Party Settle vs. Party Close?
So you’re starting a Party Plan company but not quite sure about how the consultants will get paid? You’re not alone. This is a big decision for party plan companies that drives the business and relationships the consultants have with corporate. The two most common options are Party Settle and Party Close.
With Party Settle, the consultant retains earnings from the party the same day, assuming the proper cash/check amount was collected in person during the party.
In Party Close on the other hand, payments first go to corporate by way of the consultant using their personal credit card to pay the company for products ordered in the party. Once the orders are fulfilled, then the consultant receives their profit through a monthly commission check.
Both offer a varying degree of convenience and also some drawbacks.
For instance, Party Settle can open up the company to unwanted exposure. How? By allowing the consultant to keep the cash and checks she could potentially use the funds for something personal instead of fulfilling the orders. If she does this and then later reimburses the party and places the orders, this could potentially leave the party guests to wonder why it’s taking so long to get their goods. The answer from the consultant? She could blame the tardiness on party order delivery by the company. Moving to a Party Close model protects the company from this kind of situation. However, an important benefit of Party Settle is that it does encourage your consultants by giving them immediate results for every sale in the form of hard cash/check.
On the flip side, Party Close limits payment options for party attendees. Party Close requires credit card payment for orders during the party before the host order and closing of the party can be completed. Not allowing either cash or checks, something that is available in Party Settle, can make Party Close somewhat undesirable for consultants due to less flexibility in payment choices for party attendees. A benefit to Party Close is the straightforwardness it offers – no complicated settlement calculations, no waiting for party profit via a commission cycle (end of month, etc.) and no custom reporting to communicate this information to consultants. A big argument for Party Close is that it is simple, period.
As you decide whether to setup Party Settle vs. Party Close, you should keep these points in mind. There are many other things to consider between these two options and whichever you choose has a great impact on business operations for your consultants. This means your company needs to carefully evaluate the risks and rewards of your party compensation style.
Do you have questions about how to choose between these two Party Plan options? Contact Us today and we would be happy to help! IDSTC has been the trusted technology partner to the Party Plan industry for over 15 years and we have the experience it takes to help your company make these important business decisions.