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Process regulations

Channel Commission
(Accounting & Confidential. For internal usage only.
Payment)Process

ADOPTED

Order # ______________ of _________________

Channel Commission (Accounting & Payment )Process

PR-SSTL/CAG-004

Process owner:
Corporate Accounts Group
(CAG)

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Process regulations
Channel Commission
(Accounting & Confidential. For internal usage only.
Payment)Process

Document Control

Process No: PR-SSTL-CAG-004

Process Name: Commission Process

Sanjay Banka
VP Accounting & Taxation

Recommended By

Sergey Savchenko

CFO

Approved By

Revision History

Date Revision By Page No. / Brief Description Approved By


Clause No. (Name & Sign)

Note:
For document control, Please write your name on the front cover on the hard copy / print out.

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Process regulations
Channel Commission
(Accounting & Confidential. For internal usage only.
Payment)Process

Table of Contents

S. No Process Contents Page No


1.0 SCOPE 4
2.0 OBJECTIVE 4
3.0 BUSINESS RULES 4
4.0 COMMISSION TYPES 4-6
5.0 REXPONSIBILITY MATRIX 6
6.0 PROCESS FLOW AND STEPS 6-11
7.0 TAXATION AND ACCOUNTING 12
8.0 INTERNAL CONTROLS 13
9.0 MIS & REPORTING 13
10.0 KEY DEPENDENCIES 13
Exhibit 1:-Process KPIs 14-15
11.0 REFERENCE
Annex 1

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Process regulations
Channel Commission
(Accounting & Confidential. For internal usage only.
Payment)Process

1. SCOPE:

This document lays down the end to end process for Payment of commission to Distributors, FOS and
Retailers.

2. OBJECTIVE:

The Company would be appointing Channel Partner in Circle to provide the market for various services
provided by the Company. The Company would appoint Distributor, who in turn would appoint Retailer
and Feet on Street ( FOS)

This document intends to establish well defined, effective and efficient control over Commission
Payment to Channel partners.

3. BUSINESS RULES:

These are only operational guidelines/process and do not override any existing or future Policy or
Finance Authorisation Matrix (AM). In case of any difference, the approved policy will prevail.
Agreement between Distributor and the Company should be on Principal to Principal ( P2P) basis.
Agreement should contain suitable clauses for payment to be made to retailers directly on behalf
of Distributor.
Invoice for all payments would have to be raised by Distributor. In Since in the Books of SSTS, the
transactions are with Distributor, hence accounting would be in the name of Distributor and TDS
certificate would be issued in Distributor name.
No Cash / Cheque payment to be made to distributors / retailers, all settlement for commission
will be done through E Recharge.
TDS certificates to be issued to Distributor on yearly basis.
Commission & Incentive would be paid / credited to Channel Partner as per approved Sales
Policies.
Proper system of Monthly Confirmation from Channel Partners shall be set up and administered
by Circle sales to avoid any fictitious claim.
No claim of previous quarter shall be entertained by SSTS, irrespective of fact whether the CP
has provided Confirmation or not.
Activation Commission would be payable on Daily basis in batch mode. On stabilization of system,
these would be processed on Real time basis.

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Process regulations
Channel Commission
(Accounting & Confidential. For internal usage only.
Payment)Process

The Commisson Payment by E Charge and/or FOS will be centralised to reduce manpower cost
and enhance control.

4. TYPE OF COMMISSIONS:

Following are the type of pay outs to distributors / retailers and the input required for payment of
Commission

S.No Type of Commission Payable Input Required Mode of Frequency


to Payment of
settlement
1 Monthly Activation Commission Distributor Target From E Recharge Monthly
(Activation commission will be Sales
paid to Distributors on a calendar Commission Slabs
month basis based on target Activation Report
achievement) from IT
CAF Report
Invoices
2 Quarterly Target Activation Distributor Target From E Recharge Quarterly
Commission (Quarterly Activation Sales
Target commission will be paid to Commission Slabs
Distributors on a quarterly basis Activation Report
based on target) from IT
CAF Report
Invoices
3 Distributor Handset Bonus (This is Distributor Primary Sales E Recharge Monthly
payable to distributors on Data from
purchasing a target number of National
handsets in the previous month Distributor
from ND) Commission Slabs
Invoices
4 Monthly Activation Incentive Feet on Target From Cheque Monthly
(Activation commission will be Street Sales
paid to FOS on a calendar month (FOS) Commission Slabs
basis based on target Activation

