When it comes to paying sales reps commission, there are typically two different ways to put the money in their accounts. You can go the immediate payment route or the hold and release commission payment route. Both have some pros and cons to them, but generally hold and release commission payment has become a common occurrence in the modern sales environment. Here’s why.

Downsides of Immediate Payment

While immediate payment is the most instantly gratifying way to pay sales reps, it has a couple of downsides that prevent it from being especially favorable. The biggest downside is clawbacks. When a customer doesn’t follow through on payment, this causes the commission to be taken back. This is definitely not a desirable outcome for the sales rep. The real reason that immediate payment still exists side-by-side with hold and release is because it motivates sales reps. They get the commission right after making the sale. But hold and release has more advantages in the long run.

Upside of Hold and Release Commission Payment

When you implement hold and release commission payment, the payout is held until a certain point in the sales cycle. The sales rep can still see what they made off the commission, but won’t receive it until the sale is realized. This avoids clawbacks, keeps cashflow more straightforward, and encourages sales reps to foster strong customer relationships. Of course, you do lose the instantaneous motivation of the immediate payment structure, but the benefits can usually outweigh this. It’s also good to keep in mind that Hold and Release is more attuned to companies that are mid to large-sized, so keep this in mind when deciding on a commission payout system. Click here for more information on a hold and release commission payment software.

Using a Compensation Management Platform

Regardless of your preferred method of commission payout, it’s a good idea to have a compensation management platform to keep things in order. With a compensation management platform, you can design and implement custom commission structures, allow you sales reps to easily track their goals and payouts, and motivate your team to reach their goals sooner. Your sales team will be all the better for it.

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