True-up is a periodic process where commission calculations are reviewed and adjusted to ensure salespeople have received the correct compensation. It's about "truing up"—bringing things into balance—by correcting for changes, errors, or missing data.
True-ups are particularly important in complex commission structures where data can change over time, or where commission is calculated on estimates that are later confirmed.
Review deals where data has changed since original calculation.
Recalculate commission based on updated data.
Compare previously paid with correct amount.
Add or subtract in next payout period.
| Element | Original | Adjusted | Difference |
|---|---|---|---|
| Deal value | $60,000 | $75,000 | +$15,000 |
| Commission (10%) | $6,000 | $7,500 | +$1,500 |
True-up: Rep receives additional $1,500.
| Element | Original | After Credit | Difference |
|---|---|---|---|
| Deal value | $45,000 | $40,500 | -$4,500 |
| Commission (10%) | $4,500 | $4,050 | -$450 |
True-up: $450 deducted from next paycheck.
Rep hits accelerator threshold late in quarter:
| Month | Quota Attainment | Rate Used | Correct Rate |
|---|---|---|---|
| January | 90% | 10% | 12% (due to Q total) |
| February | 95% | 10% | 12% |
| March | 130% | 12% | 12% |
At quarter's true-up, January and February are recalculated at 12% rate, and difference is paid.
| Frequency | Advantages | Disadvantages |
|---|---|---|
| Monthly | Quick correction, fewer large adjustments | Administratively heavy |
| Quarterly | Balanced, fits with accelerators | Can have larger adjustments |
| Annual | Simple | Large adjustments, late-discovered errors |
Define when and how true-ups occur.
Inform reps about upcoming adjustments before payroll.
Consider max deduction per month to avoid "negative paycheck."
Use a system like Prowi to identify and calculate true-ups automatically.
True-up is a critical process for ensuring accurate commission administration. By establishing systematic true-up routines, you build trust with the sales team and ensure everyone receives the compensation they've earned.
Want to automate true-ups? Prowi automatically identifies deals requiring true-up and calculates adjustments. Book a demo to see how we can simplify your commission administration.