Draws & Risk

Advances and reversals: draws, clawbacks, chargebacks, and true-ups. The mechanics that decide what happens when a deal changes after it is paid.

📚 22 terms
🔄 Last reviewed: May 2026
👤 RevOps · Finance · Sales Leadership

Draws and clawbacks are the risk layer of a comp plan. They govern two moments most plans handle badly: paying a rep before commission is earned, and taking money back when a deal falls apart after payout.

These are low-volume, high-emotion mechanics. Nobody researches clawback rules for fun, which is exactly why the terms here carry disproportionate weight in rep trust and in Finance risk. A clawback applied inconsistently does more damage to morale than a lower rate ever would.

The terms below define how advances are structured and how reversals are handled when reality changes after the fact.

Start with the essentials

Anchor terms in this cluster

The five most-searched and most-foundational terms. New to comp plan design? Read these first.
Tier 1

Uncapped Commission

Uncapped commission means there is no ceiling on what a rep can earn — they keep earning at the plan's rate no matter how far past quota they sell. It is the opposite of capped commission, which stops or reduces payout above a set limit. Uncapped plans reward top performers without limit and are a common recruiting draw, since reps see unlimited upside. The trade-off for the company is less predictable cost.

Read full entry
Tier 2

Commission Cap

A commission cap is a ceiling on how much commission a rep can earn in a given period, regardless of how much more they sell once they hit it. Companies use caps to control cost and prevent windfall payouts on unusually large deals, but caps carry a real risk: they can demotivate top reps, who stop selling once the ceiling is in reach. Most sales cultures favor uncapped plans, reserving caps for when cost certainty outweighs the motivational cost.

Read full entry
Tier 1

Clawback

TL;DR: A commission clawback is the recovery of commission already paid to a sales rep when the deal it was paid on falls through — a customer cancels, downgrades, or fails to pay. The goal is to keep commission aligned with revenue the company actually keeps. There are three ways to structure it: retroactive (reverse the original payment), non-retroactive (dock current-period quota), and combination (deduct from a future payout), with most companies defaulting to retroactive without weighing the alternatives.

Read full entry
Tier 1

Sales Commission

Sales commission is the performance-based pay a rep earns for closing deals, almost always calculated as a percentage of the revenue they generate. It is the core of variable compensation and the largest lever in most sales comp plans. Commission can be structured many ways — flat rate, tiered, or gross margin — and shaped by mechanics like accelerators, floors, and clawbacks. However it is built, the principle is the same: tie a rep's pay to results.

Read full entry
Tier 2

Commission Accrual

A commission expense accrual is the accounting entry that recognizes commission cost in the period a rep earns it, before the cash is actually paid out. The journal entry is a debit to commission expense and a credit to commission payable, a liability. Finance runs it every month so the expense lands in the right period; the accrual is then reversed and replaced once the actual payout is calculated. It is the liability-side counterpart to a deferred commission asset.

Read full entry

Key takeaways

  • A draw is an advance against future commission: it can be recoverable or not.
  • A clawback reverses commission already paid when a deal churns or cancels.
  • How far back a clawback reaches, retroactive, non-retroactive, or combination, is the design decision that matters most.
  • Consistency matters more than severity: an inconsistently applied clawback destroys trust.

How do draws work?

A draw against commission pays a rep a floor before commission is earned. A recoverable draw is repaid from future commission; a non-recoverable draw is not, functioning as guaranteed pay. A forgivable draw converts to a keeper if conditions are met. The core tradeoff is laid out in recoverable vs non-recoverable draw. For a fuller treatment, see recoverable and non-recoverable draws.

How do clawbacks work?

A clawback reverses commission already paid when the underlying deal churns, cancels, or fails to collect. The design choice is reach: a retroactive clawback pulls back across prior periods, a non-retroactive clawback affects only the current one, and a combination method blends the two. A chargeback is the accounting entry that records it. See sales clawbacks explained for policy examples.

How are corrections handled?

