Recoverable DrawThere are two different types of sales commission draws– recoverable and non-recoverable. A recoverable draw against commission is money paid to a sales rep paid from the future commission they earn.
What is a non-recoverable draw?
A non-recoverable draw, often called a non-recoverable draw against commission, is a common element of sales commission plans. You can think of a non-recoverable draw against commission as a guaranteed minimum payment that your sales team will not need to pay back to the organization.
If a sales representative earns less than the non-recoverable draw amount, they will be paid the difference. That amount will not be held against the rep as debt in future pay periods. If the rep earns more than the non-recoverable draw amount, the rep will be paid the entire amount they earn with no draw.
The intention is to provide a livable wage for all reps in times when it’s not possible or more difficult to earn commission– especially when it comes to seasonal businesses or inconsistent sales cycles.