---
updatedAt: 2026-04-09T13:42:46.000Z
agentTools:
  projectIndex: https://docs.pelcro.com/v2.4/llms.txt
---

# Agency Commission

Special handling for agency-type subscriptions where you act as an intermediary, collecting payments and taking a commission.

## What is Agency Commission?

**Agency Commission** represents a special type of subscription where your business acts as an **intermediary** or **agent** rather than the primary seller. In this model:

1. You collect the full subscription payment from the customer
2. You pass most of the money to a third-party provider or publisher
3. You keep a commission (your fee for facilitating the transaction)

This is different from regular subscriptions where you're the primary seller and keep all the revenue (minus costs).

***

## Transaction Types

### [Agency Commission Revenue](accounting-agency-commission-revenue)

Agency subscription revenue (commission portion only).

**When it appears:** When an agency subscription invoice is created

**Affects:**

* Deferred Revenue: Commission portion only (not full invoice amount)
* Cash: Full payment collected
* Taxes: Tax on commission portion

**Examples:** You sell $100 subscription, keep $15 commission, pass $85 to provider; marketplace transaction where you take 10% fee

***

### [Agency Commission Recognized](accounting-agency-commission-recognized)

Agency commission recognized over time as service is delivered.

**When it appears:** As the agency subscription service is delivered over time

**Affects:**

* Deferred Revenue: Decreases (commission earned)
* Recognized Revenue: Increases (commission income)

**Examples:** Monthly recognition of annual agency commission, per-issue recognition of agency subscription

***

## How Agency Commission Works

### Standard Subscription vs Agency Subscription

**Standard Subscription ($100):**

```
You are the seller, you keep all revenue
- Cash: +$100 (you collect)
- Deferred Revenue: -$100 (you owe service)
- Later: Recognized Revenue: -$100 (you earn)
```

**Agency Subscription ($100, 15% commission):**

```
You are the intermediary, you keep 15%
- Cash: +$100 (you collect on behalf of provider)
- Deferred Revenue: -$15 (only your commission is deferred)
- Pass-through: $85 (goes to provider, not your revenue)
- Later: Recognized Revenue: -$15 (only your commission earned)
```

### Complete Agency Transaction Flow

**Example: $100 annual agency subscription, 15% commission**

**Month 1: Invoice Created**

| Account                | Amount  | Explanation                                 |
| ---------------------- | ------- | ------------------------------------------- |
| Cash                   | +$100   | Collect full payment from customer          |
| Deferred Revenue       | -$15    | Your 15% commission (deferred until earned) |
| Taxes                  | -$1.50  | Tax on your $15 commission                  |
| Pass-through Liability | -$83.50 | Owed to provider ($85 - their tax portion)  |

**Month 2-13: Commission Recognized Monthly**

| Account            | Amount per Month | Explanation                           |
| ------------------ | ---------------- | ------------------------------------- |
| Deferred Revenue   | +$1.25           | 1/12 of commission no longer deferred |
| Recognized Revenue | -$1.25           | 1/12 of commission earned             |

**After 12 months:**

* You've recognized $15 commission revenue (your earnings)
* Provider received $85 (their revenue)
* You facilitated the transaction and kept your commission

***

## Key Differences from Standard Subscriptions

| Aspect                  | Standard Subscription   | Agency Subscription               |
| ----------------------- | ----------------------- | --------------------------------- |
| **Your Role**           | Primary seller          | Intermediary/agent                |
| **Revenue Recognition** | Full invoice amount     | Commission only                   |
| **Deferred Revenue**    | Full amount (minus tax) | Commission only (minus tax)       |
| **Cash Collection**     | Keep all money          | Pass most to provider             |
| **Service Obligation**  | You deliver service     | Provider delivers, you facilitate |

***

## Common Questions

### Why is agency commission handled differently?

Because you're not the primary seller. In agency relationships:

* You don't deliver the core service (provider does)
* You're only entitled to the commission, not the full amount
* Accounting standards require recognizing only your portion as revenue
* The rest is a pass-through liability (money you owe to the provider)

### How do I know if a subscription is an agency subscription?

Agency subscriptions are specifically configured in the system. Check the subscription settings or plan configuration. Typically, there's an "agency" flag or commission percentage set.

### What happens to the 85% that goes to the provider?

That money:

1. Never becomes your revenue (not recorded in your Recognized Revenue)
2. Is held as a liability (you owe it to the provider)
3. Is paid out to the provider (recorded separately)
4. Reduces your Cash when you remit payment to provider

### Are taxes calculated on the full amount or just the commission?

This depends on the tax structure and jurisdiction:

* **Commission-based**: Tax calculated on your $15 commission only
* **Full amount**: Tax calculated on $100, then split proportionally

Check with your tax advisor for your specific situation.

### What if the provider wants their money immediately?

The timing of when you pay the provider is separate from revenue recognition:

* **Immediate payout**: You pay provider right away, but still recognize commission over time
* **Monthly payout**: You pay provider monthly, recognizing commission as service is delivered
* **End of subscription**: You pay provider after subscription completes

The cash payout timing doesn't change how you recognize your commission revenue.

### Can I have different commission rates for different products?

Yes, commission rates are typically set at the product or plan level, allowing different rates for different offerings.

### What happens if a customer gets a refund on an agency subscription?

Refunds on agency subscriptions are more complex:

1. You may need to request the money back from the provider (if already paid)
2. Your commission is reversed proportionally
3. The customer receives a refund of the full amount
4. Both your Deferred Revenue and Recognized Revenue are adjusted

### How do I reconcile agency commission payments?

Track:

* **Money collected from customers**: Cash - Online/Offline Payments
* **Commission earned**: Recognized Revenue - Agency Commission
* **Money owed to providers**: Pass-through liability (tracked separately)
* **Money paid to providers**: Recorded when you make payments

The difference between money collected and money paid out (plus commission earned) should match your cash position.

# Sub pages

* [Agency Commission Revenue](https://docs.pelcro.com/v2.4/docs/accounting-agency-commission-revenue.md)

# Sibling pages

* [Revenue Streams](https://docs.pelcro.com/v2.4/docs/accounting-revenue-streams.md)
* [Revenue Recognition](https://docs.pelcro.com/v2.4/docs/accounting-revenue-recognition.md)
* [Cash Movement](https://docs.pelcro.com/v2.4/docs/accounting-cash-movement.md)
* [Adjustments](https://docs.pelcro.com/v2.4/docs/accounting-adjustments.md)
* [Reports](https://docs.pelcro.com/v2.4/docs/accounting-reports-1.md)