Sales Performance

Clawback

Updated September 2026Finance Software Glossary

A clawback is a provision that lets a company take back commission already paid to a salesperson, usually because the customer cancels, fails to pay or returns the product within a defined window. Clawbacks are typically recovered by deducting the amount from the rep's next commission payment rather than demanding cash back.

Clawbacks protect the company from paying full commission on revenue that never materializes. Common triggers are customer cancellation inside a set period, non-payment and early contract termination. The window and triggers must be written into the compensation plan, and rules vary by jurisdiction, so legal review is standard practice.

Clawbacks also matter for accounting. Expected clawbacks reduce the commission expense a company should recognize, and under ASC 606 they affect the capitalized contract cost asset and its amortization.

In software: commission platforms such as Xactly and CaptivateIQ apply clawback rules automatically and net recovered amounts against future payouts, keeping a full audit trail for the rep and the auditor.