spreadsheets for ages and although Excel is a great software program for much more than just spreadsheets when it comes to calculations like the Sales Commission, it's just not enough.

Research shows 88% of Excel spreadsheet users have made mistakes while doing the calculations. 

There's a lot that can go wrong even with the help of intuitive formulas in Excel! People might still make mistakes through manual data entry, accidental deletion, forgetting to include certain cells in formulas, forgetting to save their work, etc.

With SaaS software, you get Improved accuracy and precision. Sales commission software uses algorithms and formulas to calculate commissions accurately and precisely, reducing the chances of errors or discrepancies.


2. Finance wastes days and weeks of effort every quarter

The Finance Department doesn't have the time to do anything more productive because they're always in charge of manual calculations, especially for sales compensation. Using manual methods for tracking commission can make it challenging to keep track of everything. 

The process requires your accounting team to remember each employee's comp plan, which can lead them to dread the end of every sales cycle. Your team gets blamed for inaccuracies when an error falls through the cracks.



The research found that  finance teams waste 12 hours per month "consolidating, modifying, and correcting the spreadsheets they frequently collaborate on and reuse."

It is a waste of valuable time to juggle between multiple spreadsheet versions and entries during the payment. With the help of SaaS software, you get Increased efficiency and productivity. Sales commission software automates the entire process, allowing sales teams to focus on selling rather than spending time on tedious calculation tasks and the finance team could finish the month-end reporting and the audits that they had been postponing due to the incentives payouts.    


3. Commission errors lead to the loss of trust of Sales reps 

Excel is error-prone, and Sales Commission Software is accurate 

In the first few times, if there is an error in the commission check, the sales reps will raise disputes. However, if the disputes are not resolved promptly, or if the disputes keep happening then the Sales Reps typically resign themselves to this fate, get demotivated, and might eventually quit. 

To provide the necessary assurances to salespeople, a trustworthy and transparent sales compensation management system is required. A seller that does not trust the process will be more likely to file disputes and leave for other opportunities. Attrition is costly: from onboarding costs to lost opportunities, it all adds up. 


The average cost of replacing a sales rep is $115,000.  

Managing activities such as disputes and accounting can take valuable time away from representatives that need to be spent generating revenue and cultivating positive customer relationships. With automated solutions, transparency and trustworthy platforms are offered that can make it easy for salespeople to evaluate their work so far. As long as they have access to data and relevant information about what transactions have taken place, for instance through IC reports or dashboards, they'll be able to use this data in order to properly assess their present situation or future prospects.

When commission errors are not fixed quickly, experienced reps start looking for alternate jobs and companies suffer from a loss of trust. 

Do you think you can afford to lose all those sales reps from your company?


4. The manual calculation is a complex process and takes a lot of time 

Excel is manual, complex, and time-consuming while Sales Commission Software is timely, accurate, and transparent.

Manual commission calculations can be frustrating, difficult, and time-consuming. Your reps end up spending a ton of their time double-checking payout amounts and trying to figure out what rate would be the most lucrative for them. What's more, since humans have a limit on the number of calculations they can do in a given timeframe, calculated commissions are not scalable. 

With software, the payouts will be timely, accurate, and transparent. You can automatically track and record your commission and check the progress in real-time. Rather than waiting for the finance department to insert every detail manually and figure out the incentives. You can focus on meaningful things like sales.

60% of sales reps estimate that they could save 6 hrs or more each week with automation. 

Imagine if you had sales commission software. you'll have less work, improved efficiency, and higher productivity. It may be evident by now that using excel is not such a good idea for sales commission calculation. With Excel over-payments and recoveries are commonplace. Wouldn’t prevention (automated and accurate payouts) be better than cure (over-payments and recoveries)? 


5. Spreadsheets are opaque as they are not shareable, and not meant for distribution to a large audience

Sales compensation software is Transparent

Imagine this scenario: It’s the end of the quarter sales and the finance department created a master spreadsheet of commissions for all the sales reps. After compiling all the data he realizes that the master sheet cannot be shared with everyone as it is a matter of confidentiality for each sales rep. Making an individual spreadsheet for everyone will take a lot of time.  There are chances that the sales rep might interfere in the sheet and make the changes without informing. That sounds like a lot of work right!!

More and more companies are switching away from Excel because it's not as useful for management and financial purposes as it once was. There are much better alternatives than Excel. It is still best used for ad hoc analysis, storing small data sets, generating simple models, and formatting. 

For example: when management wants to see charts or graphs they're quick and easy to generate with Excel. But day-to-day financial management just isn't what Excel is optimal for. Although many successful small businesses use Excel for all of their bookkeeping needs. According to them, It’s easy to find, easy to understand, and it's totally free!

After so many dangerous disasters due to sloppy spreadsheet management, the company decided that Excel would no longer be a part of their equation. Sales commission requires perfect and precise data, which excel has proven unable to provide.

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