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
A sales commission agreement should say commission is earned only when the customer pays, define the base net of VAT, delivery and returns, and claw back commission on any later refund or credit. Employees need the scheme in their written terms under the Labour Act; for non-employees, commission to a resident attracts 5% withholding tax where the payer must deduct.
Commission is how most Nigerian businesses pay people who bring in sales: marketers on the road, telesales staff, estate agents, field reps for FMCG brands. Disputes usually turn on two words, "earned" and "sale". This template settles both: commission is earned when the business is paid, and it comes back if the sale is reversed.
Employee, contractor or agent?
- Employee on salary plus commission: the Labour Act requires a written statement of terms, including wage rate and method of calculation, within three months of starting (s.7). Put the commission scheme in that statement or in a document it refers to.
- Commission-only staff: SCP Law's July 2024 review of the National Minimum Wage Act 2024 lists commission workers among those outside the minimum wage, alongside part-time workers and establishments with fewer than 25 employees. Check how this applies before relying on it.
- Independent agent or marketer: use this template with the authority limits in the agency agreement template.
The template
Copy and adapt. This is a starting point, not legal advice.
- Parties. [Business name, RC/BN number] (the Company) and [Name] (the Sales Representative). Start date: [ ].
- Scope. Commission applies to sales of [products/services] to customers in [territory / customer list / channel] that the Representative originates and that the Company accepts.
- Rate. [ ]% of Net Receipts. "Net Receipts" means money actually received by the Company from the customer for the sale, excluding VAT, delivery charges, and any withholding tax the customer deducts until the Company receives the WHT receipt.
- When commission is earned. Commission is earned only when the Company has received payment. Where a customer pays in instalments, commission is earned on each instalment as received. No commission is earned on orders that are not paid.
- Payment. Commission earned in a calendar month is paid by the [ ]th of the following month, with a statement listing each customer, invoice, amount received and commission.
- Clawback. If the Company refunds or credits all or part of a sale within [ ] months of payment, because of a return, cancellation, chargeback or overbilling, commission paid on the refunded amount is repaid or deducted from the next commission payment. A deduction from wages for an employee is made only as the law and the written terms allow.
- Split deals. Where two representatives work on one sale, commission is split [50/50 / as agreed in writing before the sale].
- Targets and changes. Targets and rates may change for future periods with [30] days' written notice. Changes never apply to commission already earned.
- Ending. After the Representative leaves, commission is paid on orders accepted before the leaving date, once the customer pays, up to [ ] months after leaving.
- Tax. For employees, commission is part of pay and taxed through PAYE. For non-employees, the Company deducts withholding tax where required and issues a receipt.
- Signatures. [Company signatory] / [Representative]
Why commission should follow payment, not orders
Paying on orders rewards volume regardless of whether customers pay, which pushes reps toward slow-paying or risky buyers. Paying on receipts aligns the rep with collection. It also avoids paying commission on money you may never see, then trying to recover it later.
There is a fairness point too. A rep who closes a large order and then waits months because the customer pays slowly will feel cheated. Two fixes help: pay commission on each instalment as it lands, and give the rep visibility of collections through a monthly statement. Some businesses also pay a small advance on signed orders and deduct it when the customer pays; if you do, write the advance and its recovery into the agreement.
Worked example with a clawback
Example only. A rep on 5% of Net Receipts sells ₦4,000,000 of goods (excluding VAT) to a retailer in March. The retailer pays ₦2,500,000 in March and ₦1,500,000 in April, then returns ₦600,000 of goods in May and is refunded.
| Month | Net receipts | Commission at 5% |
|---|---|---|
| March | ₦2,500,000 | ₦125,000 |
| April | ₦1,500,000 | ₦75,000 |
| May refund | -₦600,000 | -₦30,000 (clawback) |
| Net | ₦3,400,000 | ₦170,000 |
The rep was paid ₦200,000 across March and April and has ₦30,000 deducted from May's commission, so net commission is ₦170,000, which is 5% of ₦3,400,000.
Withholding tax for non-employee reps
Under the 2024 Withholding Regulations as summarised by PwC Nigeria, commission paid to a resident attracts WHT at 5% (10% for a non-resident) where the payer must deduct. On the ₦125,000 March commission to an independent marketer, a company payer would deduct ₦6,250 and pay ₦118,750, with a receipt.
What to check first
- Is the rep an employee? Then the commission scheme belongs in the written terms of employment.
- Is the base defined net of VAT, delivery and returns?
- Is the clawback period stated and reasonable for your returns window?
- Does the rep get a statement they can check against invoices?
Where Pryme fits
The Sales agent on a Pryme Business Account can match paid invoices to each rep and prepare the monthly commission statement, and payroll or bulk payouts pays it once a person approves. For salons and similar businesses, see salary, commission or chair rental.
Questions people ask
When is sales commission earned in Nigeria?
Whenever the agreement says. Tying it to payment received, not orders taken, avoids paying commission on sales that are never paid for.
Can I deduct commission back if a customer returns goods?
Yes, if the agreement has a clawback clause stating it. For employees, deductions from pay should follow the written terms and the law.
Do commission-only workers get minimum wage?
SCP Law's 2024 review lists commission workers among those outside the National Minimum Wage Act. Check the Act before relying on it.
Is withholding tax deducted on commission?
For non-employees, commission to a resident attracts 5% WHT where the payer must deduct, under the 2024 Regulations. Employees' commission goes through PAYE.
Sources
- Labour Act Cap L1 LFN 2004 (PLAC) · accessed Oct 2026
- The 2024 Minimum Wage Act: a closer look (SCP Law, 31 Jul 2024) · accessed Oct 2026
- Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 (PwC Nigeria, Jul 2024) · 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.