Business, Legal & Accounting Glossary
An agency, factor or broker who sells products and/or services for another party and guarantees that the buyer will pay for them.
A del credere agency guarantees a buyer’s creditworthiness and, in the event of default, assumes the risk posed to the seller. In Italian, del credere means to believe.
A del credere agency is a type of principal-agent relationship in which the agent not only acts as a salesperson or broker for the principal, but also as a guarantor of the buyer’s credit. If the buyer is unable to pay the bill after the transaction is completed, the del credere agent may be held liable.
It is important to note that a del credere agent is only obligated to pay the principal if the buyer fails to pay. The del credere agent is not liable if the principal (seller) is unable to collect for any other reason, such as a dispute over the goods delivered.
Because of the nature of a del credere agency, the agent is responsible to both the buyer and seller of the product or service in the transaction. When they sell a service or product, they guarantee that the buyer will pay for it properly.
This insurance service is paid for with an additional sales commission known as a “del credere commission.” Because they are taking on more risk with their clients, it is not uncommon for a del credere agent to charge higher rates in addition to their commission. A del credere may choose to only work with buyers who have a certain credit rating or level of solvency in order to better ensure that they will pay their bills on time.
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This glossary post was last updated: 25th January, 2022 | 0 Views.