Commission and its types:-
Commission:- Commission is the amount paid by the consignor to the consignee for the services (selling the consigned goods) rendered.
There are three types of commission:-
- Ordinary Commission- is paid by consignor to consignee based on fixed percentage of the gross sales proceeds. This type of commission doesn’t provide protection to the consignor from bad debts.
- Del-credere Commission- This is one type of additional commission paid by consignor to consignee for encouraging to make credit sales. This provides protection to the consignor against bad debts.
- Over-riding Commission- This is an extra commission paid by the consignor to the consignee to promote sales at higher price then specified when new product is introduced in the market. The calculation off this type of commission is depend on the agreement whether it is calculated on total sales or difference between actual sales price of product and invoice price or any specified.