When a paid amount turns out to be wrong, a true-up or a commission adjustment corrects it in the next cycle rather than reopening the last one. A plan that needs large true-ups every month has a calculation problem, not a rounding problem.

All 22 terms in this cluster
Alphabetical · 0 Tier 1 · 0 Tier 2 · 0 Tier 3
Uncapped Commission
T1
Uncapped commission means there is no ceiling on what a rep can earn — they keep earning at the plan's rate no matter how far past quota they sell. It is the opposite of capped commission, which stops or reduces payout above a set limit. Uncapped plans reward top performers without limit and are a common recruiting draw, since reps see unlimited upside. The trade-off for the company is less predictable cost.
Commission Cap
T2
A commission cap is a ceiling on how much commission a rep can earn in a given period, regardless of how much more they sell once they hit it. Companies use caps to control cost and prevent windfall payouts on unusually large deals, but caps carry a real risk: they can demotivate top reps, who stop selling once the ceiling is in reach. Most sales cultures favor uncapped plans, reserving caps for when cost certainty outweighs the motivational cost.
Clawback
T1
TL;DR: A commission clawback is the recovery of commission already paid to a sales rep when the deal it was paid on falls through — a customer cancels, downgrades, or fails to pay. The goal is to keep commission aligned with revenue the company actually keeps. There are three ways to structure it: retroactive (reverse the original payment), non-retroactive (dock current-period quota), and combination (deduct from a future payout), with most companies defaulting to retroactive without weighing the alternatives.
Sales Commission
T1
Sales commission is the performance-based pay a rep earns for closing deals, almost always calculated as a percentage of the revenue they generate. It is the core of variable compensation and the largest lever in most sales comp plans. Commission can be structured many ways — flat rate, tiered, or gross margin — and shaped by mechanics like accelerators, floors, and clawbacks. However it is built, the principle is the same: tie a rep's pay to results.
Commission Accrual
T2
A commission expense accrual is the accounting entry that recognizes commission cost in the period a rep earns it, before the cash is actually paid out. The journal entry is a debit to commission expense and a credit to commission payable, a liability. Finance runs it every month so the expense lands in the right period; the accrual is then reversed and replaced once the actual payout is calculated. It is the liability-side counterpart to a deferred commission asset.
True-up
T1
A commission true-up is an adjustment that reconciles what was estimated or paid with what a rep is actually owed once the real numbers are known. Because commission is often accrued or paid on estimates, the final figures rarely match exactly — a true-up books the difference, up or down, to make the rep whole and the books accurate. Reps usually experience it as the answer to why their commission changed after a period closed.
Commission Structure
T1
A sales commission structure is the set of rules that determines how a rep's commission is calculated — the rates, the bands, and the conditions that turn closed deals into pay. Common structures include flat-rate (one percentage on everything), tiered (rates that rise with performance), and gross-margin (commission on profit, not revenue). The structure a company chooses shapes what behavior the plan rewards, which is why designing it well matters as much as setting the rate itself.
Commission Statement
T2
A commission statement is the document that shows a sales rep how their commission was calculated for a period — the deals credited, the rates applied, any adjustments, and the total owed. It is the primary deliverable of any commission process and the main thing a rep actually sees. A good statement lets the rep trace every dollar back to the deals behind it; a poor one shows only a total, which is what drives shadow accounting.
Decelerator
T2
A commission decelerator is the inverse of an accelerator — a reduced commission rate that applies when a sales rep falls below a defined attainment threshold. Where an accelerator rewards overperformance with a higher rate, a decelerator lowers the rate on revenue earned below plan, to discourage chronic underperformance and protect commission budget. It is one of the least common and most controversial plan levers, and almost no competitor glossary defines it.
Sales Performance Management (SPM)
T1
TL;DR: Sales performance management (SPM) is the broad discipline and software category for planning, managing, and optimizing sales performance — spanning territory and quota planning, sales analytics, and incentive compensation. ICM (incentive compensation management) is one part of SPM: the piece that calculates and administers commission. The simplest way to hold it: SPM is the umbrella, and ICM is the compensation component inside it. Buyers often compare SPM and ICM software when deciding how much of the category they need.
Deferred Commission
T1
