Commision Questions

Sales Commission — Knowledge Base Article

Article ID: COMP-001 Last Updated: April 2026 Owner: Finance / Compensation Team Audience: Finance & Compensation Team Status: Active

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Overview

This article serves as the internal reference guide for the Finance and Compensation Team on the administration, calculation, and management of sales commissions. It covers how commissions are calculated, when and how they are paid, and the process for handling disputes and corrections. This document should be used in conjunction with the current Sales Compensation Plan on file for the applicable fiscal year.

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Section 1 — How Commission is Calculated

1.1 Commission Structure Basics

Sales commissions are calculated based on each representative's attainment against their assigned quota for a given period. The standard commission calculation follows this formula:

Commission Earned = Attainment Rate × On-Target Commission (OTC)

Where:

• On-Target Commission (OTC) is the agreed-upon commission payout at 100% quota attainment as defined in the rep's compensation plan
• Attainment Rate is calculated as: Closed Revenue ÷ Assigned Quota × 100

1.2 Commission Tiers

Commission rates are tiered based on attainment thresholds. The standard tier structure is as follows:

Attainment Level	Commission Rate
0% – 49%	0% of OTC
50% – 74%	50% of OTC
75% – 99%	75% of OTC
100%	100% of OTC
101% – 119% (Accelerator)	125% of OTC
120%+ (Accelerator)	150% of OTC

Note: Tier thresholds and accelerator rates may vary by role, segment, or fiscal year. Always refer to the active compensation plan document for the applicable period.

1.3 Eligible Revenue

Only closed-won opportunities that meet all of the following criteria are eligible for commission calculation:

• The opportunity is fully executed with a signed contract or purchase order
• Revenue has been recognized or is scheduled for recognition in accordance with the company's revenue recognition policy
• The deal has been booked and verified in the CRM system
• No holds, disputes, or pending legal reviews are attached to the opportunity

1.4 Multi-Rep & Split Deals

Where a deal involves more than one sales representative, commission is split according to the agreed-upon split percentage documented in the CRM at the time of close. The Finance team is responsible for verifying split allocations prior to processing. Total split across all parties must equal 100%. Any discrepancies in split documentation must be resolved before commission is processed.

1.5 New Logo vs. Install Base

Commission rates may differ between new logo deals and install base expansions. The Finance team should reference the compensation plan to confirm whether a differentiated rate applies for the applicable rep, segment, or deal type before processing.

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Section 2 — Payment Schedule & Timing

2.1 Commission Pay Cycle

Sales commissions are processed and paid on the following schedule:

Pay Period	Deals Eligible	Processing Date	Payment Date
Month 1	Deals closed by last business day of Month 1	5th of following month	15th of following month
Month 2	Deals closed by last business day of Month 2	5th of following month	15th of following month
Month 3 (QE)	Deals closed by last business day of quarter	8th of following month	20th of following month

Quarter-end processing carries a slightly longer lead time to accommodate volume and audit requirements.

2.2 Cutoff Policy

Deals must be fully closed and booked in the CRM by 11:59 PM on the last business day of the pay period to be included in that period's commission run. Deals submitted or approved after the cutoff will be included in the following pay cycle. No exceptions will be made outside of the formal dispute and correction process outlined in Section 3.

2.3 Clawback Policy

Commissions are subject to clawback under the following conditions:

• A customer cancels or defaults within 90 days of contract execution
• A deal is found to have been booked in error or in violation of the company's booking policy
• A contract is voided or materially amended post-close that reduces the recognized revenue

In the event of a clawback, the Finance team will notify the affected representative and their manager in writing. The clawback amount will be deducted from the next scheduled commission payment. If the deduction exceeds the next payment, remaining amounts will be recovered over subsequent pay cycles.

2.4 Leaves of Absence & Terminations

• Active Leave: Commission continues to accrue on deals already in progress prior to the leave, subject to deal close and standard eligibility criteria. New quota assignments during leave are handled on a case-by-case basis in coordination with HR.
• Voluntary Termination: Commission is paid on closed-won deals booked up to and including the last date of employment. Pipeline deals that close after the termination date are not eligible.
• Involuntary Termination: Commission eligibility upon involuntary termination is governed by the terms outlined in the separation agreement and applicable state law. Contact Legal and HR before processing.