What a draw is, and when it traps you
A draw is an advance against commission you have not earned yet. A recoverable draw is repaid out of future commission, so a rep who ramps slowly can finish a season having taken more in draw than they earned and owe the balance. A non-recoverable draw is not clawed back and is much less common.
It is a loan, not a salary
This is the part that gets missed, because a draw arrives on the same schedule as a wage and feels like one. A recoverable draw is money advanced against future commission and the company expects it back out of your sales.
How the debt builds
Each period where your commission is less than your draw adds the shortfall to a balance. A slow ramp is exactly the situation where draws are most needed and where the balance grows fastest, which is why the risk lands hardest on new reps.
What to ask before accepting one
Is it recoverable. What happens to an outstanding balance if you leave or are let go. Is there a cap on how large the balance can grow. Those three answers change what the arrangement actually is.
Common questions
- Do I have to pay back a draw?
- A recoverable draw, yes, out of future commission and sometimes as a debt if you leave. A non-recoverable draw is not clawed back. Which one you have is in the contract.
- Is a draw the same as a base salary?
- No. A salary is earned; a recoverable draw is advanced and expected back.
- Can I really end a season owing money?
- With a recoverable draw and a slow ramp, yes. Ask what happens to the balance if you leave before you sign.
More on pay and commission
How D2D reps get paid: commission structures, draws, chargebacks, and 1099 versus W-2.