Part 4 · Using software and AI · Chapter 4.7
Payroll and incentives in software
Draft: the wording may change.
The idea
Salary is calculated from attendance and a salary structure. Incentive is calculated from the bills, credit notes and receipts already in the software. Nobody should have to make a separate incentive sheet: if every bill carries the salesman's tag, achievement is a report.
Salary: set it up once
For each person, the software holds a salary structure: basic, allowances, and the deductions that apply — PF, ESI, professional tax, TDS on salary. Each month it needs only attendance (days present, leave, absence) and any advance to recover.
The rates, wage ceilings and due dates for PF, ESI and professional tax change from time to time. Set them from the official sources — EPFO, ESIC, your state's professional tax rules and incometax.gov.in — and check the current figure each year. The software applies the rule; it does not know when the law changed unless someone updates it.
At the counter: Kumar's incentive
Kumar's October target for a biscuit company is ₹5,00,000 of sales, with this slab:
| Achievement | Incentive |
|---|---|
| Below 80% | Nil |
| 80% to 99% | 1% of net sales |
| 100% and above | 1.5% of net sales |
The software reads October's documents tagged to Kumar, for that brand only:
| Amount | |
|---|---|
| Bills | ₹4,95,000 |
| Less credit notes (returns, damages) | ₹22,000 |
| Less cancelled bills | ₹13,000 |
| Net sales | ₹4,60,000 |
| Achievement | 92% |
| Incentive at 1% | ₹4,600 |
On a hand-made sheet, someone would add the bills, see ₹4,95,000 — 99% — and argue for the next slab. The software counts returns and cancellations because they are documents too.
Many stockists also tie part of the incentive to collection: only bills paid within the credit days count. Because receipts are matched to bills (chapter 4.4), the software can apply that rule without anyone checking bill by bill.
Paying it
The incentive becomes a payable to Kumar. If he took a ₹3,000 salary advance, the software shows both, and the payslip recovers the advance. Kumar's party balance is the net (chapter 1.6).
Common mistake
Bills without a salesman tag, or with the wrong one. A biller in a hurry leaves the default salesman on every phone order. At month-end, one salesman has 140% and another 40%, and the office spends two days re-sorting bills. Make the salesman a required field on the bill and fill it from the beat or the order, not by hand.
Where you'll use this
This chapter automates rent and harvest (chapter 2.7): salary pays for time, incentive shares the result, and the result comes from real documents. The salesman tag is a cost centre — three questions: what kind, with whom, for which part (chapter 1.6). The incentive schemes themselves are explained in chapter 3.16.
Check yourself
- Kumar's bills total ₹4,95,000, with ₹22,000 of credit notes and ₹13,000 cancelled. What are his net sales?
- Where should PF and ESI rates in the software come from?
- Why must every bill carry a salesman tag?
Answers
- ₹4,60,000.
- From the official sources (EPFO, ESIC), checked each year — not from memory or last year's setup.
- Achievement and incentive are calculated from those tags; a missing or wrong tag pays the wrong person.