What Is a Draw Against Commission?

The company pays the rep a set amount each pay period. As commissions are earned, they are first applied to the advances already paid, and only the excess is paid out on top. A recoverable draw tracks any shortfall as a running balance that later commissions must clear. A non-recoverable draw is a minimum payment the rep keeps no matter how the period goes, so it behaves like a temporary salary and carries no debt.

A non-recoverable draw is the usual ramp tool on outbound teams, because a new SDR needs months to build pipeline and pay tied only to output would be close to nothing at first. Recoverable draws appear more often with experienced hires on mostly commission plans, such as a contract closer, where the company wants to share early risk without absorbing all of it. Whichever type is used, the offer letter should state the amount, the length, how the balance is calculated, and what happens if the rep leaves.

Two points trip people up. First, a draw is not a salary: a salary is paid regardless and is never settled against commissions, while a draw is an advance with an accounting trail. Second, an unrecovered balance is not automatically collectable. Rules about recovering unearned advances from a departing employee vary by jurisdiction and by contract wording, so have an employment attorney or HR advisor review recoverable terms before using them.