boris11

Enterprise Account Executive

Commission paid out, turns our we didn't invoice the customer so they aren't paying - last tax year

Hi gents,

I closed a ±$200k ARR upsell in 2022, commission paid, beers had, high fives all around.

We did it through the Azure marketplace. Turns out, "accepted offer" doesn't always mean "accepted offer", and the client wasn't committed to that revenue, and has been using $200k worth for free for 9 months.

Luckily they are happy to work to fix the problem. Unhappily, due to 2023 economic issues, they only need half the licenses. So bye bye $100k ARR.

Company wants to claw back the commission. I've never had this happen before - how does that even work? I've paid tax on that money? In a previous tax year! How "should" this work, and then what is the reality of what I can expect from my management? I'm in the UK.

My boss is onboard, but this is coming from Finance.

Cheers!

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21 comment

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Pachacuti

Politicker

10

They call me Daddy, Sales Daddy

In all fairness the company should eat it. it’s their fault for not billing it correctly.

They should be clawing back Finance bonuses instead

AnchorPoint

Politicker

9

Business Coach

Not your error! You did your job -- someone else did not.

jefe

Arsonist

0

🍁

Exactly. Not his problem.

CuriousFox

WR Officer

8

🦊

What do the commish docs that you signed say?

punishedlad

Tycoon

4

Regional Partnership Manager

Unless there's something in your contract about clawbacks, you should be fine. This isn't on you. I feel like there's a statute of limitations on this sort of thing as well.

All of this is to say: You don't owe them shite.

oldcloser

Arsonist

3

💀

Ouch!
Not a UK tax expert but over here, you earned the money and paid taxes on the money last year. The clawback will reduce your tax liability this year (and obviously the associated income).

If the clawback is non-negotiable internally, you might be able to get them to spread it out instead of getting popped all at once.

Painful.

FinanceEngineer

Politicker

1

Sr Director, sales and partnerships

Yeah man, I have seen that before. Generally the dock future commission. So you can leave, or negotiate it.

CPTAmerica

Opinionated

1

President/CRO

Get an HR lawyer to look at your agreement and provide advice.

Maximas

Tycoon

1

Senior Sales Executive

Oops,it ain't your fault so either they can settle it or just leave!

Justatitle

Big Shot

1

Account Executive

Very important, does your company clearly state a clawback policy in the employee handbook or commission agreement? If you have been paid and taxes have been deducted, the only thing I could offer is to have the clawback be minus the taxes you paid. seems like you have an incredible argument for not having a clawback happen though.

detectivegibbles

Politicker

1

Sales Director

SalesGPT not have a response for this one?

Kidding, this sucks but I'd have to think they'll take on future commish. Hopefully not!

boris11

Fire Starter

0

Enterprise Account Executive

Appreciate all the comments here.

Comp plan has a section about delinquent accounts, and clawback of commission if a client doesn’t pay (not necessarily exactly applicable here, since my finance team never confirmed the invoice via the azure marketplace) - I think I’m up shit creek without a paddle but I’m going to fight like hell.

JustGonnaSendIt

Politicker

0

Burn Towns, Get Money

Depending on the value of this commission to you, I would recommend talking to an attorney that has experience in this area for an opinion.

It's likely to cost you $500 - $1000 for a consultation. There may be national or local laws that put a time limit on this type of behavior by a company, or otherwise offer you some options.

Havok99

Big Shot

0

Senior Account Executive

Great question! I’m with an HCM company and I have significant chargebacks almost every month. Sometimes it’s $1000 and other months it’s $120k. I’ve never dealt with this level of chargebacks before and it can be soul crushing especially if you had zero hand in the reason. We also have just about the worst Implementation teams I’ve ever experienced. My biggest competitor is my own co. Not really helpful but I hope you don’t get hit hard on that!

TallR

0

Account Executivee

Check the details of your comp. plan that you signed probably at the beginning of the year. Does it say specifically when you get paid?
I had an ex-coworker who years ago successfully sued our company 'cause the customer she sold to filed for BK before paying; however, our comp. plan said that we got paid when invoiced, not when payment was received.

lajefa

Good Citizen

0

Enterprise Account Executive

Don't fall for this bullshit. THEY failed to bill the client, they bear the responsibility. Nope.

salesprofessional26

Executive

0

Enterprise Account Executive

Happened to me once! I showed I submitted all the correct paperwork to finance (documented via email and salesforce), but they failed to process it. Finance was held accountable and I kept my commission. There’s a chance! Your job is to close deals, not micromanage finance to do their job

rsnyc

Good Citizen

0

Account Management Leader

Even if your comp plan has a clawback in it, the company should eat the commission paid out if they didn’t create a process to actually confirm a $200k deal and also let access stay on for 9 months. It’s Finance’s fault for not catching this no more than 90 days from first invoice. I’d fight this if I were you.
* also if you don’t already follow Dan Goodman on LinkedIn, you should follow him and/or reach out for help. Good luck!

Daedalos

Tycoon

0

AE / BDRM

This is ABSURD. I’m sorry you’re going through this because someone dropped the ball.

MrAnderson

Executive

0

AE

Good ol Chris Voss question - How am I supposed to do that? I paid taxes, used that money....how am I supposed to do that?

Repeat over and over.

3 things may happen

1.They give up and eat their mistake. And everything back to normal.

2. Give up...for now, they adjust the comp plan or try to eat from future commission. This is a great moment to look for another opportunity if they are this type of company.

3. Try something illegal like taking from your base, just to realize they can't. But be prepared if they try this stupid route.

Most likely it will be something around 1 or 2.

0

Account Executive

How do you get pay the full circle to it

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