Draw (also called draw against commission) is a guaranteed minimum payment to salespeople, advanced against future commission earnings. The draw provides income stability during slow periods or ramp-up phases and can be structured as recoverable (repaid from future commissions) or non-recoverable (forgiven if not earned). According to WorldatWork (2024), 62% of companies use some form of draw in their compensation plans.
Draws serve important purposes for sales compensation:
According to the Alexander Group (2024), 71% of companies use draws during new hire ramp periods.
| Type | Description | If Commission < Draw |
|---|---|---|
| Recoverable | Advance that must be repaid | Debt carries forward |
| Non-recoverable | Guaranteed minimum | No repayment required |
| Time-limited | Only in specific period | Depends on type |
Setup:
| Month | Sales | Commission | Draw | Payout | Balance |
|---|---|---|---|---|---|
| January | $30,000 | $3,000 | $6,000 | $6,000 | -$3,000 |
| February | $50,000 | $5,000 | $6,000 | $6,000 | -$4,000 |
| March | $100,000 | $10,000 | $6,000 | $6,000 | $0 |
| April | $80,000 | $8,000 | $6,000 | $8,000 | $0 |
What happened:
Setup:
| Month | Sales | Commission | Payout |
|---|---|---|---|
| January | $30,000 | $3,000 | $5,000 (draw) |
| February | $80,000 | $8,000 | $8,000 (commission) |
Key difference: No debt to repay. January's $2,000 shortfall (commission vs. draw) is absorbed by the company.
Most common use of draws is during onboarding:
| Month | Quota % | Draw Type | Amount |
|---|---|---|---|
| Month 1-2 | 0% | Non-recoverable | 100% of target commission |
| Month 3-4 | 50% | Non-recoverable | 75% of target commission |
| Month 5-6 | 75% | Recoverable | 50% of target commission |
| Month 7+ | 100% | None | Commission only |
| Aspect | Recoverable | Non-Recoverable |
|---|---|---|
| Risk | Rep carries risk | Company carries risk |
| Admin complexity | Requires balance tracking | Simple (higher of comm/draw) |
| Rep preference | Less attractive | More attractive |
| Common use | Ongoing support | Ramp period, new market |
According to Pavilion (2024), 78% of non-recoverable draws are used during ramp periods only.
Document clearly: Specify in the compensation plan whether draw is recoverable, how debt accumulates, and when it resets.
Set appropriate levels: Draw should cover basic needs but still motivate earning commission.
Consider time limits: Most draws have a natural end—after ramp period or when market stabilizes.
Track balances transparently: For recoverable draws, reps should always be able to see their current balance.
This depends on contract. Many companies forgive outstanding draw debt upon termination, while others recover it from final payout.
Yes. Many plans have base salary + draw + commission. The draw acts as an extra safety net during slow periods.
Draw is an advance against commission (potentially repayable), while bonus is earned on top of commission and is never repayable.
Draws provide crucial income stability for sales reps, especially during ramp periods and in volatile markets. With Prowi, you can configure both recoverable and non-recoverable draws, track balances automatically, and give reps full visibility into their earnings.