Glossary
Clawback
A clawback is a company's right to reverse or deduct a commission it already paid a distributor, most often because the underlying sale was returned, refunded, or cancelled, or because an order is later found to violate company policy. Clawbacks are usually deducted from a distributor's next commission payment rather than billed separately.
Also called: commission reversal, chargeback
Why it matters
Clawback terms matter because a distributor's commission on a sale is not always final the moment it is paid. A high customer return rate, or a pattern of orders a company later reverses, can meaningfully reduce a distributor's real take home income compared to what their commission statement first showed.
Example
A distributor earns a 50 dollar commission on a product sale, but the customer returns the product 20 days later, so the company claws back the 50 dollars from the distributor's next commission run.