Commission payment considerations

I. Calculating the base of commissions Taking the FOB and CIF prices as examples, in the case of a CIF contract, a astute salesman should use the FOB price as the base for calculating the commission of the counterparty. The reason is that according to INCOTERMS 2000, the cargo risk of the buyer and the seller under the CIF trade term is located on the ship's rail at the port of shipment. Therefore, the seller's subsequent transportation and insurance is for the buyer's benefit, that is, the transportation and insurance costs in the CIF price. The cost is not the vested interest of the seller and is paid separately to the shipping company and the insurance company for the benefit of the buyer. Therefore, the seller should not withdraw the commission for the transportation and insurance costs to the buyer, but should deduct the transportation and insurance costs from the CIF price. Use the FOB price of the goods as the base for calculating the commission of the other party.

Second, the method of calculating commissions We are all very clear that the formula for calculating commissions in all textbooks on international trade practices is:

With commission price = net price + commission commission = with commission price x commission rate net price = with commission price x (1 - commission rate)

According to the above formula, the calculation of the commission amount can be evolved as:

Commission = (net price + commission) x commission rate = net price x commission rate + commission x commission rate The question at this time is in this formula: commission itself is also drawn commission?

In fact, there is another very similar situation in the operation of foreign trade companies, namely, the calculation of the opening and refund of VAT invoices:

Invoice Amount (tax included) = Principal + Tax Tax = Principal X VAT Rate (17%)

Principal = invoice amount / (1+17%)

Therefore, the formula used by the State Administration of Taxation when calculating the amount of tax refunds for export enterprises is:

Tax refund amount = principal x tax refund rate = invoice amount / (1 + 17%) x tax rebate rate instead of directly using "invoice amount x tax refund rate" because the invoice amount is the taxable price and the tax itself cannot be refunded.

By the same token, I believe that the following formula is more appropriate when calculating the commission price and commission:

With commission price = net price + commission commission = net price x commission rate with commission price = net price x (1 + commission rate)

If the commission price is known to exist, the commission is calculated as (that is, the formula for calculating the commission paid by a foreign trade company to a foreign commission merchant):

Commission amount = commission rate / (1 + commission rate) x commission rate For example, in the actual transaction process, we quote 3% of a product for a product with a commission price of 10,000 US dollars, if calculated according to the formula on the book Foreign commissions are:

The amount of commission payable = USD 10,000 x 3% = USD 300. If calculated according to the second formula, it is:

The amount of commission payable = USD 10,000/(1+3%) x 3%= 291.26 USD By comparison, the amount of the commission payable of the former is 8.74 US dollars more than the latter, which is because the commission itself is also calculated according to the method of the former. Commission.

The author encountered this kind of situation in his foreign trade work. An Indian importer used a bill to press for a commission. The commission on the bill was calculated by directly multiplying the total value of the goods (including the commission price) by the commission rate. The Indian trader finally accepted my explanation when he explained that the commission itself had to be paid unreasonably. For this reason, our company paid “less” more than four thousand dollars in the commission of the other party.

Therefore, the author believes that the latter's calculation method is more scientific and reasonable, and it is easy to understand and apply.

Third, the issue of the time to pay commissions Our foreign trade companies must insist on the completion of the sales contract in order to pay commissions to brokers. The purpose of adhering to this practice is to integrate the interests of the middlemen with the implementation of the contract, so that the intermediary chamber of commerce will work hard to promote the parties to the transaction to perform better in order to obtain the part of the interests that he wants. Especially when there are misunderstandings and disputes in the initial transactions between buyers and sellers, the communication and mediation of middlemen is particularly important. Imagine that the seller paid the commission to the middleman before it had safely received the buyer’s full payment. When the contract is fulfilled, the middleman will be “slacked” due to lack of incentives, and will not actively promote it. The transaction proceeded smoothly.