Net rates versus commission: where your money sits

How a travel business gets paid is really a question about where money sits and when. Under a net-rate model you are sold a confidential rate by the supplier, you charge your customer a higher price, and you keep the difference, meaning you hold the customer's full payment and pay the supplier their share later. Under a commission model the supplier sets the price, collects the money, and pays you an agreed percentage after the fact, meaning you carry a receivable rather than cash in hand.

It sounds like an accounting nicety, but it shapes your whole cash position. One model leaves you temporarily holding money that is not yours; the other leaves you waiting to be paid money you have already earned. Many agencies run both at once across different products, and that is where forecasting and reconciliation get muddled. This guide separates the two so you can see what is genuinely yours, what you are holding for someone else, and what you are still owed.

Two ways to get paid, two cash positions

The distinction is structural, not just a pricing preference. With a net rate plus markup, the customer pays you the full sale price up front. You hold all of that money, including the supplier's portion, until you settle with the supplier on their terms. Your earnings are the margin between the net rate and the sale price, but for a while you are sitting on cash that is mostly destined for someone else.

With commission, the money flows the other way. The supplier is paid directly or collects on booking, and you invoice or wait for a percentage to be remitted to you later, often only after the traveller has actually stayed or travelled. Here you never hold the gross; instead you carry an unsecured receivable on your books and chase it until it lands. Same booking, same customer, completely different place for the money to be.

The percentages vary, and that is the point

Margins and commission rates differ widely by product and by deal, so treat any figure as illustrative. Hotel commissions are typically somewhere around ten to twenty-five per cent; tour and activity commissions are often higher, perhaps in the twenties to thirty per cent range; inbound and destination operators working on net rates may keep only a single-digit margin on high-value arrangements. These are rough industry ranges, not fixed numbers, and your own contracts will differ.

What matters is not the exact percentage but what it implies for your cash. A thin net-rate margin means most of the money you are holding belongs to the supplier, so an error in what you set aside is costly. A commission percentage means the cash only arrives later and is at risk until it does. Confusing a gross sum you are holding with a margin you have earned is the fastest route to over-spending, because the bank balance flatters you under the markup model and understates you under the commission model.

Why mixing them muddles forecasting

The trouble starts when both models run through the same account. Your balance is then a blend of your own earned margin, money you are holding for suppliers under markup, and the absence of commissions you are still owed. Looked at as a single number, it tells you almost nothing reliable about what you can spend.

Good practice is to keep the two flows visibly distinct. Under markup, treat the supplier's share as a liability from the moment the customer pays, not as available cash. Under commission, track the receivable per booking so you can see what has been earned but not yet received, and flag anything that arrives short or late. Reconciling each settlement against the booking behind it, rather than against a lump payout, is what keeps your forecast honest when you are running mixed models across hotels, tours and air.

How Altery fits

This is fundamentally a separation problem, and that is where an Altery account helps. You can keep money held for the supplier under a markup arrangement in a dedicated pot, ring-fenced from your own margin, so the gross payment a customer makes is not mistaken for spendable cash. What is left outside that pot is closer to what you have genuinely earned.

Where net rates are quoted in a foreign currency, a multi-currency business account lets you hold USD, EUR or GBP and settle suppliers in their currency without being forced to convert at an awkward moment, and you can manage currency conversion on your own timeline. With real-time balances you can watch markup retained in one pot and commission received against expected in another, so forecasting reads cleanly even when both models run side by side. If you operate several brands or a separate destination-management entity, multi-entity management keeps each one's position distinct. Altery is not a bank, and this is general information rather than advice; the model you choose with each supplier remains a commercial decision for you.

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