Sales Commission Glossary of Terms

Do you work with sales commissions but have a few gaps in your knowledge regarding terminology? Don’t worry! We have you covered.

Account Executive (AE)

An individual salesperson, responsible for closing sales and managing renewals.

ASC 340-40

A subtopic of ASC 606 that outlines how organizations in the US are required to handle sales commissions in their financial reports. Specifically which accounting policy to apply in different circumstances.

For more information see our Amortization of Sales Commission article.

ASC 606

An accounting standard that outlines how organizations in the US are required to recognize their revenue. It was introduced by The Financial Accounting Standards Board (FASB) in 2014 and became effective in 2018.

For more information see our Amortization of Sales Commission article.

Audit Trail of Approvals

A record containing information about approvals, such as who approved and when.

For more information see our Sales Commission Compliance article.

Business Development Representative (BDR) 

A sales rep responsible for growing business by prospecting and qualifying new leads. Also known as Sales Development Representative (SDR).

Business Intelligence (BI) Platform

A BI platform combines data from throughout your business and supports analysis and visualization of your data to support data-driven business decisions. A BI platform typically includes or connects to a Data Warehouse.

Clawback(s)

A commission amount that a sales rep must repay to a business. For example, if a customer cancels a contract early, the business may clawback some or all of the commission previously paid to the sales rep for this deal.

Clawback Clause

A contractual obligation that requires a sales representative to return already paid commission under certain conditions. 

Clawback Provisions

Contractual obligations that require a sales representative to return already paid commission under certain conditions.

Commission Tracking

The process which computes and records the commission earned by a sales representative.

Commission Expense Accounting

The process of recording sales commissions in the accounting books following specific rules, for example such as those outlined in ASC 340-40.

For more information see our Amortization of Sales Commission article.

Commission Plan

A variable compensation model designed to reward sales reps for their performance.

Customer Relationship Management (CRM) Platform

A CRM platform centrally stores information on your actual and potential customers, and tracks their interactions with your team.

C-Suite

The most senior executives in a company, typically with titles beginning with "Chief" (CEO, CFO, CRO, etc) hence the term.

Data Warehouse (DWH)

A DHW is a database containing data gathered from throughout your business, to enable efficient querying and analysis of said data. A Business Intelligence platform typically includes or connects to a DWH.

Developer Experience (DX)

DX describes the quality of the experience software developers have when using a technical product, particularly in relation to their usage of related Open APIs.

Enterprise Resource Planning (ERP) Platform

An ERP platform supports automation of critical financial and accounting business functions.

The Financial Accounting Standards Board (FASB)

An independent body that sets accounting standards for financial reporting in the United States. It also works with the International Accounting Standards Board (IASB), which is responsible for International Financial Reporting Standards, to develop universal accounting standards. 

The Four Eyes Principle

Is a type of Separation of Duties that requires that a task is authorized by at least two people to be completed. Also known as the two-person rule.

For more information see our Sales Commission Compliance article.

Human Resources (HR) Department

A department responsible for attracting and retaining talent at a company.

Incentives

Rewards designed to encourage a sales representative to meet or exceed specific sales goals.

InsurTech

A technology-enabled insurance company.

International Accounting Standards Board (IASB)

Is an independent body that sets International Financial Reporting Standards (IFRS) that are required to be used by publicly traded companies based in 167 jurisdictions, including all of the EU countries.

IFRS 15

An accounting standard that outlines how organizations are required to recognize their revenue. It was introduced by the International Accounting Standards Board (IASB).

For more information see our Amortization of Sales Commission article.

No-Code Software

Software that supports sophisticated configuration, deployment, and usage without engineering involvement is typically referred to as "no-code software". It constitutes a major trend in B2B software, since customers desire to be less reliant on expensive engineering resources.

On Target Earnings (OTE)

The total earnings of a sales rep upon achieving their targets.

Open API

An Open API allows a customer of a software application to programmatically control its behavior, so as to facilitate tight IT integrations. 

See our Open API mini demo for some examples.

Payroll process

The payroll process is run periodically, and involves finance and HR functions determining exactly how much to compensate employees / freelancers.

Period Locks

An internal control that requires that data is locked after a particular point in time so that no changes can be made to the past period.

For more information see our Sales Commission Compliance article.

PropTech

A technology-enabled property company.

Quota

A quota is a target that a sales rep is expected to achieve, and for which an incentive payment is available.

Return on Investment (ROI)

A performance indicator measured as a ratio between the earning and the cost of a particular investment.

Revenue Operations 

A business function focused on designing and managing the processes related to revenue, including commission tracking.

Sales Representative (Sales Rep)

An individual doing or supporting the selling of products and services of a company.

Sales Contest

A "fun" competition between sales reps, typically used either to better align the team with business goals or to improve team motivation during a "quiet" period.

Check out our blog post for 7 Effective and Easy Sales Contest Ideas.

Sales Commission

The amount paid to a sales rep for making a sale.

Segregation of Duties (SoD)

An internal control, the main purpose of which is to prevent fraud and minimize errors. It is achieved by dividing responsibilities among multiple individuals, so that no single person performs or controls a whole process. Also known as Separation of Duties.

For more information see our Sales Commission Compliance article.

Software as a Service (SaaS)

A business model where customers pay recurring fees to access and use a cloud software application.

Spiff

Stands for Sales Performance Incentive Fund (sometimes “spif” or “spiv”). A spiff is a short-term incentive used to better align the team with business goals.

See our article on spiffs for more information.

SOX Compliance

Adherence to the rules outlined in the Sarbanes-Oxley (SOX) Act. All publicly traded companies doing business in the United States and any private company that is preparing for their initial public offering (IPO) must comply with SOX. SOX-type regulations also exist in other countries including France, the Netherlands, and Germany.

For more information see our Sales Commission Compliance article.

US Generally Accepted Accounting Principles (US GAAP)

Accounting standards used in the United States.

Variable Compensation

A type of compensation that is based on performance. Sales commission is an example of variable compensation.