GlenRoss

Director of Sales

Getting paid quarterly and now only upon payment?

This is the first time I’ve ever heard of this in my career so wanted to see if anyone has had this comp plan.

before coming to this pre series A start up, I was always paid monthly on commissions. This company is quarterly. I know that is standard in enterprise. Not a huge surprise.

then they just updated the comp plan and changed a bunch of shit. Including now sales only gets paid once the customer pays, not upon signature. Not to mention our “collections” is one finance person who also does a million other jobs so not great at collecting.

maybe I’m just ranting but has anyone dealt with this before? Is there any ground to stand on that we as a sales team can say no way?

💰 Compensation

22 comments

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jefe

Arsonist

🍁

Yup. It's annoying, but not really uncommon.

I don't think there's anything you can push back on for this. It's a cashflow thing.

MRK47

Tycoon

Head of Growth

Experienced that in one of my previous gigs...creates unnecessary friction between sales vs finance...for the reasons you mention....an under-resourced finance team struggles to chase payments, update records to show payment received and so on...plus of course, screws the AE if they exit the business (voluntarily or forced).

So in your example, you close a deal in Feb....payment not received by end of Qtr 1, instead is paid in late April.......so does that mean comms on that deal will now only be paid end of Q2 and as the AE, you've had to wait close to 4 months?

I changed that process so that once an opp has been marked as closed won and we are delivering some verifiable type of service (for revenue recognition rules), comms were paid...but there was a clawback policy so if account defaults (outside of agreed terms) or churns outs (within first x weeks), company reserves right to claw back already paid comms.

poweredbycaffeine

WR Lieutenant

☕️

I'm currently on a quarterly comp plan, but if I close something on December 20th and they don't pay till Jan 3rd then it won't be paid till April 2025. They have net 30 terms, so I am fighting tooth and nail to get this changed to close date, not paid date.

This, in my case, is tied to a cash flow problem. Our collections team is the AE that sold the business, so I have a vested interest in getting the smallest net-term built into each deal...but some companies simply won't budge and I honestly get it.

However, if I push to crush a quarterly or annual number and I close that business on the last day of the period then why am I being penalized for payment for months?

CuriousFox

WR Officer

🦊

Jesus that's alotta hats you have to wear. Fucking stressful. You good?

Pachacuti

Politicker

They call me Daddy, Sales Daddy

You need to ask questions. They are obviously doing commission-stalling tactics since I'm sure there's a clause in your agreement that says you need to be there to collect the $$. And they might be having cash flow issues.

Waiting till they get paid though is pretty standard.

Revenue_Rambo

Politicker

Director, Revenue Enablement

Sounds like a founders group that has never sold before. As such they don’t seem to realize that comp plans should motivate reps and not create stress.

Everything you asked about above you’ll need to get clarification around. I worked for a small startup that did commish upon payment, but we were monthly payments.

If they are intent on paying at end of the quarter received you need to consider looking for another company. Closing a deal this month, having them pay in January, only to get your commission in April is a shit deal, and who’s to say they will even be around by the time commission is due.

FinanceEngineer

Politicker

Sr Director, sales and partnerships

Quarterly isn’t uncommon in the start-up world. It also depends on how quickly POs turn into cash, and if there is a lag, i can see it being cash. Usually it’s on signing of the PO with a clawback if the customer doesn’t pay

Sunbunny31

Arsonist

Sr Sales Executive 🐰

We just moved from upon payment to quarterly, so we just did the reverse. However, it’s not uncommon.

It may be a cash flow issue - so pay attention to that. The upside is that clawbacks aren’t an issue any longer.

CuriousFox

WR Officer

🦊

Those pesky clawbacks can suck it

Sunbunny31

Arsonist

Sr Sales Executive 🐰

Hate those!

CadenceCombat

Tycoon

Account Executive

Yikes. Shitty situation.

Justatitle

Big Shot

Account Executive

Is this structure only for commission? or is it all comp that is only paid quarterly? I have heard of only being paid once a customer pays.

GlenRoss

Politicker

Director of Sales

This is just variable. Not base

Retired Sales Professional

That some straight up BS, if you ask me. Signature is a legally sign contract. You did your job and sold what ever service you sold that customer. Not your responsibility to have that individual pay that should be the finance department.

SaaSguy

Tycoon

Account Executive

Not much you can tbh

Director

That is common in many industries. In fact, I know of some companies that paid commissions on order intake that are not around anymore. The customers never paid. So yeah, collect from customer and then pay commissions.

cpsfo

CRO and Managing Consultant

It is becoming a more common practice to pay on revenue vs bookings. Your best play is try to get them to pay half at booking and half upon receipts or something like that. Will be tough to get them to pay at booking especially for startups that are not well funded.

notasalesbro

Big Shot

Senior AE

I would ask questions about their runway. Paying out commissions way after signature and after receiving payment could be a sign of cash problems.
It could also just be a group of founders who have never sold before.

Sales Rep

Your job is to sell. It’s the company‘s job to collect the money. Tell them you need your commission payment monthly or you’re walking.

punishedlad

Tycoon

Regional Partnership Manager

Had this arrangement at a previous Series A I worked for. Hoping this isn't the case for you, but it was kind of a harbinger of more bad news down the line. About 3 months after the policy was implemented, there was a big RoF that gutted about half of the sales team. Another three months and the CRO was fired and only about 4 sales people remained on the team. I jumped ship literally a day before that final announcement.

TheHypnotist

Executive

I have never, ever been paid commission before the customer pays my employer. I have never heard of anyone getting paid because an opportunity is marked "closed, won" - that seems like an insane way to operate to me. It's not sold 'til the money's in the bank.