AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
An agency agreement appoints someone to sell or act for your business and must fix three things: what the agent may and may not do in your name, how and when commission is earned, and who carries the loss if the agent oversteps or fails to pay over money collected. Commission paid to a resident agent attracts 5% withholding tax where the payer must deduct.
An agency agreement appoints someone to sell, buy or act on behalf of your business. Nigerian businesses use agents constantly: a manufacturer's sales agent in the north, a property agent letting flats, a buying agent sourcing goods at a market. The risk is the same each time. An agent can bind you to deals you did not want unless the agreement fixes what the agent may and may not do.
Agent, distributor or employee?
Get the label right before you draft. An agent acts in your name and does not own the goods; customers contract with you. A distributor buys from you and resells on its own account, and needs a different agreement (see distribution agreement template). An employee works under your control for wages; the Labour Act has its own rules for workers. If you control the agent's hours, methods and tools, the relationship may look like employment whatever the paper says, so take advice.
The template
Copy and adapt. Square brackets are for you to fill in. This is a starting point, not legal advice; have a lawyer review it for high-value or exclusive appointments.
- Parties. This Agreement is made on [date] between [Principal name], [RC/BN number], of [address] (the Principal) and [Agent name], of [address] (the Agent).
- Appointment. The Principal appoints the Agent as its [exclusive/non-exclusive] agent to [find customers for / sell / collect payment for] the Products or Services in Schedule 1, in the Territory of [state(s) or area].
- Authority. The Agent may: [describe, e.g. show samples, take orders at list prices]. The Agent may not, without the Principal's written approval: (a) agree prices, discounts or credit terms other than those in Schedule 2; (b) sign any contract in the Principal's name; (c) collect cash except as set out in clause 6; (d) make promises about quality, delivery or warranty beyond the Principal's written terms; (e) appoint sub-agents.
- Orders. All orders are subject to the Principal's acceptance. The Principal may refuse any order without liability to the Agent.
- Commission. The Principal will pay the Agent [ ]% of the net invoice value (excluding VAT and delivery) of accepted orders from customers introduced by the Agent, earned only when the Principal has received payment in full. Commission is paid by [date each month] with a statement. Where the Principal is required to deduct withholding tax, it will do so and provide a receipt.
- Money collected. Any money the Agent receives for the Principal is held for the Principal and paid into the Principal's account [named account] within [24 hours]. The Agent may [not] deduct commission from collections.
- Expenses. The Agent bears its own costs unless the Principal approves an expense in writing in advance.
- Liability. The Agent is responsible for loss caused by acting outside its authority, by dishonesty, or by failure to account for money collected. The Principal is responsible to customers for the Products it supplies.
- Conduct and confidentiality. The Agent will not misrepresent the Products, will comply with applicable law, and will keep customer lists and prices confidential during and after this Agreement.
- Term and ending. This Agreement runs from [start date] for [period] and may be ended by either party on [30] days' written notice, or at once for serious breach. Commission on orders accepted before the end date remains payable once the customer pays.
- Disputes. The parties will first try to settle disputes by discussion within [14] days, then [mediation/the courts of state].
- Signatures. Signed for the Principal by [name, title] and by the Agent, with a witness for each.
The three clauses that matter most
Authority limits
Customers who reasonably believe your agent speaks for you may hold you to what the agent agreed. Clause 3 narrows that by saying in writing what the agent cannot do. Send customers your price list and terms directly, so they know where the agent's authority ends.
Commission
Tie commission to money received, not orders taken, and define the base (net of VAT, delivery and returns). Under the Deduction of Tax at Source (Withholding) Regulations 2024, as summarised by PwC Nigeria, commission paid to a resident attracts withholding tax at 5% (10% for non-residents) where the payer is required to deduct. Example only: an agent earns 8% on ₦2,500,000 of paid sales, which is ₦200,000; a company principal deducts 5% WHT of ₦10,000 and pays ₦190,000 with a receipt.
Liability for money collected
If agents collect cash, make them pay it in fast and in full. Danol Partners' overview of the 2024 Regulations lists broker commissions retained from money collected for the principal, in line with industry norms, among exemptions from deduction; if your agent keeps commission from collections, ask an adviser how the WHT exemption applies to your arrangement.
What to check first
- Is this really agency, or distribution or employment?
- Is the territory and exclusivity clear, and does it match other agents' agreements?
- Does the agent have a Tax ID, so WHT is not deducted at double the rate?
- Who keeps the customer relationship when the agreement ends?
If a commission dispute does reach court in Lagos, liquidated claims up to ₦5,000,000 can go to the Small Claims Court under the 2023 Practice Direction.
Where Pryme fits
Give each agent its own collection account number with virtual accounts so money they collect is traceable, and pay commission through bulk payouts; how to get paid in Nigeria covers the collection options. The Sales agent can prepare commission statements from paid invoices for a person to approve. For employee sales staff, see the sales commission agreement template.
Questions people ask
What should an agency agreement contain in Nigeria?
Parties, what the agent is appointed to do, territory, exclusivity, clear limits on authority, commission and when it is earned, handling of money collected, liability, term and notice, and dispute resolution.
Can my agent sign contracts for my business?
Only if you give that authority. Say in writing what the agent may not do, and tell customers, because a customer who reasonably relies on the agent may hold you to the deal.
Is withholding tax deducted on agent commission?
Where the payer must deduct, commission to a resident attracts 5% WHT under the 2024 Regulations, 10% for non-residents, per PwC Nigeria.
What is the difference between an agent and a distributor?
An agent sells in your name and never owns the goods. A distributor buys from you and resells for its own profit and risk.
Sources
- Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 (PwC Nigeria, Jul 2024) · accessed Oct 2026
- Overview of the Deduction of Tax at Source (Withholding) Regulations 2024 (Mondaq, Danol Partners, 16 Oct 2024) · accessed Oct 2026
- Lagos State Practice Direction on Small Claims Court 2023 (copy on lagosmepb.org) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.