When veterinary associates evaluate an employment offer, they often focus on the base salary or production percentage. But buried in many agreements—usually somewhere between “bonus compensation” and “reconciliation period”—is a clause that can quietly chip away at earnings: negative accrual.
If your associate compensation includes a ProSal model (a base salary or “draw” plus production-based bonuses), it’s essential to understand whether the agreement permits the practice to track and carry forward underproduction, known as negative accrual.
What Is Negative Accrual?
Negative accrual refers to the practice of tracking the shortfall between what an associate is paid and what they actually earn in production-based compensation. If the associate doesn’t generate enough production to cover their monthly draw, that deficit may be carried forward and deducted from future earnings.
Simple Example
Let’s say a veterinarian is on a ProSal arrangement with:
- A monthly draw of $8,000
- 22% commission on monthly collections
In one month, the associate produces $27,000 in collections. At 22%, their production-based pay would be $5,940, which is $2,060 less than their $8,000 draw.
If the agreement includes negative accrual, the $2,060 is carried forward as a deficit. This means that in a future month where the associate overproduces, that prior shortfall is subtracted from their bonus or commission.
In contrast, if the agreement has no negative accrual, the associate keeps the full $8,000 that month—no clawbacks, no running deficit.
Why It Matters
Negative accrual clauses can have a major impact on associate compensation, especially:
- During slow seasons or holidays when the practice is closed
- When an associate is newly hired and building a client base
- During vacations, illness, or parental leave
Associates often assume that their draw is guaranteed, not realizing they may be required to “pay back” that draw if they don’t hit certain benchmarks.
Best Practices for Practice Owners and Associates
For employers, clarity and transparency about the practice’s compensation structure helps build trust and prevent future disputes. If your structure includes negative accrual, provide your employees with an explanation of how and when it’s applied, and consider whether it aligns with your practice culture and employee retention goals.
For associates, it’s critical to ask:
- Does the compensation structure include negative accrual?
- How is production calculated?
- Collections or gross revenue?
- What revenue items are excluded, if any?
- How often is compensation reconciled?
- How often are the production bonuses paid?
- What happens during PTO or leave?
Associates should keep in mind that there is potential for negotiating with their employer to remove a negative accrual provision from their employment agreement. Alternatively, they could request a ramp-up period during their first few months of employment to build up the “bank” that it gets deducted from.
Understanding this concept and how it affects your production bonus can have a meaningful impact on your take-home pay. Do your homework and be prepared to have that conversation with your employer so you can advocate for yourself.
