Recoverable draw

A recoverable draw is a type of compensation arrangement that allows sales reps to be paid a guaranteed salary or draw each pay period, regardless of their sales performance. The draw is then deducted from the rep’s future commissions once they start making sales.

There are a few reasons why companies might offer recoverable draws to new sales hires. 

First, it can help to attract and retain top talent. In today’s competitive job market, many top sales reps have their pick of companies, and they’re more likely to choose a company that offers a guaranteed income.

Second, recoverable draws can help to offset the risk associated with a sales career. Sales can be a volatile industry, and there’s always the risk of a rep not making enough sales to earn a commission. A recoverable draw helps to protect the rep from financial hardship during these periods.

Third, recoverable draws, or a draw against commission, can help to shorten the sales ramp-up period. It can take new sales reps several months to start generating significant sales. A recoverable draw can help to ensure that the rep has a steady income during this time, which can help them to focus on their sales goals without worrying about making ends meet.

Of course, there are also some potential drawbacks to recoverable draws. First, they can be expensive for companies. If a rep doesn’t make enough sales to cover their draw, the company is essentially subsidizing their salary.

Second, recoverable draws can create a disincentive for reps to work hard. If they know that they’ll be paid a guaranteed salary regardless of their performance, they may be less motivated to close deals.

Finally, recoverable draws can be complicated to administer. Companies need to carefully track each rep’s sales and draw payments to ensure that they’re not overpaying or underpaying. That’s where QuotaPath can help to automate commission tracking and draw payments.

Overall, recoverable draws can be a valuable tool for companies that are looking to attract, retain, and motivate top sales talent. However, it’s important to weigh the potential benefits and drawbacks before deciding whether or not to offer them.

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