Business Finance
finance help reqired

Question Description

Need help with my Business question - I’m studying for my class.

What is the difference between a recoverable and non-recoverable draw?

Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

Final Answer

A recoverable draw (also known as a draw against commission) is a set amount of money paid to the sales representative by the company at regular intervals. When a salesperson′scompensation is derived largely from commissions, a company can pay the salesperson a substantial sum of money even before the commissions are earned. This payment method provides the salesperson with funds with which to plan and pay for basic living expenses. When the commissions are earned, the salesperson pays back the draw.

When the amount of commission earned is more than the draw, the salesperson receives the draw amount plus whatever is left over after the draw balance is paid off. When the commission earned is less than the draw, the salesperson receives the draw amount only.

The draw activities are recorded in a spreadsheet under the categories: commission earned, pay cheque amount and draw balance:

Pay Period Commission Earned  Pay Cheque Payment  Debt  Draw Balance
(Week Ending)

Mar. 1  $400 $1,000 $600  $600
Mar. 8  $600 $1,000 $400  $1,000 
Mar. 15 $1,200  $1,000   <$500>  $300 
Mar. 22  $1,500  $1,000  <$500>  $300
Mar. 29 $1,400  $1,100  <$300>  $0

A non-recoverable draw occurs when the salesperson′s commissions are less than the draw amount and the draw monies are not returned or carried forward. The salesperson gets to keep the draw amount.


UT Austin

Anonymous
The tutor managed to follow the requirements for my assignment and helped me understand the concepts on it.

Anonymous
The tutor was knowledgeable, will be using the service again.

Anonymous
Awesome quality of the tutor. They were helpful and accommodating given my needs.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors