Worked example
A $5,000 monthly recoverable draw, with $3,000, $4,500 and $9,000 of commission earned over the first three months.
| Input | Value |
|---|---|
| Monthly draw | $5,000.00 |
| Draw type | Recoverable: shortfall is repaid from later commission |
| Commission earned, month 1 | $3,000.00 |
| Commission earned, month 2 | $4,500.00 |
| Commission earned, month 3 | $9,000.00 |
| Result | Value |
|---|---|
| Total paid over 3 months | $16,500.00 |
| Payout, month 1 | $5,000.00 |
| Payout, month 2 | $5,000.00 |
| Payout, month 3 | $6,500.00 |
| Deficit carried after month 1 | $2,000.00 |
| Deficit carried after month 2 | $2,500.00 |
| Deficit carried after month 3 | $0.00 |
| Total commission earned | $16,500.00 |
| Shortfall forgiven | $0.00 |
- Month 1: pay max(draw, earned 3000 − deficit carried in): $5,000.00
- Month 2: pay max(draw, earned 4500 − deficit carried in): $5,000.00
- Month 3: pay max(draw, earned 9000 − deficit carried in): $6,500.00
- Total paid: $16,500.00
- Deficit carried forward: $0.00
How each draw type works
Recoverable draw — the draw is an advance. Any month the commission falls short, the gap is carried forward and deducted from future commission before anything above the draw is paid.
Available = commission earned − deficit carried in
Payout = max(draw, available)
Deficit carried out = max(0, draw − available)
Non-recoverable draw — the draw is a floor. The rep is paid the larger of the draw or the commission, and any shortfall is absorbed by the company.
Payout = max(draw, commission earned); forgiven = max(0, draw − commission earned)
In the default example the recoverable draw pays $5,000, $5,000 and $6,500: the $2,500 deficit built in the first two months is repaid out of the strong third month. Over the three months total pay equals total commission, which is the point of a recoverable draw.
How to use it
- Enter the monthly draw from the offer letter or plan.
- Enter the commission actually earned in each of the three months, before the draw is applied. The commission calculator can compute these from deals.
- Switch the draw type to compare what the rep receives and what the company carries.
Limitations
- Three months only, starting with no deficit. To continue, start the next run with month 1 commission reduced by the carried deficit.
- Some plans cap the amount recovered per month or write off deficits at year end; those rules are not modelled.
- Whether an unrecovered draw can be collected when someone leaves depends on the signed plan and on local wage law. This page is not legal advice.
Frequently asked questions
What is the difference between a recoverable and a non-recoverable draw?
A recoverable draw is an advance that later commission pays back. A non-recoverable draw is a guaranteed minimum: if commission falls short, the difference is never repaid.
Do I have to pay back a recoverable draw if I quit?
It depends on what your plan says and on the law where you work. We do not give legal advice; check your signed plan and ask HR or an employment lawyer.
Is a draw the same as a base salary?
No. Salary is paid regardless of results. A recoverable draw is offset against commission, and even a non-recoverable draw only tops commission up to a floor.
How is a draw used during ramp-up?
New reps often get a non-recoverable draw for their first months, while pipeline builds, before switching to a recoverable draw or pure commission. Model each phase separately with this calculator.