Accrued Commission
What is accrued commission?
Accrued commission is commission that has been earned but not yet disbursed. The rep did the work, the plan owes them the money, and the cash has not moved.
On the balance sheet it is a liability. The company has recognized the expense and has not yet paid it, so it carries an obligation until it does. That liability is created by the commission expense accrual entry, and it is extinguished when the payment goes out.
It is the number a rep is asking about when they want to know what they have made this month but have not yet received, and it is the number Finance is asking about when they want to know what the company owes but has not yet paid. Same money, two questions.
Accrued commission, pending payout, and paid commission
These three describe the same dollars at different points in their life, and they are constantly confused:
Accrued commissionPending payoutPaid commissionWhose viewFinanceThe rep and the commission adminEveryoneWhat it isA liability recognized on the booksEarned, calculated, awaiting approval or releaseDisbursed. Cash has moved.Where it livesThe general ledgerThe approval queuePayroll and the bankCreated byThe accrual entry at period closeThe calculation completingThe payout runCan it still change?Yes, through reversal or true-upYes, review can adjust itOnly via clawback or true-up
The important relationship: accrued commission and the pending payout queue should reconcile. They are the same money. If the ledger says the company owes $220,000 and the pending queue totals $195,000, something has gone missing between the calculation and the books, and that gap is one of the fastest integrity checks available on a commission process.
A worked example
Maya earns $4,000 in February on a $50,000 deal. It will be paid on 15 March.
DateStatusWhere it sits28 FebruaryEarned. Period closes.Accrued commission: $4,000 liability on the balance sheet.3 MarchCalculated.Also visible to Maya as a $4,000 pending payout.7 MarchReviewed. A booking was $48,000, not $50,000.Accrual and pending both adjust to $3,840. The $160 is a true-up.15 MarchPaid.Liability extinguished. Cash out. Nothing remains accrued.
What this means?
For Finance, accrued commission is one of the more scrutinized liabilities on the balance sheet, because it is estimated rather than invoiced. An auditor will want to know how the figure was arrived at, and "we applied our average commission rate to bookings" is a weaker answer than it sounds, since it ignores accelerators, splits, and overlays, all of which raise the true number.
For the rep, this is simply the answer to a very common question: I closed the deal, so where is my money? It has been recognized, it is owed, and it has not yet been released. Performio reviewers specifically mention valuing visibility into the accrued amount alongside expected end-of-month earnings, which tells you reps want this number even though it is not yet theirs to spend.
This page explains general accounting concepts and is not accounting or tax advice. Treatment depends on your facts, your jurisdiction, and your auditor. Confirm with a qualified professional.
How Visdum handles accrued commission
Visdum derives the accrued figure from the actual calculation rather than from an estimate, so the liability on the books is the commission the plan genuinely owes, including tiers, accelerators, splits, and overlay credit.
Because the accrual and the pending payout queue are views of the same underlying calculation, they reconcile by construction rather than by manual comparison, and a discrepancy between what the ledger says is owed and what the system is about to pay surfaces immediately. Reps can see their accrued and pending amounts on their commission statement, so the question of where the money is has an answer on the page rather than in a ticket.
Take a self-guided product tour to see this in action, or read the complete commission close playbook.
Related terms
Commission Expense Accrual · Pending Payout · Accrual Reversal · Commission True-Up · Deferred Commission
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Frequently asked questions
What is accrued commission?
Accrued commission is commission that has been earned but not yet disbursed. It sits on the balance sheet as a liability, because the company has recognized the expense and owes the money but has not yet paid it. The liability is created by the accrual entry and extinguished when the payment goes out.
Is accrued commission an asset or a liability?
A liability. The company owes the money to the rep and has not yet paid it, so it carries an obligation on the balance sheet. It is created when the commission expense is accrued and removed when the cash is disbursed, at which point the payment entry does not touch the profit and loss account.
What is the difference between accrued commission and a pending payout?
They are usually the same money seen by different people. Accrued commission is the liability recognized in the general ledger by Finance. A pending payout is the admin status of commission that has been calculated but is awaiting approval or release. The two should reconcile, and a gap between them is worth investigating.
Can accrued commission change before it is paid?
Yes. It is an estimate until the calculation is final. If review finds a deal was booked at the wrong value, the accrual adjusts, and the difference is handled as a true-up or by reversing and re-posting the accrual. Once paid, the figure can only change through a clawback or a later true-up.
How is accrued commission calculated?
Ideally by applying the actual comp plan to the deals that closed in the period, rather than multiplying revenue by an average commission rate. An average ignores accelerators, splits, and overlay credit, all of which raise the true cost, so it tends to understate the liability on exactly the largest deals.
Why do reps care about accrued commission?
Because it answers the question they ask most often, which is what they have earned but not yet received. Reviewers of commission tools specifically mention valuing visibility into the accrued amount alongside their expected end-of-month figure. It is not money they can spend yet, but knowing it exists is what stops a ticket being raised.