Partner profit share and agent commission are not the same
A co-investor's profit share and an agency's commission both go out to a company each month. Added together, they give a total that means nothing.
In an outdoor media business, two payments leave every month and land in another company’s bank account. One is a partner’s share of the profit on a site they co-invested in. The other is an agency’s commission for introducing a client. On a bank statement they look the same: a monthly payment to a company.
In the office, both are called commission. Somebody then produces a report of “total commissions paid”, and the figure at the bottom is meaningless, because one half of it is a share of profit on a particular site and the other half is a percentage of business introduced. The number looks like a total. It is not a total of anything. Anyone who then decides what to pay, or what a site really earns, from that figure is deciding on something that does not exist.
What was actually going on
When we wrote the requirements for the system, the two were nearly built as one thing. The requirements document had to carry a table headed “two commissions, do not confuse them”, because in the meeting where both were described, the same word was used for both.
Set side by side, almost nothing lines up. The partner’s share is a percentage of net profit on one specific site: revenue minus approved costs, including the site’s rent or licence fee, running costs and vendor payments. The percentage comes from how much each partner put in. It is worked out monthly and paid within thirty days, and the partner claims it by raising their own invoice, which means the platform treats the payout as a purchase, with tax on it.
The agency’s commission is a percentage of business introduced, not profit, and it is not tied to any one site. It runs across the agency’s whole book. It is monthly, and there is also a year-end bonus on total annual volume, which is a second calculation on a different period.
Different basis, different period, different scope, different way of settling. The only things they share are “monthly”, “money out” and “to a company”. Two of those three are also true of the electricity bill.
What we changed
They were built as two separate things. A partner settlement carries the site, the partner, the month and a computed share, generated once per month from that site’s own profit and loss. An agent commission carries the agent, whether it is monthly or year-end, the amount it was based on, the rate and the result. Neither can be mistaken for the other by someone writing a report who has not read the requirements.
The same pass went the other way on the companies themselves. Client, agent, partner and supplier were four words in every conversation, and they are one record with role flags. A company has an address, a tax registration, bank details and a contact, whichever role it plays. And one company can hold more than one role: an agency that introduces business may also be a client in its own right. Four separate lists would have meant four copies of the same address and no way to ask “everything we do with this company”.
One mistake: I put a visible role picker on the company form, four tick boxes asking what the company is. It was taken out later, because it made every user answer a question they should not have to. The roles are still held on the record; only the picker went.
What it did not fix
The year-end bonus is held as a different type of entry on the same commission record as the monthly ones. It has a different period, so it is exactly the situation this article warns about, inside one record rather than across two. It has not caused a wrong total yet, and it is where I still expect trouble.
The pattern, for anyone who pays partners and agents
Merge things that share an identity, and keep apart things that share only a shape. A company is one identity playing several roles. A profit share and an introduction fee are two calculations that happen to produce similar-looking payments.
Two things with the same shape and different meaning will eventually be added together by someone who can only see the shape. Keep them apart in how the records are kept, not in an agreement to be careful.
Where this ends up
A partner’s share of a co-invested site and an agency’s introduction commission stay separate in Sazinga AdBoard, which is what stops them ever being totalled together because both left the bank on the same day.