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Process regulations
Channel Commission
(Accounting & Confidential. For internal usage only.
Payment)Process

achievement) Report from IT


CAF Report
Invoices

5 Quarterly Target Activation Feet on Target From Cheque Quarterly


Incentive (Activation commission Street Sales
will be paid to FOS on a quarterly (FOS) Commission Slabs
basis based on target Activation
achievement) Report from IT
CAF Report
Invoices

6 Activation Commission Retailer Commission E Recharge Daily


(Commission payable to retailer Slabs,
for activation of new customers) Activation
Report from IT,
Customer
Activation Form
(CAF) Status
Report,
Invoices
7 Monthly Activation Incentive Retailer Target From E Recharge Monthly
(Monthly Activation Incentive Sales
commission will be paid to Commission Slabs
Retailers on a calendar month Activation Report
basis based on target from IT
Achievement) CAF Report
Invoices
8 Revenue Share (This is a Retailer Recharge report E Recharge Monthly
commission paid to Retailers which from IT
represents a percentage of the Invoices
top-ups made by customers that
they have activated regardless of
where the subsequent top ups
have been purchased)

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Process regulations
Channel Commission
(Accounting & Confidential. For internal usage only.
Payment)Process

9 Key Money (This is an absolute Retailer Commission Slabs E Recharge Monthly


amount of money paid to a limited Invoices
amount of Retailers on a monthly
basis. This is usually associated
with branding or rental support)

5. RESPONSIBILITY MATRIX:

Following is the understanding of Corporate Accounts Group ( CAG) on process owners for various steps.
This process document specifies the process listed under step no 8,9, 10

S.No Activity Responsibility Remarks


1 Execution of Agreement with Distributors Circle Legal
2 Creation of Channel Partner Account in Telecompass and Circle Sales
Mapping of Retailers and FOS accounts to Distributor
3 Approval of Commission Rates Circle Sales &
Finance
4 Uploading of Commission Slabs in Telecompass Circle Accounts
Approval of Commission Slabs CAG
5 Setting Monthly / Quarterly Sales Target of Distributors & FOS Circle Sales
6 Approval note for Key Money Sales
7 Invoices for Commission Distributor
8 Validation of Commission Circle Accounts
9 Transfer of Commission through E Recharge / Cheque Circle Accounts
10 Accounting for Commission CAG
11 Monthly Reconciliation / Confirmation from distributors Circle Sales
12 Funds transfer to FOS by RTGS Corporate Treasury

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Process regulations
Channel Commission
(Accounting & Confidential. For internal usage only.
Payment)Process

6. PROCESS STEPS:

EXECUTION OF THE PROCESS

6.1 Key Steps


1. Execution of 2. Monthly / 3. Performance 4. Raising of Invoice for 5. Monthly
Agreements with Quarterly By Channel Partners Commission by Distributor Reconciliation /
Distributors by Legal targets by sales 4A. Validation by Circle Accounting
1A. Approval of Accounts
commission rates by 4B. Transfer of Commission5A. Confirmation
Sales & Finance and by system directly from distributors by
Uploading in system Sales

6.2 Process Notes:

6.2.1 Activation Commission to Retailer

Sr. No Activity Responsibility Timeline 1

1 Commission slabs are decided and Sales, Accounts, 25th of Previous Month
approved as per Authorization Matrix (AM) Finance
on monthly basis at Circle.

2 Commission slabs will be provided to Circle CAG Same Day


Accounts on monthly basis for uploading in
the system. CAG to approve

3 Daily Activation report will be sent by IT IT Daily


for the activations done during the day.
The report will contain Amount of
Commission as per Commission Slab

4 Accounts to Validate the Commission Circle Accounts Daily


Report

5 Accounts to approve transfer of CAG Daily


Commission through E recharge to Retailer
after deduction of Withholding Tax/TDS

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Process regulations
Channel Commission
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Payment)Process

6 Monthly invoices for commission to be Distributor/Sales 1st of every month


raised by distributor in Telecompass and to
be provided to Circle Accounts.

7 CAG to do the Centralized Accounting for CAG Within 3 WD


commissions on weekly basis in batches
based on TC reports.

8 On monthly basis, the Sales team to do Circle Sales By 3rd of every month
reconciliation with distributor and take
confirmation from Distributors

6.2.2 Target Commission to Distributor / Retailer / FOS

Sr. No Activity Responsibility Timeline 1

1 Commission slabs and sales target are Circle/Corporate 25th of Previous Month
decided by sales and approved as per AM Sales/Finance
on monthly basis duly approved by
budgetary control

2 Commission slabs will be provided to IT by CAG Same Day


Accounts on monthly basis for uploading in
the system. Target also to be uploaded in
TC.

