Commercial Agency Services: Objectives, Commission Agency, Functions of Commission Agency, Marketing and Advisory Services

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There are two categories of agency services viz., financial agency services and commercial agency services, and learnt about the financial agencies like the saving and investment agency and insurance agency. We shall take up the details of Commission agency, Clearing and Forwarding agency, advertising agency, packing agency, Travel and Tour agency, Placement agency, Property agency, Courier service, Packers and Movers, which are placed under commercial agency services.

Commercial Agency Services

A single person cannot manage all the commercial activities alone. Well, if it is a small trading unit then, of course, it is possible. But, for large business undertakings, it may not be possible for a single person to manage everything efficiently and effectively. So, the businessman may think of employing the professionals or hiring their services on commission basis. For example, to sell the goods in Johannesburg, a businessman of New Delhi may engage somebody as its employee or appoint a sales agent who will work there on specific terms and conditions. Similarly, in case of other businesses, various types of, commercial agents may be engaged to work on their behalf. In the following sections we shall learn in detail about Commission agency, Clearing and Forwarding agency, advertising agency, Packing agency, Travel and Tour agency, Placement agency, Property agency, Courier service, Packers and Movers. Since all these agency services provide direct support to commerce, they are categorised as commercial agency services.


After studying this lesson, you will be able to:

  • Identify different types of commercial agencies like Commission agency, Clearing and Forwarding agency, advertising agency, Packing agency, Travel and Tour agency, Placement agency, Property agency, Courier service, Packers and Movers.

  • Explain the meaning and functions of these commercial agency services.

Commission Agency

In the modern world of business, goods are bought and sold not only at the place of production, but also at various places in the country and possibly even outside the country. It is, therefore, not possible for every businessman to handle all activities on his own. He needs the services of someone who could act on his behalf. These persons are known as Commission Agents because they get commission for their services. Their business is known as commission agency business. Commission agents are engaged to act on behalf of their principals for different purposes and on different terms and conditions. When appointed to buy goods, they are known as Purchase Agents. When appointed to sell goods, they are known as Sales Agents, and so on.

Functions of Commission Agency

Commission agencies render a series of useful services. These are:

Functions of Commission Agency

Functions of Commission Agency

Buying and Selling of Goods

The commission agents buy and sell goods on behalf of their principals at the most favourable rates and terms. They determine which commodities or services are most suitable to the requirements and choose the supplier of the product or service accordingly. They negotiate with the supplier to get lowest price and finalise the deal.

Marketing Services

They perform certain marketing functions, such as storage of goods, sales promotion, transportation, etc.

Advisory Services

  • The commission agents advise their principals regarding the market conditions, when and where to buy or sell, when and how to store goods, and so on.

  • Providing financial assistance: Sometimes, in case of need, the commission agents also provide advance money to their principals. Of course, they may charge interest thereon, if necessary.

Types of Commission Agents

Commission agents may be grouped into

  • Factors

  • Brokers

Types Of Commission Agents

Types of Commission Agents


A factor is a commission agent employed to sell goods consigned or delivered to him by the principal. He is entrusted with the possession of goods and usually sells the goods in his own name without disclosing the identity of his principal. He may sell the goods on usual terms as to credit, may receive payment of the price and give valid receipts. He may pledge the goods in his possession. He has general lien on the goods in his possession for all charges and expenses and also an insurable interest in them. He gets commission as his remuneration.


A broker is an agent who makes bargain for others and receives commission for his service, which is called brokerage. He is employed to buy and sell goods. He is not entrusted with the possession of goods for sale and does not have authority to contract in his own name. He encourages trading by finding buyers for those who wish to sell, and sellers for those who wish to buy.

Clearing and Forwarding Agency

When a business firm wants to import goods from another country or export goods to another country a lot of legal formalities are to be completed before sending goods or receiving goods. It is here that the businessman takes the help of clearing and forwarding agents. They act on behalf of the importer and exporters to complete all formalities required for clearing and despatch of the goods. In case of imports, they take delivery of the goods from the ports and the customs authority and sends it by rail/road to the place of importer. In case of exports, they complete all the formalities of loading the goods on the ship and those relating to custom clearance, if any. Their assistance helps the exporters and importers all over the country to successfully deal with international trade.

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