D2D glossary / How reps get paid
What is a holdback in sales commission?
Holdback (reserve): A holdback, or reserve, is a slice of each commission the company keeps for a set time to cover possible chargebacks. If the deals hold, the reserve is released to you later.
Instead of paying a full commission and deducting chargebacks afterward, some companies withhold a percentage of every check into a reserve. Cancellations are charged against the reserve first. What is left is paid out on a schedule in your agreement, for example after a number of months or at the end of a season.
A holdback is not lost money, but it is money you cannot spend yet, and it can be at risk if you leave early. The percentage, the release date and the conditions for release should all be written in your rep agreement.
Ask before you sign
What percentage is held, when is it released, and can I lose it by leaving?
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Holdback (reserve): quick answers
What is a holdback in sales commission?
A holdback, or reserve, is a slice of each commission the company keeps for a set time to cover possible chargebacks. If the deals hold, the reserve is released to you later.
What should I ask a company about a holdback?
Ask this before you sign: "What percentage is held, when is it released, and can I lose it by leaving?" Get the answer in writing, in the rep agreement or the pay plan.