TL;DR: A deferred commission is the balance-sheet asset a company records when it pays a sales commission but has not yet expensed it. Under ASC 606, commission is capitalized as a cost of obtaining a contract and amortized over the customer relationship, so the amount paid but not yet amortized sits on the balance sheet as a deferred commission asset. A $12,000 commission on a three-year contract starts as a $12,000 asset that shrinks by about $333 each month.
Flat Rate Commission
T3
Flat rate commission pays a rep the same percentage on every sale, no matter how much they sell — a single, constant rate applied to all revenue. It is the simplest commission structure: easy to calculate, easy for reps to understand, and predictable to budget. The trade-off is that it gives top performers no extra incentive to exceed quota, since the last deal earns the same rate as the first. It is the natural counterpart to a tiered structure.
SPIFF
T1
A SPIFF (Special Performance Incentive for Field Force) is a short-term, deal-specific incentive layered on top of standard commission to drive a particular behavior — pushing a specific product, clearing inventory, or closing before a deadline. Unlike an accelerator, which rewards overall quota attainment, a SPIFF is time-bound and targeted. It is often confused with the sales-software vendor of the same name, but as a concept it is simply a tactical, limited-time bonus used to spike short-term sales activity.
OTE
T1
On-Target Earnings (OTE) is the total annual compensation a sales representative is expected to earn if they achieve 100% of their assigned quota, calculated as base salary plus variable commission at full quota attainment.A sales rep with an $80,000 base salary and $80,000 variable at quota has an OTE of $160,000. OTE is a projection, not a guarantee — actual earnings vary with sales performance.
Kicker
T1
A kicker is an extra incentive — usually a multiplier or a fixed bonus — triggered when a rep meets a specific deal condition, such as signing a multi-year contract, winning a strategic account, or closing before a deadline. Unlike an accelerator, which rewards overall quota attainment, a kicker fires on a discrete condition being met. It is frequently confused with accelerators and SPIFFs, but the distinction is simple: a kicker rewards a defined deal characteristic, not attainment.
Pay Mix
T2
Pay mix is the ratio of base salary to variable pay within a sales rep's on-target earnings, written as two numbers like 60/40 or 70/30 — the first is the base percentage, the second is variable. A 60/40 mix on $150,000 OTE means $90,000 base and $60,000 target variable pay. The mix sets how much of a rep's pay is at risk: more variable rewards performance harder, more base gives stability. It is a core lever in comp-plan design.
Draw Against Commission
TL;DR: A draw against commission is an advance a company pays a sales rep against commission they are expected to earn later — essentially a guaranteed income floor while the rep ramps or works a slow pipeline. The rep repays it out of future commission. A recoverable draw must be paid back if commission falls short; a non-recoverable draw is forgiven. It is not extra money on top of commission — it is commission paid early.
Bookings vs Collections
T1
Bookings-based and collections-based commission are the two main payout timing models in SaaS comp. Bookings pays a rep when the deal is signed; collections pays only after the customer's invoice is collected. The choice comes down to who carries the risk of a deal going bad — the company (bookings, then clawback if needed) or the rep (collections, who waits until the cash clears).
Base Salary
T1
The fixed, guaranteed portion of compensation paid regardless of performance.
Commission Rate
T2
The percentage of revenue paid as commission — typically 8–12% in SaaS.
Commission Statement
T2
The detailed document showing how a rep's commission was calculated.
Earnings Cap
T3
A maximum limit on commissions a rep can earn in a period.
Floor
T3
A minimum payment level that triggers commission eligibility.
Guaranteed Pay
T3
Compensation paid regardless of performance — usually base salary plus draw.
Multi-Year Deal Bonus
T3
Additional incentive for closing deals with multi-year contract terms.
On-Plan Earnings
T2
Actual earnings when a rep performs at expected attainment levels.
OTE (On-Target Earnings)
T1
Total annual compensation at 100% quota — base plus variable.
Paired Quota
T3
Quota structure where one role's targets mirror another's (e.g., SE to AE).
Pay Mix
T1
The ratio of base to variable in OTE — typically 50/50, 60/40, or 70/30.
Performance Period
T2
The time window over which performance is measured for commission.
Plan Acceptance
T3
The formal sign-off by a rep agreeing to a new comp plan's terms.
Quota Attainment
T2
The percentage of quota a rep has achieved — drives variable pay directly.
Quota Credit
T2
Revenue or value applied toward a rep's quota for a closed deal.
Quota Period
T3
The time horizon a quota covers — usually annual, sometimes quarterly.
Ramp Period
T2
The first months in role with reduced quotas and variable pay.
Sales Quota
T1
The target a rep must hit to earn full OTE.
Target Compensation
T2
Total compensation at target performance — often synonymous with OTE.
Threshold
T2
The minimum attainment level required before commission starts.
Total Compensation
T2
All earnings including base, variable, benefits, and equity.
Variable Compensation
T1
Performance-based pay — commission and bonuses contingent on attainment.

