Pay period
A pay period is the span of time a pay run covers. In sales compensation two windows matter: the earning period that decides which deals count, and the payroll period that delivers the money. The gap between their edges is why a deal closed on the last day of a month can be paid six weeks later.
Ten to six on the last day of the month, and a rep is on the phone trying to get a signature back before the clock runs out. Everyone in sales has watched this and most people assume it is about the quota. Often it is about the calendar: the deal that lands tonight is paid in two weeks, and the deal that lands tomorrow morning is paid in six.
Keeping the two windows separate in your head is the whole skill. The earning period is a sales concept, usually monthly or quarterly, and it answers which deals belong to which number. The payroll period is a finance concept, usually semi-monthly or biweekly, and it answers which bank transfer carries the money. Biweekly payroll gives twenty-six pay dates against twelve commission periods, so commission rides on a designated run and the other fourteen carry salary alone.
Between the two sits the cutoff, which is the part most plans forget to specify. A run calculated on the last day of the period cannot see the deals signed that afternoon, so the cutoff has to fall a few days after the period closes: enough time for CRM data to settle, for the review to happen, and for the file to reach payroll before its own deadline. Write the cutoff into the plan document as a date rather than leaving it as whatever the person running the cycle does.
One more property matters more than it sounds. A pay period closes, and once payroll has been submitted it cannot be reopened. A correction found afterwards does not go back and change the run. It goes forward as an adjustment in the next open period, carrying a label saying which period it belongs to. Any system that offers to recalculate a paid run is offering something payroll will not accept.
What one day of close date is worth
A monthly earning period, a cutoff three business days after month end, and a pay date on the 15th of the following month. Two identical deals close a few hours apart.
- Earning period
- 1 to 31 March
- Data cutoff and calculation
- 4 April
- Review, approval and payroll submission
- 5 to 9 April
- Pay date for the March period
- 15 April
- Deal closed 31 March, days to payment
- 15 days
- Deal closed 1 April, paid 15 May
- 44 days
- What crossing the period boundary by one day costs
- 29 days
Quarterly periods multiply the same effect. On a quarterly plan paid one month in arrears, a deal closing on the first day of a quarter waits almost four months for its commission, which is worth knowing before anyone designs a quarterly cadence for its administrative tidiness.
A period boundary with no timezone attached
A deal timestamped 31 March at 23:40 in Vancouver is already 1 April in UTC, and whichever the system happens to use decides which month the rep gets paid in. The same ambiguity bites reports, statement date ranges and the quota a deal counts toward, and it bites hardest at quarter end when the amounts are largest. Fix it once by writing the boundary into the plan as an instant in a named timezone, then make sure the calculation reads that instant rather than whatever a date string parses to on the machine running the job.
- What is a pay period?
- A pay period is the recurring span of time that a single payroll run covers, commonly weekly, biweekly, semi-monthly or monthly. In sales compensation it works alongside a separate earning period, which determines which deals are credited. A deal earned in the March period is typically delivered by a payroll run in April, so the two windows rarely line up.
- How long after a deal closes is commission usually paid?
- It depends on the earning period and the lag the plan sets. A monthly plan paid in the following month puts roughly two to six weeks between a close and the payment, depending on where in the month the deal landed. A quarterly plan paid one month in arrears can stretch that to nearly four months for a deal closed early in the quarter. The plan document should state both the period and the lag.
Nearby terms
Knowing the word is
the easy half
Commish pays pay period the way your plan describes it, shows the arithmetic on every line, and traces each payment back to the deal that earned it.