rippnsticks

Enterprise Account Executive

Clawbacks

Fellow Bravado Homies - have a quick one for you. I work for a scale up in enterprise eCommerce software. Good pay plan where we are compensated for the full value of the contract the month after client signature.

That said, I noticed in our 2023 comp plan that they have a clause for commission clawbacks (reduction of future payments by percentage of non-payments of the client). I have never agreed to something like this in the past. I have also never worked for an employer that paid commissions as generously as they do.

General thoughts on how to handle this? Does it make sense to let it slide?

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21 comment

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BTQ

Politicker

Account Manager

Woof. I'm only an SDR but that seems whack.

Bumping this up for a more experienced savage to comment.

TennisandSales

Politicker

Head Of Sales

you need to make sure you FULLY understand how it works.

does the amount that gets clawed back, decrease and become 0 at some point?

how long does the customer have to pay?

what payment options are there to avoid this?

And then i would think about how much of this is in anyones control.

antiASKHOLE

Tycoon

Bravado's Resident Asshole

all of the questions I had. The company has to protect themselves as well. my company does such a small percentage that if it does happen, it's not much at all.

Sunbunny31

Politicker

Sr Sales Executive 🐰

Yes! Have this explained to you.

Kosta_Konfucius

Politicker

Sales Rep

I have worked at places with clawbacks, I feel like its somewhat typical. However, some clawbacks are more egregious than others, so its important to read into it.

CuriousFox

WR Officer

🦊

This word scares me. I hope I don't have to experience it.

notdavemoss

Valued Contributor

CCBW

Nothing like being told "sell sell sell, the board needs the revenue" then closing an iffy deal and then a few months later getting your commission clawed back because the customer can't pay or otherwise flake. Hot take: clawbacks happen when sales process is crap, solution is middling at best, and all the C suite cares about is revenue reports to the Board.

fhbn418

VP of Sales

This.

GingerBarbarian

Opinionated

Lead Sales

Most companies I have worked at have had clawbacks. It is frustrating, but it happens. With that said, I do not know if I have ever worked with a company that had a formal written out process for clawbacks either. It was just part of what happened. There is a chance they have been doing clawbacks and you haven't even noticed.

Sunbunny31

Politicker

Sr Sales Executive 🐰

I get paid out after the customer pays, so clawbacks are going to be rare or non-existent. It can be difficult to wait for payment - but the tradeoff is the lack of clawback!

Justatitle

Big Shot

Account Executive

So clawbacks are very standard and as companies grow they become almost needed because of accounting. What you should fully understand is how the clawback works and if the revenue that was attributed to your quota for the deal signage is also removed or not.

fhbn418

VP of Sales

Good point. Where I have been it didn't impact quota and that's the way to do it.

Diablo

Politicker

Sr. AE

We do have that but its rare that clients haven’t paid.

Mobi85

Politicker

Regional Sales Manager

Deal with it currently, much different industry vs what you are working in but we pay commissions once product is invoiced out. So reps are paid out monthly and if a company goes belly up and we have to write it off the rep is hit with whatever the remaining commission amount may end up being.

FinanceEngineer

Politicker

Sr Director, sales and partnerships

Clawbacks are always a thing. You need to determine what the rules are and make sure you are covered.

dreadpiratescript

Politicker

Producer

makes sense to let it slide, i get paid as the client pays their bill, sometimes they over pay and get docked when that happens. live comish is a blessing and a curse (mostly a blessing)

StringerBell

Politicker

Account Executive

Everywhere I've worked had clawbacks, usually if they didn't pay 6 months of the contract. Rarely ever an issue

Account Executive

Sounds like they want to turn you into a collection agency in addition to hitting your quota. Seems like a tactic to use when there is no plan to enforce a contract and that makes YOU responsible for the company's agreement. They wouldn't add this if there wasn't a reason to. I would be very leery of signing off on that comp plan. If they aren't hitting company numbers you should be very careful about where things are going.

lajefa

Good Citizen

Enterprise Account Executive

This. Don't be afraid to push back when shit doesn't seem legit. These are not the times to be playing with reps' $$$. The company is cya so you better do the same.

TimeKillsDeals

Good Citizen

Lead Account Executive

Clawbacks are pretty common in SaaS, particularly if you don't get annual payment upfront. We have this at our company and it's rarelyneeded as long as you're signing up the right buyers.

If you still feel compelled to dig further, the only thing I would check is the % of deals in the prior year that a clawback was needed (hopefully they'll provide this info if you ask).

As long as it's small percentage, I wouldn't worry about it - just the nature of the business. 👍

salesboi22

Politicker

Head of Growth

I’ve had clawbacks in a really fair way before. I got full credit up front when I was basically selling trials with multiple months free. First 6 months if they cancelled the deal was fully clawed, next 6 months was 50%, after 12 months I was good to go

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