Draw
An advance against future commission, used to provide income stability during ramp or seasonal variation.
Recoverable and non-recoverable
A recoverable draw is a loan repaid from future commission; a non-recoverable draw is guaranteed income. The distinction is material to both the seller's risk and the company's cost, and confusing the two in an offer letter creates a dispute later.
Recoverable draws can trap
How to structure one
Decide recoverable or non-recoverable before anything else. A recoverable draw is a loan against future commission; a non-recoverable draw is guaranteed income.
Set the duration from measured ramp time, not from a round number of months.
If recoverable, cap the recovery rate per period so repayment cannot consume an entire pay cheque — that is the arrangement that drives attrition.
State plainly what happens if the rep leaves owing a recoverable balance, and check enforceability in your jurisdiction before issuing it.
Model the draw alongside ramp quota. The two interact, and plans that set them independently produce outcomes nobody intended.
Where it goes wrong
A recoverable draw that accumulates during a long ramp produces a debt the rep discovers at the point their commission should start, which is the worst possible moment.
Non-recoverable draws are cleaner for the rep and more expensive for the business, and the cost is frequently not modelled into capacity plans.
Recovery terms are often written vaguely, so the first dispute becomes a negotiation rather than an application of the plan.
Enforceability varies by jurisdiction, and a recoverable draw that cannot legally be recovered is a non-recoverable one with a misleading name.
RELATED TERMS
Clawback
A provision reclaiming paid commission when a deal churns, fails to pay, or is cancelled within a defined window.
Compensation Plan
The document defining how a seller earns variable pay: what is measured, at what rates, with what accelerators, caps and clawbacks.
On-Target Earnings (OTE)
Total expected compensation when a seller hits quota exactly: base salary plus target variable.
Ramp Quota
A reduced quota applied during a new seller's ramp period, stepping up to full quota as productivity is expected to arrive.
Ramp Time
The time between a seller starting and reaching expected productivity. The variable that makes hiring plans wrong when it is guessed rather than measured.
COMMON QUESTIONS
- What is a draw in sales compensation?
- An advance against future commission, used to provide income stability during ramp or in a role with lumpy earnings. It is paid in periods when commission is low, and whether it must be repaid is the distinction that matters most.
- What is the difference between a recoverable and non-recoverable draw?
- A recoverable draw is a loan: it is repaid from later commission, so a rep who under-performs accumulates a debt. A non-recoverable draw is guaranteed income with no repayment. Recoverable is cheaper for the business and carries real risk for the rep.
- How long should a draw last?
- As long as your measured ramp, not a round number of months. A draw ending before a rep can realistically produce leaves them with a pay cut exactly when their pipeline is maturing, which is a common and avoidable cause of early attrition.
- What is the main risk of a recoverable draw?
- Accumulated debt discovered at the wrong moment. A rep who ramps slowly builds a balance and then finds their first real commission cheque consumed by repayment. Capping the recovery rate per period is what prevents that, and it should be in the plan from the start.
Learn how to apply this: RevOps Audit
Definitions are the vocabulary. The courses are where you learn to operate it, with the interactive audit tools.
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