3 Monthly / Quarterly Activation report will IT Daily


be sent by IT for the activations done
during the Month / Quarter. The report
contains amount of Commission as per
Commission Slab

4 Accounts to Validate the Commission Circle Accounts Daily


Report

5 Monthly invoices for commission to be Distributor 1st of every month


raised by distributor in Telecompass

6 CAG to do the centralized Accounting for CAG Within 3 WD


commissions

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Process regulations
Channel Commission
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Payment)Process

7 Accounts to approve transfer of CAG Monthly / Quarterly


Commission through E recharge to Retailer
/ Distributor.

8 Payment of commission to FOS to be done Corporate


through direct credit to Bank Account of Treasury
FOS agency (after deduction of withholding
Tax) . ( Bank details of FOS agency to be
captured at the point of creation of new
FOS agency Account. )

8 On monthly basis the Sales team to do Sales By 3rd of every month


reconciliation with distributor and take
confirmation from Distributors

6.2.3 Handset Bonus to Distributor

Sr. No Activity Responsibility Timeline 1

1 Bonus slabs is decided by sales and Sales, Finance 25th of Previous Month
approved as per AM on monthly basis duly
approved by budgetary control

2 On monthly basis the data for primary sales ND & Corporate 15th of every month
of handset to distributors is sent by ND to Devices Team
Corporate Devices Team.
Corporate Devices team to forward the
details of primary sales to Circle Accounts.

3 Accounts to calculate monthly handset Circle Accounts 15th of every month


bonus. ( 1st to 31st of Last month)

4 Monthly invoices for bonus to be raised by Distributor By 20th of every month


distributor in Telecompass

5 CAG to do the centralized Accounting for CAG Within 3 WD

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Process regulations
Channel Commission
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Payment)Process

commissions

6 Accounts to approve transfer of CAG 25th of every month


Commission through E recharge to
Distributor after deduction of withholding
Tax.

7 On monthly basis , the Sales team to do Sales By 3rd of every month


reconciliation with distributor and take
confirmation from Distributors

6.2.4 Revenue share commission to Retailer

Sr. No Activity Responsibility Timeline 1

1 Commission slabs are decided by sales and Sales 25th of Previous Month
approved as per AM on monthly basis duly
approved by budgetary control

2 Commission slabs will be provided to IT by CAG Same Day


Accounts on monthly basis for uploading in
the system

3 Report of recharges done by the customer IT Monthly


in the last six months will be provided by IT
The report to contain amount of
Commission as per Commission Slab

4 Accounts to Validate the Commission Circle Accounts Daily


Report

5 Monthly invoices for commission to be Distributor 1st of every month


raised by distributor

Invoice Approval

6 CAG to do the centralized Accounting for CAG Within 3 WD


commissions

7 Accounts to approve transfer of CAG Monthly


Commission through E recharge to Retailer
after deduction of withholding Tax. Service

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Process regulations
Channel Commission
(Accounting & Confidential. For internal usage only.
Payment)Process

tax if charged is reimbursed to Distributor

8 On monthly basis the Sales team to do Sales By 3rd of every month


reconciliation with distributor and take
confirmation from Distributors

6.2.5 Key Money to Retailer

Sr. No Activity Responsibility Timeline

1 Commission slabs are decided by sales and Sales 25th of Previous Month
approved as per AM on monthly basis duly
approved by budgetary control

2 Duly approved Note for approval for basis Sales Same Day
and identification of Key retailer is
forwarded by sales to Accounts

3 Accounts to process key money payment to IT Monthly


retailer basis Note for Approval.

4 Accounts to transfer Key Money through E Circle Accounts Monthly


recharge to Retailer after deduction of
withholding Tax. Service tax if charged is
reimbursed to Distributor

6 Monthly invoices for commission to be Distributor 1st of every month


raised by distributor

7 CAG to do the centralized Accounting for CAG Within 3 WD


commissions

8 On monthly basis the Sales team to do Sales By 3rd of every month


reconciliation with distributor and take
confirmation from Distributors

( ISSUE- WILL WE HAVE SEPARATE AGREEMENT WITH RETAILER, HOW KR WIL BE CONTROLLED?)

