What is Clawback?
Clawback is a core concept in modern B2B revenue. Here is a clear, accurate definition, why it matters, and how Ardovo handles it.
Short answer
A clawback is a provision that lets a company reclaim commission already paid to a salesperson if the underlying deal falls through, such as a customer canceling or failing to pay within a set window. Clawbacks protect the business from paying for revenue that never materializes and discourage reps from closing bad-fit deals.
Key takeaways
- Recovers paid commission when a deal later fails.
- Triggered by early cancellation or non-payment.
- Protects against paying for revenue that never lands.
- Discourages closing bad-fit or risky deals.
Why it matters
Without clawbacks, a rep could earn commission on a deal that churns immediately, costing the company twice. Clawbacks align incentives toward durable, quality deals rather than quick, fragile ones.
How Ardovo handles it
Ardovo links commission to deal outcomes and lifecycle, so if a deal cancels within the clawback window the impact is visible and traceable, keeping payouts aligned with revenue that actually stuck.
Frequently asked questions
When do clawbacks apply?
Typically when a customer cancels or fails to pay within a defined period after closing, often 90 days to a year. The exact triggers and window are set in the compensation plan.
Why do companies use clawbacks?
To avoid paying commission on revenue that never materializes and to discourage reps from pushing through deals likely to churn. They align rep incentives with lasting, quality business.