Commission is a kind of labor remuneration in commercial activities, which is the remuneration obtained by middlemen with independent status and business qualifications for providing services to others in commercial activities.
In international trade, a certain amount of commission will be generated. These fees are the remuneration collected by agents or brokers for serving the principals; or middlemen and agents collect a certain percentage of fees after introducing business to both parties and reaching a deal.
Types of Commission
In international trade, commission is the most important part of the price of goods, affecting the actual price, the economic benefits of both importers and exporters and related third parties, and even directly affecting whether the transaction can be completed in the end. Therefore, commission is an expense that both parties must clarify in negotiations.
Commission generally refers to the remuneration obtained by agents, brokers, middlemen, etc. for introducing transactions or buying and selling on behalf of others; while discount refers to the price discount given to the other party in commodity transactions. Commission is a kind of expense that foreign trade enterprises or individuals must bear in foreign trade. my country has clear regulations on the standards of commissions: Article 8, paragraph 2 of the Anti-Unfair Competition Law makes a clear provision: “Middlemen can obtain legal commissions through legal services.” Article 7, paragraph 1 of the Interim Provisions makes a clearer provision: “When an operator sells or purchases goods, he may give commissions to middlemen in an explicit manner. If an operator gives a commission to a middleman, it must be recorded truthfully; if a middleman accepts a commission, it must be recorded truthfully. ”
It can be seen that commission is one of the indispensable factors to achieve the final completion of trade. According to different payment methods, commission can be divided into the following three types.
1. Clear commission
The clear commission refers to the amount to be publicly stated in the transaction, and the payment method directly deducted by foreign customers when paying for exported goods. The clear commission needs to be clearly indicated on the sales contract, letter of credit or invoice and other relevant documents, and the expression method is usually written after the trade term: such as “CIFC5%HONGKONG”. This “℃” is the abbreviation of Commission, which means commission. Therefore, exporting companies do not need to pay separately.
It is worth noting that although the clear commission is directly deducted by foreign customers when paying for exported goods, and the exporting company does not need to pay separately, it should be reflected separately in the accounting of export sales revenue, and this part of the cost should be used as part of the reduction of sales revenue. An example is as follows:
A foreign trade company in my country exported 1,000 pieces of ceramics to Hansen Company of the United States, with a total sales price of 20 000 USD, the export commission is calculated at 2% of the transaction price. The bank is then submitted for exchange settlement, and the US dollar exchange rate on that day is 7.83 yuan. The payment is received three months later, when the US dollar exchange rate is 7.8 yuan. The corresponding accounting treatment is:
(1) When selling, the net amount of the commission amount less the invoice amount is recorded in accounts receivable, and the commission part is offset against sales revenue
● Debit: Foreign exchange accounts receivable – Hansen Company (US$19600) 153468
● Goods: Self-operated export sales revenue 156600
● Self-operated export sales revenue – export commission 3132
(2) When collecting payment
● Debit: Bank deposit 152,880
● Credit: Foreign exchange accounts receivable – Hansen Company (US$19600) 152 880
2. Hidden Commission
Hidden commission refers to a payment method in which the amount of the commission only appears in the export contract, but not in the price conditions or export invoice. In international trade, the amount of the hidden commission needs to be kept secret from the real buyer and is paid to the middleman secretly after the seller (exporter) receives the payment. Depending on the payment method, hidden commissions are divided into two types: negotiation and remittance. Due to the different payment methods of hidden commissions, there are also differences in accounting.
(1) Negotiation: This payment method The method of payment is a commission payment method in which the bank withholds commissions from the total amount of the goods when the export goods are settled. The commissions are paid to the foreign middlemen. Under this method, the settlement amount received by the export enterprise is the net amount of the goods after deducting the commissions.
Accounting treatment: Remittance means that the commission is paid after the payment is received, but when confirming the export sales revenue, the hidden commission should be calculated and the sales revenue should be offset. Take the business just mentioned as an example:
When selling, the full amount is first recorded in the sales revenue and accounts receivable
● Debit: Foreign exchange accounts receivable–Hansen Company ( US$20,000) 156,600
●Debit: Self-operated export sales income 156,600
●Then calculate the hidden commission to reduce the income
●Debit: Self-operated export sales income – Export commission 3132
●Debit: Foreign exchange accounts payable – Hansen Company (US$400) 3132
(2) Remittance: This payment method refers to the commission payment method of collecting foreign exchange based on the total amount of the goods when exporting, and then purchasing foreign exchange from the bank after the settlement, and remitting it to the foreign middleman.
When selling, collect the money first, then convert it into foreign currency and pay it
●Debit: Bank deposit 156,000
●Credit: Foreign exchange accounts receivable – Hansen Company (USS20,000) 156,000
●Pay commission later
●Debit: Foreign exchange accounts payable – Hansen Company (US$400) 3,120
●Credit: Bank deposit 3,120
3. Accumulated commission
Accumulated commission refers to the form of payment in which export enterprises pay a certain amount of remuneration to foreign middlemen and agents based on the accumulated sales volume in a certain period of time. The advantage of this payment method is that the accumulated commission has a certain incentive effect on middlemen and sellers, because the greater the accumulated sales volume, the higher the commission amount is often.
When doing accounting processing, the accumulated commission should be calculated into the “sales expenses” of sales revenue.