‘Targeted percentage rate with monetary turnover’ mechanism

Description

A mechanism where the earnings are a percentage of turnover, but the size of this percentage depends on the level of turnover achieved.

Example

A deal for which the earnings are 2% of turnover if turnover is greater than or equal to £1,000,000 but less than £1,500,000, 3% of turnover if turnover is greater than or equal to £1,500,000 but less than £2,000,000, or 4% of turnover if turnover is greater than or equal to £2,000,000.

Configuration approach

Within Enable, you will be required to:

• Configure one or more turnover bands, with a turnover target and a percentage rate for each (where each turnover target is a monetary amount, in the currency of the parent scheme), as illustrated below for a GBP scheme:

• Select one or more items for each dimension that has been configured for you as included items for the deal.

Enable will select matching turnover lines for the deal, based on:

• The trading partner to which the deal belongs.

• Your dimension item selections.

• The start and end date of the deal.

• The currency of the parent scheme.

To determine which turnover band, and therefore which percentage rate, applies to the deal, Enable will compare the total for turnover value across the matching turnover lines with the turnover targets that have been configured for the deal.

To calculate an earnings result for the deal as a whole, Enable will multiply the percentage rate that applies to the deal by the deal level total for turnover value.

To calculate an earnings result for each matching turnover line, Enable will multiply the percentage rate that applies to the deal by the entry for turnover value that applies to the turnover line.

Optional settings

You will be able (but not required) to use the ‘Mechanism details’ area of the deal configuration page to:

• Untick the Retrospective? tick box.

• Tick the Separate target and earning turnover? tick box.

• Enter a value in the Discount %

• Select one or more deals as deduction deals.

Retrospective vs Non-Retrospective

For a deal that uses the Targeted % rate with monetary turnover plug-in, the Retrospective? tick box is ticked by default. When the Retrospective? box is ticked, the earnings will be calculated with the achieved rate applied retrospectively, or ‘back to zero’.

If the Retrospective? box is unticked, Enable will instead perform a non-retrospective calculation that involves applying each of the achieved rates to the turnover that ‘belongs’ to the corresponding turnover band.

Consider for example a deal that has turnover bands as follows:

If the total for included turnover is £1,800,000, Enable will calculate the earnings as:

• 3% x £1,800,000 = £54,000, if the Retrospective? box is ticked;

• 2% x (£1,500,000 - £1,000,000) + 3% x (£1,800,000 - £1,500,000) = £19,000, if the Retrospective? box is not ticked.

The above example shows how the deal level result for earnings would be calculated for a non-retrospective deal that uses the Targeted % rate with monetary turnover plug-in.

To calculate an earnings result for each of the included turnover lines for such a deal, Enable will use the entries for turnover value from the included turnover lines to apportion the deal level result for earnings and derive an earnings result for each of the included turnover lines.

Separate target and earning turnover?

For a deal that uses the ‘Targeted % rate with monetary turnover’ plug-in, the Separate target and earning turnover? tick box is unticked by default.

When the Separate target and earning turnover? box is unticked:

• You will be required to configure a single set of dimension items as included items for the deal, where the set of included items contains at least one item for each dimension that has been configured for you.

• Enable will:

  • Use the set of included dimension items, in conjunction with the start and end dates of the deal and the currency of the parent scheme, to select a single set of matching turnover lines for the deal;

  • Use the set of matching turnover lines, in conjunction with the turnover bands that have been configured for the deal, to calculate the earnings.

When the Separate target and earning turnover? box is ticked:

• You will be required to configure two sets of dimension items — one for target turnover and one for earning turnover — where each set of included items contains at least one item for each dimension that has been configured for you.

• Enable will:

  • Use the two sets of included dimension items, in conjunction with the start and end dates of the deal and the currency of the parent scheme, to select two sets of matching turnover lines for the deal — one for target turnover and one for earning turnover;

  • Use the target turnover lines to determine which turnover band, and therefore which percentage rate, applies to the deal;

  • Use the earning turnover lines to calculate the earnings for the deal;

  • Assign earnings to all of the earning turnover lines and none of the target turnover lines.

Discount %

For a deal that uses the Targeted percentage rate with monetary turnover plug-in, the discount percentage is set to null by default to indicate that there is no (i.e. zero%) discount percentage.

You will have the option of taking no action to accept the default null value for Discount % or typing a numeric value (to a maximum of 3 decimal places) to specify a discount percentage.

Please note — you should enter the percentage value, e.g. 2.5 as opposed to 0.025 for a 2.5% discount.

The expected scenario is one where a user enters a positive percentage (e.g. 2.5) to reduce the qualifying turnover, although the user may enter a negative percentage to inflate the relevant turnover. You will not be allowed to enter a percentage that is greater than 100% or less than -100%.

When a non-zero value is entered into the Discount % box, a Discount deducted from setting will become visible.

For a deal that uses the Targeted % rate with monetary turnover plug-in, whether the Separate target and earning turnover? box is ticked will determine how the Discount deducted from setting operates (and this in turn determines how the discount percentage is applied).

If the Separate target and earning turnover? box is unticked:

• The Discount deducted from entry will be set to (and fixed as) Target and earning turnover.

• Enable will use turnover that is net of the discount percentage both to determine which turnover band applies and to calculate the earnings.

If the Separate target and earning turnover? box is ticked:

• The Discount deducted from field will allow you to select from options of:

  • Target and earning turnover (the default);

  • Target turnover;

  • Earning turnover.

• Enable will apply the discount percentage to:

  • Both target and earning turnover if your Discount deducted from selection is Target and earning turnover;

  • Target turnover only if your Discount deducted from selection is Target turnover;

  • Earning turnover only if your Discount deducted from selection is Earning turnover.

Deductions

When using the Targeted % rate with monetary turnover plug-in, no deals will be selected for the Deductions setting by default.

You will have the option of taking no action to accept this default selection or selecting from a list of the deals that have been configured for the parent scheme. If you accept the default option, Enable will calculate both turnover and earnings for the ‘deduct from’ deal in the normal way without referring to the earnings from any other deals.

If deduction deals are selected for a deal that uses the Targeted % rate with monetary turnover plug-in, where the Separate target and earning turnover? box is ticked, a Deduct earnings from setting will be displayed.

When the Deduct earnings from setting is available:

• You will be required to select from options of:

  • Target turnover;

  • Earning turnover;

  • Target and earning turnover.

• Enable will deduct the earnings from the deduction deal(s) from:

  • Both target and earning turnover if your Deducted earnings from selection is Target and earning turnover;

  • Target turnover only if your Deducted earnings from selection is Target turnover;

  • Earning turnover only if your Deducted earnings from selection is Earning turnover.

When the Deduct earnings from setting is hidden for a deal that uses the Targeted % rate with monetary turnover plug-in (which it will be if Separate target and earning turnover? is not ticked for the deal), Enable will use turnover that is net of the deducted earnings both to determine which turnover band applies and to calculate the earnings.

Please note — for a deal where one or more deals have been selected for the Deductions setting and a non-zero discount percentage has been entered, the discount percentage is applied first. That is, the relevant percentage discounts are applied before the earnings from the deductions deal(s) are subtracted.