Definition of Pre-deduct commission
Pre-deduct commission refers to a payment model used in sales transactions where the distributor, such as a travel agent, collects commission upfront before sending the balance of the sales price to the supplier. The commission acts as a payment for the distributor’s services in facilitating the sale of the supplier’s product or service. In other words, the distributor gets a percentage of the sales price as a commission for their role in the transaction.
The pre-deduct commission model is prevalent in various industries, including travel, insurance, and real estate, among others. It is a practical payment option that allows distributors to earn revenue while providing suppliers with crucial services like product marketing and sales. Additionally, it ensures that suppliers get paid for their products or services.
In a pre-deduct commission model, the amount deducted as a commission is usually agreed upon between the distributor and the supplier before the start of the transaction. The distributor collects the commission upfront and sends the supplier the balance of the sales price. This payment method is beneficial to both parties because it reduces the financial risk associated with delayed payments.
In conclusion, the pre-deduct commission payment model is a practical payment option used in sales transactions. It’s a win-win situation for both the distributor and the supplier, and it ensures that both parties receive their benefits promptly.
« Back to Glossary Index