Mathematics and Statistics · Ch 9 — Commission, Brokerage and Discount
Del Credere Agent and Del Credere Commission
Del Credere Agent and Del Credere Commission
When goods are sold on credit there is always a risk that some buyers will fail to pay — a bad debt. An ordinary agent does not bear this risk; if a credit customer defaults, the loss falls on the principal. A del credere agent is one who, for an extra payment, guarantees to the principal that every buyer will pay. If a buyer defaults, the del credere agent himself makes good the loss.
For accepting this guarantee the agent is paid an additional del credere commission, over and above his ordinary commission.
Del credere commission
The del credere commission is calculated on the total sales (cash sales and credit sales together), because the guarantee covers the whole business the agent transacts:
where is the del credere rate. The ordinary commission is charged separately at its own rate on the total sales.
Net earning of a del credere agent
Because the del credere agent must absorb any bad debt himself, his net earning is …
An agent who, for an extra commission, guarantees to the principal that all buyers (including credit buyers) will pay, and who bea …
, the extra commission paid to a del credere agent for guaranteeing payment; charged on cash a …
An amount owed by a credit buyer that is not paid; for a del credere agent this loss is borne by the agent, …