Year-End Commission Checklist: 9 Steps for Denmark

Year-end commission checklist: the short answer

Before you close the year: settle annual targets and accelerators, close open clawbacks, decide which year December deals belong to, accrue unpaid commission in the annual accounts, check holiday pay on commission, hit the payroll cut-off, settle with reps who have left, give notice of next year's plan and archive the statements. The checklist below splits these nine tasks between the sales leader, finance and HR/payroll.

The list is written for companies with commission or bonus-paid salespeople in Denmark, so the legal points are Danish. If you run teams in other Nordic countries, the tasks are the same, but check the local rules on holiday pay, notice and record keeping. We don't give dates, because they depend on your plan, financial year and payroll provider. Where there is a statutory rule, we link the source.

The checklist on one page

#	Task	Owner	Supported by
1	True-up of annual targets, accelerators and annual bonus	Sales leader	Finance
2	Open clawbacks and corrections	Finance	Sales leader
3	Deals signed in December but invoiced or paid in January	Finance	Sales leader
4	Accrued commission in the annual accounts	Finance	Auditor
5	Holiday pay on commission	HR/payroll	Finance
6	December and January pay runs	HR/payroll	Finance
7	Reps who have left or are working their notice	HR	Finance and sales leader
8	Next year's plan and notice	Sales leader	HR and management
9	Archiving statements and plans	Finance	HR

The nine points in detail

1. True-up of annual targets, accelerators and annual bonus

Owner: sales leader, with finance.

Many plans pay commission monthly but settle annual targets, tiers and accelerators once a year. That settlement is a true-up. Compare what each rep was paid during the year with what they earned under the plan for the full year, then pay out or offset the difference.

Example: Sara has an annual target of DKK 2,400,000 and earns 5% of revenue each month. Above target she earns an extra 5% of revenue, settled at year-end. She sells DKK 2,760,000, or 115% of target. Her monthly commission for the whole year is 5% of DKK 2,760,000 = DKK 138,000. The accelerator adds 5% of the DKK 360,000 above target = DKK 18,000, which goes on the year-end statement.

If you pay annual bonuses, settle them now too. Check whether the targets were met and who is entitled to a bonus. Our bonus agreement template shows how to write the rules.

2. Open clawbacks and corrections

Owner: finance, with the sales leader.

Go through deals where the customer cancelled, didn't pay or received a credit note within the plan's clawback window. Decide which ones to offset and when. Unresolved clawbacks rolled into the new year are a classic cause of disputes. Put the amount and reason on the statement so the rep can see what happened. See our guide to commission clawbacks for what can be offset.

In Sara's case, a customer cancelled a DKK 90,000 deal within the clawback window. The 5% commission, DKK 4,500, is offset in her December statement:

Sara's December statement	Calculation	Amount
Commission for December	5% of DKK 240,000	DKK 12,000
Accelerator, annual true-up	5% of DKK 360,000	DKK 18,000
Clawback, cancelled deal	5% of DKK 90,000	-DKK 4,500
Total payable		DKK 25,500

3. Deals signed in December but invoiced or paid in January

Owner: finance, with the sales leader.

Which year a deal counts in depends on the plan's rule for when commission is earned: at signature, at invoicing or at payment. That affects the annual target, the accelerator and the accounts. Take a DKK 200,000 deal at 5% commission (DKK 10,000), signed in December, invoiced in January and paid in January:

Plan's earning rule	Earned in	Counts towards	In this year's accrual?
At signature	December	This year's target	Yes, DKK 10,000
At invoicing	January	Next year's target	No
At payment	January	Next year's target	No

If the plan doesn't say, decide now and write the rule into next year's plan. Also watch for deals moved across the year-end to hit a particular target.

4. Accrued commission in the annual accounts

Owner: finance, with your auditor.

Commission belongs to the period in which it is earned, not the period in which it is paid. Commission earned in December but paid with the January salary must therefore be accrued as a liability in the annual accounts. The same goes for true-ups and bonuses earned during the year. See commission accounting in the glossary for the entries.

Rep	Earned in December, paid in January
Sara	DKK 25,500
Jonas	DKK 14,200
Amira	DKK 9,800
Accrued commission at 31 December	DKK 49,500

If statements are not approved when you close the books, accrue an estimate and correct it once the amounts are approved. If you capitalise commission on multi-year customer contracts, the share that belongs to the year must also be expensed. See commission amortization. Always confirm the treatment with your auditor.