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Process regulations
Channel Commission
(Accounting & Confidential. For internal usage only.
Payment)Process

7. TAXATION AND ACCOUNTING:

TDS Withholding tax to be deducted at applicable rates on payment of Commission / Incentive


and Net payment to be made to Channel partners.
o Upfront margin in case of Primary Sales of Startup Kit, Recharge Voucher (RCV) & E
Recharge is paid as Trade margin & accordingly reduced from revenue. No TDS is payable
on Trade Margin.
TDS Certificate TDS Certificate to be issued by CAG based on details available in Telecompass
in favour of Distributor.
CAG / Circle Accounts to courier TDS certificate to Distributor.
Vendor Creation Form (VCF) to be obtained before creating vendor account in TC.
Service Tax Service Tax, if charged by Channel partner will be claimed as CENVAT credit. The
CP must provide proper Bills as per CENVAT Credit rules.

IT Reports needed for commission transferred to Channel partners on daily basis to CAG.

Basis MIS report, the Accounting for Channel Commission will be done centrally by CAG on weekly basis.

8. INTERNAL CONTROLS:

Commission Slabs to be duly approved as per Delegation of Authority (AM) & Budgetary control.
Independent uploading of Commission slabs in Telecompass by Circle and approval by CAG
Intermediary checking by Circle Accounts prior to credit of E recharge to Channel Partner.
Final E Recharge Transfer by CAG
Monthly reconciliation with Distributor .
Monthly confirmation from Distributor.
Periodical Audit of Channel Pay outs.
Reconciliation by RA for ECV sold / Transferred without cash.

9. MIS & REPORTING:

S.No MIS/ Report Responsibility Frequency Annexure


1 Daily / Monthly/ Quarterly Activation IT Daily

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Process regulations
Channel Commission
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Report
2 Monthly Primary sale of handset report ND Daily
3 Note for Approval for Key Money Sales Monthly
4 CAF report Daily /Monthly IT
5 Report of Monthly /Quarterly Targets Monthly Sales

10. KEY DEPENDENCIES & REQUIREMENTS:

The Execution of Commission Process by CAG would depend upon following system dependencies:

Sl Functionality Required Status


1 Automation of E Recharge transfer from IN to Yet to be
Telecompass and from Telecompass to Channel Partner confirmed
Account.

2 Functionality of Intermediary checking by Circle Yet to be


Accounts and CAG prior to credit of E recharge to confirmed
Channel Partner.

3 Direct Interface between TC and IRIS for Online Yet to be


Accounting , due to very high Volume of Daily confirmed
Transactions and Daily E Charge Transfer
3 Direct Interface between TC and IRIS for Online Yet to be
Accounting, due to high Volume of Monthly Transactions. confirmed

10 A. ACCOUNTS/ FINANCE REQUIREMENTS TO INITIATE COMMISSION PROCESS:

a) Availability of IT system of commission (Including report format) payout, invoice Preparation, TDS
certificate shall be available for UAT testing.
b) Functionality for uploading commission structure in TC by Sales and approval by corporate
accounts.
c) Development of IT module for automated entry of all payout/ e-transfer in IRIS by direct
interface, since there would be millions of transactions in a month due to online credit to
retailers and its a humoungous task to physically perform accounting.
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Process regulations
Channel Commission
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Payment)Process

d) Modification in TC module for deduction of TDS from all E charge payout.


e) Facility in TC to enable Circle Accounts to validate E transfer for initial period (Say 6 month) for
verifying accuracy of payout. Thereafter, it can be direct credit, without any Finance
Verification.
f) Functionality to enable circle Accounts to activate the Channel Partners Accounts and end to end
mapping before first payout of commission. Copy of agreement to be provided to Circle Accounts
g) Invoice format to be created in TC
h) Audit trail for tracking changes in Mapping.
i) For Issuance of Cheques to FOS, RTGS Facility needs to be implemented at Circle with sufficient
number of Authorised Signatories.

11. EXHIBIT 1. PROCESS KPI

Amendments to the exhibit can be approved and adopted separately from the process regulations.

Approval list of Exhibit 1. Process KPIs


Designation

Approved CFO

Agreed Corporate Sales Head, Corporate Devices Head, Corporate IT Head, Corporate Legal Head

Signatures

Process owner controls:


Process execution
Process outcomes
Customer satisfaction

Throughout following KPIs:

Table of Exhibit 1. Process KPIs

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Process regulations
Channel Commission
(Accounting & Confidential. For internal usage only.
Payment)Process

Current
No KPI unit Calculation formula KPO*
value
Process execution measuring KPIs
1 Accurate Calculation of Commissions INR Exception report by Circle Accounts NA 95%
Process outcomes measuring KPIs
2 Timely payments to Channel Partner INR No Complaints NA 95%
Customer satisfaction with process outcomes measuring KPIs
Q1 50%
Q2 75%
Monthly Balance Confirmation with
3 Days 100% Confirmations NA Q3 100%
Channel partner

12. REFERENCE:

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