What Are Deductions?

Deductions typically apply when you use a YTD or QTD plan. Deductions allow you to re-evaluate all commissions earned YTD / QTD, but deduct what has been paid previously YTD / QTD.

This approach is often used if transaction data can retroactively change. For example, if amounts retroactively change, a full re-evaluation of all commissions YTD / QTD may be warranted.

Suppose that you have a YTD plan with monthly payment.

Each month, we will re-evaluate commissions earned on each deal YTD:

In January, calculate all commissions earned from Jan. 1 to Jan. 31st
In February, calculate all commissions earned from Jan. 1 to Feb. 28
In March, calculate all commissions earned from Jan. 1 to Mar. 31

Without deductions, it's quite clear that you would double-pay commissions!

What we have to do is deduct what has been paid before:

In January, calculate all commissions earned from Jan. 1 to Jan. 31st
- Nothing to deduct
In February, calculate all commissions earned from Jan. 1 to Feb. 28
- Deduct what was paid in Jan.
In March, calculate all commissions earned from Jan. 1 to Mar. 31
- Deduct what was paid in Jan. AND Feb.

Here is how deductions will appear visually on incentive dashboards. You can of course choose your own terminology.