Sales by affiliates are an increasingly common phenomenon, especially in online sales. Typically, these sales need to be tracked much like sales by a commissioned salesperson, both to monitor the commission to be paid to the affiliate and to track the effectiveness of that marketing channel.
We recommend using 1 of 2 methods to track affiliate sales in POS:
- Define the affiliate as an employee
- Enter a Promo Code for the affiliate on receipts and sales orders
Our recommended approach is to define the affiliate as an employee and enter that employee code in the Associate field on each receipt and sales order. This is analogous to recording a sales rep on a transaction. Although POS doesn’t use the Sales Rep from QuickBooks financial, software, using an employee code in this fashion serves a similar purpose.
Both of these approaches allow you to track affiliate sales by using the built-in reporting features of POS.
Method 1 – Define the Affiliate as an Employee
To track affiliate sales by defining the affiliate as an employee, keep in mind that employee data is not shared between QuickBooks financial software and POS. Also, an employee (or Associate on the New Sales Receipt window) is not the same as a Cashier. To define a new employee, click Employees->Employee List, followed by the New Employee button. Enter an employee for each affiliate whose sales you want to track.
One important consideration in using an employee code to track affiliate sales is to accurately record the Commission %. If a single affiliate gets a different Commission % for different sales, you’ll need to enter multiple employee codes for that affiliate. When you record receipts or sales orders, you’ll need to enter only those items on that receipt or order that receive that commission rate, since you can only enter one employee code (or Associate) on a receipt or sales order. Moreover, the Commission % only applies to receipts and sales orders recorded after the Commission % is recorded. If you record a Commission % of 0.00 (which is the default), POS won’t calculate any commissions on receipts or sales orders until you change it, and then it will only apply to new transactions, not those already entered. If there’s a change in the commission for your affiliate, it’s important to update the affiliate’s employee record immediately on the effective date of the change, before new transactions are entered so that your commission reports are accurate.
The commissions that POS calculates aren’t shared with QuickBooks financial software, so you’ll have to use POS reports as an aid to record commission expense in QuickBooks financial software on your own.
During transaction entry, enter the employee code for the affiliate responsible for this transaction in the Associate field. Because the employee code is selected from a pre-defined pull-down menu, there’s less chance for data entry error. However, POS can’t require entry of an employee in the Associate field, so there’s some risk that all affiliate sales data won’t be captured.
There are a variety of built-in reports showing sales by employee found on the Reports->Employees menu, and these readily lend themselves to reporting on affiliate sales. In addition to reports, POS offers a basic pie chart showing the sales contribution of employees.
Method 2 – Enter a Promo Code for the Affiliate on Receipts and Sales Orders
To track affiliate sales by entering a Promo Code on each receipt and sales order, just enter the code for each affiliate in the Promo Code box.
Optionally, to insure affiliate sales data are properly captured, consider requiring a Promo Code on receipts and sales orders by checking the Sales preference Require a Promotional Code on receipts and customer orders on the Edit->Preferences->Company menu.
Using a Promo Code can be an effective way to capture and report on affiliate sales because of the availability of an off-the-shelf report on sales by Promo Code. To generate the report, click on the Reports->Sales->General Sales – Promo Code Summary menu.
Here’s that report:
The drawbacks to using a Promo Code to track affiliate sales are twofold. First, Promo Codes are not defined and selected from a list, so extra care needs to be taken to consistently use the same code and avoid data entry errors. Secondly, if a Promo Code isn’t required, there’s a chance it will be omitted from a receipt or sales order inadvertently. On the other hand, if a Promo Code is required and affiliate sales aren’t a large portion of transactions, there’s an extra step in transaction entry that otherwise wouldn’t be required on the majority of transactions.
We recommend defining each affiliate as an employee to capture affiliate sales. It’s more reliable, and there are better reporting tools. However, for firms that don’t want to include affiliates on employee lists, using a Promo Code is a workable alternative.