Frequently asked questions

Common questions about sales compensation as a topic. For term-specific questions, see the individual term pages.

What are the core components of a sales compensation plan?

Every sales comp plan has four core components: base salary (the guaranteed portion), variable compensation (the performance-based portion), a quota (the target performance level), and rules governing how variable pay is calculated as attainment varies. OTE is the umbrella metric expressing base plus variable at 100% quota.

How is OTE different from total compensation?

OTE includes only base salary plus variable cash commission earned at 100% quota. Total compensation is broader and includes benefits, retirement contributions, equity, signing bonuses, and one-time incentives like SPIFFs. A $200K OTE rep typically has total compensation of $230K–$280K depending on benefits and equity.

What is a typical pay mix in B2B SaaS?

Pay mix varies by role. SDRs typically have 70/30 pay mix (base/variable), AEs 50/50, CSMs 80/20, and Sales Engineers 75/25. Enterprise AEs sometimes move to 60/40 to reflect longer cycles and higher base. The general rule: the more controllable the outcome, the more aggressive the variable.

How often should comp plans be reviewed?

Sales comp plans should be reviewed annually, typically aligned with fiscal year planning. Mid-year changes are strongly discouraged unless the plan is materially broken — retroactive changes erode trust and rarely produce the desired behavior change quickly enough to justify the morale cost.

Continue exploring sales compensation

Compensation plan design is one of 8 topical clusters. These three are most adjacent:
Cluster 2 of 8
Commission Structures
Tiered, flat, gross margin, and progressive commission models. How variable pay is actually calculated.
Cluster 4 of 8
Quota & Attainment
Quota setting, attainment tracking, ramps, retirement, and over-attainment mechanics.
Cluster 5 of 8
Draws & Risk
Recoverable and non-recoverable draws, clawbacks, and at-risk pay mechanics.
Cluster 2 of 8
Compensation Plan Design
How sales compensation plans are structured — from base salary and pay mix to OTE, quotas, ramps, and target compensation. The foundational vocabulary every RevOps and Finance team needs to design plans that motivate sales without breaking the budget.
Cluster 2 of 8
Commission Structures
The models that turn a closed deal into commission: flat, tiered, progressive, margin, and recurring-revenue structures, and when each one fits.
Cluster 2 of 8
Commission Mechanics
The levers that modify base commission: accelerators, decelerators, caps, splits, credit, and thresholds. The rules that decide what a deal is actually worth.

Go from glossary to working comp plan

Visdum automates every concept in this glossary — OTE calculation, quota tracking, accelerators, clawbacks, and ASC 606 compliance — for high-growth B2B SaaS companies.
See how Visdum works →