Pros and cons of an agency agreement for the provision of services

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Let's consider the advantages, characteristics and risks of an agency agreement for the provision of intermediary services for participants.

Benefits for the principal
Let's consider the advantages of an agency agreement for the provision of services for the principal:

The ability to expand business and increase profits by delegating tasks and attracting new clients to the agent. This allows the principal to determine all costs in advance (agency fee).

Eliminate the need to interact with end consumers, as this function is performed by the agent.

The ability to delegate non-core work to specialists. For example, entrust the launch of an advertising campaign to a targetologist.

Deferral of income tax. Instead of paying tax immediately after the sale, it is paid upon receipt of the agent's report.

Pros and cons of working in the premium segment

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Benefits for the agent
Let's consider the advantages of an agency agreement for the provision of services for an agent:

No need to invest in purchasing goods, as the products are provided free of charge by the supplier. The agent receives a commission from each sale.

Possibility of reimbursement of all expenses by the customer, if provided for by the contract.

Saving on taxes due to the specifics of agency activities. For example, if the intermediary did not purchase the goods, then the tax is paid only on the percentage earned on the sale. Let's say that the targetologist receives 300 thousand rubles for advertising, of which only 10% is his remuneration, and the rest goes to pay for the advertising space. After the agreement is concluded, the agent pays tax only on his remuneration (in this case - on 30,000 rubles), unlike the situation when deductions are paid from the entire amount that passed through the tax account.

Cooperation under an agency agreement is not without risks for both parties. If the product sold by the agent is not in demand by customers, the principal may suffer losses. For example, a cake manufacturer may face the need to dispose of the product if the agent is unable to sell the goods before the expiration date. If the intermediary were to buy the product, this risk would be minimized.

The agent is also at risk. He may not receive payment for afghanistan email list 168973 contact leads his services if the principal is not satisfied with the quality of the work performed. In addition, the agent has no right to paid vacation and sick leave. There are no deductions to the Social Fund for him. There are also no payments upon termination of cooperation.

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Who needs an agency agreement for the provision of services
Not all enterprises are able to organize a complete chain of business processes from purchasing raw materials and manufacturing products to selling and delivering them to end consumers. Even large organizations prefer to work with dealers and distributors who help them sell goods and services.

The following may act as intermediaries in a simple agency agreement for the provision of services:

Marketplaces are online platforms where sellers can post their products for sale. Such platforms act as intermediaries between manufacturers and buyers, speeding up the process of selling products. They also advertise products, store them in their warehouses, and deliver them to buyers.

Labor exchanges are online platforms for finding workers. Here, customers can find contractors. Freelancers look for work on such platforms. Labor exchanges act as intermediaries, charging a commission for each transaction between participants. On such platforms, you can find specialists of various professions.

Individuals and businesses that earn income by providing intermediary services.

In the insurance industry, various organizations such as banks, car dealerships, notary offices, freight carriers and leasing companies play an intermediary role.

Insurance or leasing

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Although insurance is not their main activity, they provide intermediary services in the implementation of their commercial programs, services or goods. Such companies create agent sales channels, receiving profit from the sale of insurance products. For these organizations, such cooperation is very profitable, since about 60% of sales in this area are carried out through the agent network. In auto insurance, this figure is about 70%.

The agency scheme of work can be used in a variety of situations. Companies entering new markets prefer to attract experienced specialists instead of studying the business environment from scratch, opening new offices and hiring employees. Organizations and institutions enter into agency agreements with contractors to outsource some tasks. Online stores benefit from agreements with marketplaces, transport or courier organizations, as well as order pick-up points. Self-employed individuals enter into agency agreements with intermediaries who help them find customers or sell goods.

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