Holdback (Sales Compensation)

Owned by Jana Volencová (Deactivated)
Oct 30, 2023
2 min read

Holdback is defined in a Compensation Plan on the header level. It allows you to enter how much of the compensation should be held back from the payee and paid only in the last period of the plan. This mechanism helps you ensure that you do not overpay your Sales Agents in case of cancellations/returns etc. It is executed by the logic SC_HoldBack_Configurator.

How Holdbacks Work

  • Holdback is applicable per each line item in a value specified, per each payment period as defined on the line item.

  • Holdback value defines the value which should be “held back“ by the company – not paid out immediately (for the payment period). It is defined either in percentage of a compensation earned in the payment period or by flat value.

  • Holdback value is subtracted from the final compensation value on the COR.

  • If the holdback value (flat) is higher than a compensation earned, all the compensation is held back accordingly (but nothing is owed to the company).

  • If the holdback is defined as a percentage, 100% is the maximum which can be defined. (It is validated during recalculation.)

  • Holdbacks are still counted as compensation earned by the seller, but held back and planned to be paid out later.

  • In CORs, there is the Holdback attribute.

    1. If Holdbacks are disabled globally, it shows “N/A“ as a value. If, in the future, this gets enabled, there is information that this was not available/applicable at the time of calculation.

    2. If the payment period is NOT the last payment period:

      1. For purpose of holdbacks we define last payment as either:

        • The last payment period of a given “Quota For Period“ (e.g. the last payment of the year if Quota is defined for “Plan Duration” and the plan matches the calendar year etc.).

        • The last payment of an expiring plan (e.g. even though Quota is defined for a year, the plan expires in August, then August is the last payment).

        • It is the last payment because the seller is terminated/removed from a team and this is the last payment period for the given agent.

      2. If the holdback was defined as a value:

        • Current Compensation > Holdback = Holdback

        • Current Compensation < Holdback = Current Compensation (the company cannot hold more than the value they are supposed to pay)

      3. If the holdback was defined as % (max. 100%) = Current Compensation * Holdback

      4. Holdback can never be greater than Current Compensation.

      5. If Current Compensation < 0 (e.g. no sales + returns/adjustments etc.)

        • Holdback = Current Compensation
          The seller owes money to the company for this month, so the “debt is lowered“.

    3. If the payment period IS the last payment period:

      1. Nothing is held back; the seller gets paid everything which was held back until now.

      2. Holdback is the SUM(Compensation Payment(below)) for all previous periods (e.g. 11 months) - SUM(Current Compensation) for all previous periods (e.g. 11 months).

      3. This calculates the final value. It is known how much the seller earned over all the previous periods vs. how much they actually got paid. This last holdback is used to even out the score.

      4. See attached Holdbacks_examples.xlsx for examples and hopefully better understanding

  • There is an attribute in CORs: Compensation Payment: Current Compensation - Holdback.