In the first installment of this article, I suggested a sales representative would do well to think of himself as the provider of unsecured credit to a principal. With that in mind, a representative should consider basic loan underwriting concepts when structuring an agreement with a new principal. The idea is to minimize the damage when the principal becomes unable to meet financial obligations to the representative.

At the contract negotiation stage, the need for the representative to think of himself as a banker providing credit on an unsecured basis applies most directly in the payment and remedies provisions of … Read the rest

You may not have thought of yourself as a banker, but sales representatives are providers of commercial credit.

By keeping this in mind when entering into or deciding whether to continue or sever a relationship with a principal, a sales representative can minimize the damages it will incur if the principal becomes insolvent, by which I mean unable to pay commissions as they come due. There is always some level of risk that a principal will not pay commissions not out of malevolence, but due to inability. Business failure is always a possibility. The representative cannot do much to affect … Read the rest