Commission clawbacks

Returns, clawbacks and corrections can take back more commission than a participant still has to be paid. Bitta Commission handles this with recovery policies: the shortfall becomes recoverable debt, which later settlements recover from the participant's future commission within the limits you set. This page shows you how to set up recovery policies, what happens at settlement, and how finance writes off, holds or overrides open debt.

How a negative balance arises

When a return or correction reduces an earning, the negative delta first offsets the participant's eligible balance. See Commission returns.

• The eligible balance covers it. Nothing else happens. The next settlement pays less.
• The eligible balance goes negative. If an Active recovery policy applies to the plan version, or an Active company default policy exists, the negative eligible position moves to the Recoverable bucket. Without one, the negative balance stays eligible and a settlement line whose net is negative is Carried Forward.

When a payment is unapplied or a credit memo is netted

With payment-based eligibility, commission that was already released can go back when a payment is unapplied from the invoice or a credit memo is netted against it. See Credit memo netting. If the commission was already paid out, the participant's eligible balance turns negative. Only the shortfall caused by this reversal moves on; an older negative eligible balance of the participant stays where it is. The Unapplication Behavior of the eligibility policy decides what happens to the shortfall:

Unapplication Behavior	What happens to the shortfall
Reverse Eligibility	Moves to Recoverable when an Active recovery policy applies. Otherwise it stays eligible and nets against the next settlement.
Net Future	Always stays eligible and nets against the next settlement, outside the recovery records.
Hold Recovery	Moves to Recoverable, and the participant's recovery plan gets a Recovery Hold, so nothing is recovered until a manager reviews it.
Manual Review	Moves nothing to Recoverable.

You set Unapplication Behavior in the New Eligibility Policy dialog, for the triggers On Payment and On Full Payment only. See Eligibility rules.

A correction that only reduces commission already linked to earlier governed output is calculated even when the license state no longer allows new positive commission. Freezing a settlement still needs a Trial, Active or Grace license state. See License lifecycle.

Step 1: Set up recovery policies

Open Commission Recovery Policies and add a policy. Leave Plan Code blank for the company default policy.

Field	What it does
Plan Code, Plan Version No.	The plan version the policy applies to. A plan version policy is used before the company default when the negative balance is moved to Recoverable.
Recovery Method	Net Against Future Eligible, Limit Per Settlement, Write Off or Manual Review.
Settlement Limit Percent	For Limit Per Settlement, the maximum share of a settlement payable applied to recovery.
Maximum Per Settlement Amount	An absolute cap on recovery in one settlement. Zero means no cap.
Respect Protected Pay	Keeps the remaining payable at or above the participant version's protected pay amount.
Write-Off Days	For Write Off, the number of open days after which the balance is written off. Zero disables the age rule.
Write-Off Threshold Amount	For Write Off, the amount at or below which the balance is written off. Zero disables the threshold rule.
Termination Handling	What happens to open debt of a terminated participant: Continue Recovery, Write Off or Manual Review.
Status	Only Active policies are applied.

Method	Effect at settlement
Net Against Future Eligible	Recovers open debt from up to 100 percent of the next payables, subject to the caps and protected pay.
Limit Per Settlement	Recovers at most the limit percent of each payable, and at most the maximum amount.
Write Off	Recovers nothing. The debt stays open until a write-off rule removes it.
Manual Review	Recovers nothing until a manager clears the review with Manager Override.

A Recovery Hold set by the Hold Recovery behavior works like Manual Review: the held debt is neither recovered at settlement nor written off by the age or threshold rule, and Commission Recoveries shows its method as Manual Review. The participant's method override and review state stay as they were, so once a manager approves a Manager Override, the hold is lifted and recovery continues under the method that applied before.

Step 2: Settle as usual

1. Create and refresh the settlement as usual. For each participant with open debt, the app calculates the recovery and shows it as the line's Recovery Amount. Net Amount is what is paid after recovery. A Maximum Recovery Percent Per Settlement on the participant's country/region policy limits it further.
2. Freeze the settlement. The recovery is recorded once as a recovery application, and the remaining debt is recovered from later settlements.

Debt is recovered only from the same participant's commission and in the same currency. See Settle commission.

Step 3: Monitor and act on open debt

1. Open Commission Recoveries. It shows one row per participant and currency with open or past debt.

Field	What it shows
Participant Status	Termination handling applies to terminated participants.
Recoverable Amount	The open debt that future settlements can recover.
Total Recoverable Amount, Recovered Amount, Written Off Amount	The history of the debt.
Eligible Amount	The participant's current eligible balance.
Recovery Method	The method that applies, including any participant override. A participant with a Recovery Hold shows Manual Review.
Legal Hold	Whether recovery is blocked.
Manager Override Percent	An approved share of each payable applied to recovery.
First Open Date, Days Open	Used by the write-off age rule.

2. Choose the action you need. Write Off, Set or Clear Legal Hold and Manager Override open Correction Decision, which asks for a Reason Code, plus the Amount or Percent where needed. Apply Write-Off Policy runs immediately.

• Write Off moves part or all of the open balance to the Written Off bucket. The amount must be positive and within the open balance.
• Set or Clear Legal Hold blocks or allows recovery. A held balance stays visible as open debt, and a legal hold stops recovery whatever the method.
• Manager Override sets a share of each settlement payable (0 to 100 percent) for recovery. A share above zero replaces the policy limit, and the action always clears manual review and lifts a Recovery Hold.
• Apply Write-Off Policy writes off every balance that meets the default policy's age or threshold rule (Write Off method) or its termination rule, as of the work date. Balances on legal hold are skipped, and a balance with a Recovery Hold is not written off by the age or threshold rule.

Recovery Plans opens Commission Recovery Plans, the per-participant record of holds, overrides and manual review. Its Recovery Hold field shows a hold set by the Hold Recovery behavior. Changes are made from Commission Recoveries so every decision is logged.

Recovery evidence

Settlement Applications opens Commission Recovery Applications, the append-only record of every recovery and write-off: the kind, when it was applied, the payable before recovery, the amount applied, the recoverable balance before and after, the limit percent and method, the reason, and a tamper-evident Entry Hash.

Recovered commission posts to a recoverable account: the Recoverable Account No. on the account mapping, or the default on Commission Posting Setup. See Commission accruals.

Troubleshooting

• A negative balance did not move to Recoverable. Check that an Active policy covers the plan version or that an Active company default policy exists.
• Nothing was recovered. Check the company default policy, a legal hold, a Recovery Hold, the Write Off or Manual Review method, protected pay, or a currency mismatch.
• An unapplied payment or netted credit memo did not create recoverable debt. Check the Unapplication Behavior of the eligibility policy. Net Future and Manual Review keep the shortfall in the eligible balance, and Reverse Eligibility needs an Active recovery policy.
• BAA-COR-RECOVERY-WRITE-OFF. The write-off amount is zero or exceeds the open balance.
• BAA-ACC-RECOVERABLE-ACCOUNT. Set a recoverable account on the account mapping or on Commission Posting Setup.

For the reports that cover recoveries, see Commission reports.

What's next

Capitalize commission cost when your accounting policy requires it: ASC 340-40 deferrals.