Commission Based Salaries

What is Commission Based Salary

Commission based salary is alternative of fixed salary. in commission based salary the individual is offered a certain percentage of a target achieved. This target is normally a revenue. There are two kind of commission based salary one is total commission based salary and other is minimum salary with a percentage of target achieved.

Types of Commission Based Salary

Total Commission based Salary

Under this structure the individual is offered no fix salary and he get a certain percentage of revenue earned by him. for example an employee may be hired at 1% of sales target achieved and if he makes a sales of 100,000 then he is entitle to receive an amount of 1000.

Fixed Salary Plus Commission

Under this structure he is guaranteed with a minimum wage and plus a commission of a target achieved. normally the commission start after a certain level of basic performance. for example the individual is given 1000 for sales upto 100,000 and and sales target achieved above 100,000 will give him a chance to earn 1% of sales.

Reasons for Over Trading

Overtrading
Over trading is a situation where there is Sharpe increase in sales

Reasons for over trading
The overtrading may represent the real growth in business which is accordingly reflected in the sales increase in revenue.The overtrading may result due to flexible or more generous credit policy or allowing higher discount to the customer.

Indications of Over trading

The following are common indication of over trading

• Sharpe increase in receivables
• Sharp increase in stock levels
• Share increase in Sales/Revenue

Risks of Overtrading

• Enough funds not available to support operations
• Over utilization of fixed assets
• Bad debts
• Over reliance on short tem financing
• Sufficient funds stuck up in high level of stock

Limitations of E-Commerce

Limitations of E-Commerce

High cost are involved:- The E-commerce is not an economical solution. This involve high cost for development of site which can respond the customer online.

Complex Process :- There are complex process are involved to process the transaction. each department must be well connected with the server and website to complete the transaction.

Security Issues:- one of the greater concern is the security on online business . if someone put his credit card number on your site and the record is leaked to unauthorized person.

Customer privacy issues :- The customer information protection is also great concern in the E-Commerce.

Taxation and Custom duties :- The different taxation system are applicable around the global. It is very difficult to tell the customer the exact price of the product when it will be reached at customer door step.

Product offered are illegal :- Some product are legal in one country but illegal in other country. for example alcohol product

Important Factor of E-Commerce Website

Important Factor of E-Commerce Website

The following are important factor of website.

1. Well integrated with support function and system
2. Quick response and processing of transactions
3. The transaction completion message or report
4. User friendly
5. Interaction with customer options
6. Stage of completion of transaction under process
7. Segment of frequqtly asked question for most common question asked
8. Details of products and services offered
9. Information about the delivery charges and timing
10. Automatic invoice generation options
11. well integrated security system
12. A professional team for maintenance and updation
13. uninterrupted service

Characteristic of Service industry

   Characteristic of Service industry

1. The first important characteristic is that a service is untouchable.

2. The other important aspect of service and service provider has a very close relationship. The service provider is more important that service itself.

3. The service is a continuance process and long term relationship. for example you are using an internet connection, only satisfied customer can be retained.

4. There is no title transfer in the services. you sell your skill or a virtual product for a agreed period of time .

5. The services and time has important relationship. The service diminish with the passage of time. you can not claim that i was sleeping in the cinema house so return me the ticket price back . i did not watch the movies.

Types of Stake holder

Types of Stake holder

There are following important stakeholder in the business and each stakeholder has different interest or stakes in the organization . one may be interested in high profit and other is interested liquidity information. i believe that all these interest may be conflicting with each other, but by satisfying overall objective of organization i.e maximization of profit will play a vital role in satisfying expectation of different stakeholders.

Share holder are interested in high profit because high profit will increase their wealth. they invest in the business with the aim of increase in wealth. they choose this opportunity for more rapid grow in their wealth.

Directors are interested in remunerations and more and more powers. They will always pursue the policies which will result to increase their remuneration and powers in the organization.
Employee are more concerned about increase in remuneration , working condition, job security and social welfare.

Supplier and Bankers are more interested in liquidity ,so that their payment may be realized in time also interested in going concern of the organization as long term business opportunity.


Society are more interested in environmental issues created by the existence of organization. The society would like to have cleaner environment. 

Types of Services by Banks

Types of Services by Banks

1. The bank offer organization to withdraw fund more than their deposits, technical this is called overdraft facility. Normally overdraft facility is not generally offered facility . it limits and condition vary client to client.
2. International Trade :- Facilitate international trade by opening letter of credit.
3. Personal Loans :- The bank offer different personal loans to public for daily consumption. These loan is usually unsecured.
4. House Loan :- The bank offer loan for house construction and renovation usually these loan are secured.
5. Finance Leasing :- The bank also offer finance lease facility i.e to provide asset against rentals , these rental may vary from three to five years.
6. Discounting the Bills :- The bank also discount bill for businessmen.
7.  The Bank Guarantees ;- The bank offer bank guarantee services to the client . This means bank guarantee second party to pay on behalf of first party if first party default.
   
   
   

Advantages of Debt Factoring
The debt factoring is technique where collection for credit sales is the responsibility of independent third party against an agreed fees. The credit sales and collection record is maintained by  the that party. The party is responsible to collect debt and pay it back to the company.
The factoring company immediately pay some portion to the company like seventy to eighty percent and the remaining portion is paid when the debt is fully recovered and the fee is is deducted from the remaining portion. The following are advantages of debt factoring.
Cash are available :- The cash available as soon as the sales invoices are issued to debt factoring company.
Cost of Sales ledger are saved :- The sales ledger are maintained by the debt factoring company. therefore the cost is reduced .
Cost of collection is saved :- The other important cost is saved of the cost of chasing the customer. some time in case of small amount of credit the cost of collection exceed the actually amount collected from some customer.
Disadvantages of Factoring

1. Factoring company charges high fee sometime more than 5% of invoice values
2. Aggressively chase customer may loss customer
3. Customer relationship and goodwill at stake

Advantages of commission based Salary

Advantages of Commission Based Salary
Normally under this structure a very little fixed salary is offered with a commission on sales made by the sales representative. The totally new entity sometime offer only commission and no fixed salary is attached. The main advantages of commission based salary are as under.

1. High self motivated sales staff
2. High earning opportunity for the sales staff
3. High sales volume for the organization
4. High sales volume improve entity cash flows
5. High sales volume reduces the unit fixed cost