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How to get paid if I help broker a deal

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  1. #1

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    How to get paid if I help broker a deal

    If I help broker a deal between two parties and one of them has agreed to pay me a fee. What can/should I do to protect myself and ensure that I get paid and the parties don't simply leave me out of the loop?

    i.e. a friend wants to buy coal and I have friends in the coal mining business. The buyer has casually said that I could get a comission per tonne if I introduce him to the right supplier. As this would be ongoing business, how do I make sure I get my cut fair and square?

    Obviously a contract is necessary, but do I need to form a company/business for this?


  2. #2

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    You don't need to form a company other than for tax reasons, a legal person can enter into a contract. This kind of contract is not uncommon - for example in my business we are helping someone procure electricity and they will pay us a sucess fee when the tender is complete, if they find a seller that fits their criteria.
    So you need a contract - you need to specify the reward, the timeframe over which it is paid (monthly with each shipment, or a guesstimeate in advance?); the billing terms; that if the people do a deal without you that they pay anyway .... I'd get a lawyer to draft it up to be honest.


  3. #3

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    Quote Originally Posted by wayland:
    What can/should I do to protect myself and ensure that I get paid and the parties don't simply leave me out of the loop?
    Don't ever let them meet or know who each other are. It's that simple really...

    It won't be very long until they do and they will find a way to cut you out as would every business.

  4. #4

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    Quote Originally Posted by MovingIn07:
    You don't need to form a company other than for tax reasons,
    But this is obviously taxable income so why wouldn't I form a company? Is it possible to just declare it on my personal tax filing?

    Quote Originally Posted by bryant.english:
    Don't ever let them meet or know who each other are. It's that simple really...

    It won't be very long until they do and they will find a way to cut you out as would every business.
    This is obviously what I'm concerned with. But how can it be avoided? I don't expect to handle the logistics from two different countries for every transaction.

    I do admit that a recurring comission on all future transactions seems zealous for simply doing an introduction. Maybe a one time finders fee is more convenient (altho not as lucrative). Am I dreaming to even consider getting a recurring comission for doing nothing aside from the introduction?

  5. #5

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    It depends how much you get involved. If you are just putting them together than an honest thing to do is just get a one off finders fee.

    If you are negotiating terms, pricing, logistics etc you should be classed an Agent and get an ongoing commission for services. Generally an Agent would then 'hide' original pricing and add their commission on top. Some agents just charge a flat fee from few percent to many hundreds of percent.

    For your last question, yes. Many Chinese expect a reoccurring fee for their services.


  6. #6

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    the buyer's profit will be around usd 20 per tonne after transport. you can use this info to set your finders fee


  7. #7

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    Find a freight forwarder to handle logistics for you. Get someone you trust. Hiring a forwarder is an effective way to wall off the buyer/seller.

    I.E. - Even if the buyer has a forwarder to handle logistics, have your forwarder act on your behalf.

    Last edited by Dreadnought; 22-12-2011 at 07:58 PM.

  8. #8

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    Thanks for all the advice guys.


  9. #9

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    Personally, unless this is your business, I would go for a straightforward upfront introduction fee. Getting in the "middle" of a long term transaction has a heap of risks and liabilities and if this is not your area of expertise, you risk losing more than you make.

    Ramdom likes this.

  10. #10

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    when using a forwarder, is it best to contact the company beforehand and tell ask them prices? Or let them know who you are and tell them that you will be using them in the near future.

    Or do you just call the forwarder company up when you need them?


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