Recoverable draws are the amount paid in advance to sales reps at the start of a pay cycle. By the end of the sales period, the actual payout of reps is calculated, and they’re paid the difference between the advance given and the final commission number. In general, the advance is between 30-60%, and it’s based on the size of the incentive percentage and how likely reps would achieve their numbers.
When to Use It
- You’re a seasonal business where reps may run dry of deals in a quarter
- You have an incentive-heavy compensation plan where reps are left with no choice but to close more & more deals.
- You’ve longer sales cycles where deals that take a year and above to close