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Cash-Collected Commission
Commission earned only when cash is actually collected from the customer.
Specialty
Advanced
How it works
Earning trigger is cash collection rather than booking. Eliminates clawback need and reduces post-termination exposure but creates a longer feedback loop for reps. Common in industries with material payment risk - services, agencies, staffing.
Formula
Commission earned at cash collection. Until then, accrued but not earned.
Worked example
Example. A $100K deal closed in March; customer pays in April. Rep doesn't 'earn' commission until April; accrual posts in March, payout follows in May statement.
Pros & cons
Pros
- Eliminates clawback need
- Aligns rep with cash-flow reality
- Strong protection for the company
Cons
- Long feedback loop demotivating
- Reps often shadow-account closes vs. cash
- Plan-modeling is harder
Best for
- Staffing and services
- Agencies and consulting
- Plans in industries with material AR risk