5. Holiday pay on commission

Owner: HR/payroll, with finance.

Under the Danish Holiday Act (ferieloven), commission-paid reps can be entitled to compensation for commission they lose while on holiday. Check that the method in the commission agreement was actually applied in this year's pay runs. The Danish holiday year doesn't follow the calendar year. It runs from 1 September to 31 August, and the holiday can be taken until 31 December (sections 4 and 6 of the Holiday Act). So year-end is also when the period for taking holiday from the year that ended on 31 August closes. Agree with payroll how untaken holiday is handled, including the commission part. See holiday pay on commission in the glossary.

6. December and January pay runs

Owner: HR/payroll, with finance.

Ask your payroll provider when the December and January pay runs close, and work backwards: when must statements be approved for commission to be included? In Denmark, commission paid to employees is A-income (A-indkomst) and is reported to eIndkomst with the salary it is paid with. The Danish Tax Agency (Skattestyrelsen) sets fixed deadlines for reporting and for paying withheld tax and labour market contribution. Find yours at skat.dk. More in our guide to commission tax in Denmark.

7. Reps who have left or are working their notice

Owner: HR, with finance and the sales leader.

Make a separate list of reps who left during the year or are working their notice. For each one, settle commission during the notice period, commission on deals that close after they leave, open clawbacks and any annual bonus. Under section 9(2) of the Danish Salaried Employees Act (funktionærloven), an advance on commission can only be covered by pay owed to the employee. A bonus may be covered by section 17a of the same act. Our guide to commission upon termination sets out the rights. Ask your lawyer if in doubt.

8. Next year's plan and notice

Owner: sales leader, with HR and management.

If the plan changes on 1 January, the process should ideally have started weeks ago. If the new plan lowers a rep's expected pay, Danish law may treat it as a material change that must be notified with the rep's individual notice period. In that case the plan starts later for them. Our guide to rolling out a new commission plan covers the timeline, the shadow calculation and the conversation with each rep. To test rates and targets, use our calculators.

9. Archiving statements and plans

Owner: finance, with HR.

Keep the year's commission statements, approvals, plan versions and signed agreements together per rep. Under the Danish Bookkeeping Act (bogføringsloven), accounting records must be kept for 5 years from the end of the financial year they relate to (section 12(1)). Pay claims generally become time-barred after 3 years (section 3(1) of the Danish Limitation Act, forældelsesloven), so a rep can raise a claim for earlier years. With your statements in order, you can answer it. Our commission statement template works well as a fixed format.

Common year-end mistakes

The annual accelerator is forgotten because it isn't part of the monthly calculation.
Clawbacks from the autumn are rolled into January without an explanation to the rep.
Nobody knows whether a December deal counts this year or next.
December commission is only expensed in January, so the year's result looks too good.
Reps who have left get their final statement late because they weren't on the list.
Next year's plan is announced in December to take effect on 1 January, with no notice for reps who are worse off.

Prowi and year-end

In Prowi each rep has a statement per period that updates live from CRM data. When the period closes, the statement moves to awaiting approval, and approved amounts are added to the rep's balance and passed on to payroll, either pushed directly to Zenegy or as a payroll file for systems such as Danløn and Visma Dataløn. Clawbacks and corrections are handled in Prowi, so they show on the statement instead of in a separate spreadsheet. Book a demo to see it with your own plan.

FAQ

When should December commission be recorded in the accounts?

In the period it is earned. Commission earned in December but paid in January is accrued as a liability in December. Confirm the treatment with your auditor.

Which year does a deal signed in December and paid in January count in?

That depends on the plan's earning rule. If commission is earned at signature, the deal counts in December. If it is earned at invoicing or payment, it counts in January.

What is a commission true-up?

A settlement where what was paid is compared with what was earned for the whole period, and the difference is paid out or offset. It is usually needed for annual targets and accelerators.

How long should commission statements be kept in Denmark?

The Danish Bookkeeping Act requires accounting records to be kept for 5 years from the end of the financial year. Pay claims generally become time-barred after 3 years, so statements must be retrievable for at least that long.

Who owns the year-end commission close?

It is a shared job. The sales leader owns the true-up and next year's plan, finance owns clawbacks, accruals and archiving, and HR/payroll owns holiday pay, the pay run and reps who have left.

Sources

This article is general information, not legal or accounting advice. Check with your auditor and lawyer.