It is usual for an agent to be paid on a commission basis. The commission is normally a percentage of the value of the goods sold and for which, payments have been received from the customer. Because of this, agents are sometime called “commission agents.”
It is difficult to generalise about rates of commission. They may vary from less than 1% to more than 1% according to the nature of the market and the sales problems.
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For contracts covering a large volume of commodities to be delivered over a fairly long period, the agent’s commission may be under 1%. At the other extreme, an agent might get a commission of 15% for small orders for handicrafts.
Sometimes there might be an agreement with the agents to pay them a commission on all orders received from customers in their territory regardless of whether orders are actually placed through them.
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Whatever type of agreement is there, agents should always be told about orders received direct from customers so that they can follow up and possibly obtain repeat orders. The supplier and the agent should also let each other have copies of all correspondence with customers.
Del credere agents:
Agents receive higher than usual payments when they act delcredere. This means that they take the credit risk for the orders they obtain and are responsible for making payment to the supplier if the customer fails to do so.
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Del credere agents are normally paid a higher commission than ordinary agents (the extra commission may be anything from 5% to 15%), to compensate them for the credit risk they assume.
Del credere agents are not very common, but where they exist they enable exporters to sell with great confidence, particularly in markets where it is difficult for them to judge the creditworthiness of prospective customers.