Commission and incentive glossary

Short, plain-English definitions of the terms used in commission and incentive plans. Terms are in A–Z order.

Accelerator

A higher commission rate that applies once a rep passes a set level of quota attainment, e.g. above 100%. It rewards over-performance.

A time-stamped record of every calculation, plan change and approval, showing who did what and when.

Taking back commission already paid, usually because a deal is cancelled, refunded or doesn't meet the plan's conditions.

Commission expense that has been earned in a period but not yet paid. Finance records it so the books reflect the true cost.

A question or disagreement from a payee about how a commission was calculated or paid.

The rules that decide who earns commission, on what, at what rate and when it is paid. Also called a compensation plan or commission scheme.

The percentage of an eligible amount paid as commission. For example, $10,000 at 5% gives $500.

A report for each payee showing the deals, rates and adjustments behind their commission for a period.

Dividing the credit or commission for one deal between two or more people.

An advance paid against future commission. A recoverable draw is paid back from later commission; a non-recoverable draw is not.

The date from which a plan or rate change applies. Deals before it use the old rule; deals after it use the new one.

Conditions that decide whether a person or transaction qualifies for commission, e.g. deal status, product or date.

Software and processes used to design, calculate, approve and pay variable pay such as commissions and bonuses.

(1) A commission paid to a manager on their team's sales. (2) A manual change to a calculated result, which should be approved and logged.

The commission amount approved and sent to payroll for payment.

A saved version of a commission plan. Versioning shows what rules applied when, and lets you roll back.

The sales target a rep or team is expected to hit in a period.

How much of their quota a rep has achieved, shown as a percentage. 100% means the target was met.

A short-term incentive for a specific goal, such as selling a new product during a campaign.

A plan where the rate changes as performance passes set thresholds, e.g. 5% up to €50,000 and 7% above it.