Intermediaries (Functions and Types)

Category: Business

In global markets, connections are very important so that products can be processed and delivered in optimal time frames and that they cover a quota of production and sales that allow profit, at the midpoint between manufacturer and consumer is this figure that It has a great impact on trade, these are the intermediaries.

The role of these people in general and basic ways to make it easier for the producers of goods and services to get their products to final consumers, while the intermediary depending on the modality achieves a profit margin for each operation in which there is intervened as an intermediary.

An intermediary or intermediaries, is the person, entity or company that serves as a link to market the availability of products, goods and services of some products and the person who demands it, managing to expand the market for those who wish to acquire these products, you come and services can acquire what suits you best.

On the other hand, for the producers or generators of services, they save on the sales expenses that they should incur in order to place their products on the market to be consumed.

Although previously this figure was seen as a parasite today, thanks to globalization, it is easier to distribute these goods and services, so that small companies can show and offer their work to third parties whom they normally would not be able to reach without high expense. in advertising and sales force.

Functions of intermediaries

Intermediaries are figures that allow optimizing many of the processes, although their participation has a negative side for the final consumer since there is an increase in the cost of the good and / or service so that the participation of the intermediary is covered by the number of functions that They comply, allowing the market to benefit on a large scale.

The main functions of intermediaries are:

  • They are in charge of looking for the largest number of producers to meet the demand of a certain sector.
  • They locate buyers who will acquire the goods and services offered by the providers, these may be an end consumer or other brokers on a larger scale.
  • It allows the number of transactions to decrease and allows a more balanced and natural cohesion in the market of demand and supply.
  • Sometimes they are responsible for the logistics and transportation of the products.
  • It carries out a marketing and sales campaign that allows the products and services offered by suppliers to be known and more attractive, which will generate an increase in sales by reaching a larger audience.
  • When they acquire the rights and obligations of the good that they will commercialize, they assume the risk of the deterioration and obsolescence of the product.
  • It allows a growth of the financial instruments of the market, since they usually generate sales on credit.

These functions are generally and broadly speaking, the role of the intermediary depends on the type of transaction, the rights and risks that it is capable of assuming according to the agreements they have with the provider and with the client.

Types of Intermediaries

As mentioned above, there are several types of intermediaries, depending mainly on the number of activities for which you have rights and responsibilities, which is generally agreed through contracts with suppliers.

Among the main types of intermediaries we have:

Financial intermediaries

The financial intermediaries are perhaps the best known and related to the name, are responsible for contacting those who have a surplus of money and looking to put this money into the financial market to earn interest.

These intermediaries manage to place the money in those financial instruments in the stock market and diversify the portfolio of the person, so the people who seek to develop a project obtain financing from third parties that they will never know thanks to the participation of the intermediary who earns a commission. for making this transaction.

In this way, the capital will generate a return that will allow both parties to benefit without many complications since it has been the intermediary who has facilitated the connections that otherwise would have been a long and cumbersome process.

Commercial intermediary

On the other hand, we have the commercial intermediary in its most classic court, since, just as the financial intermediary connects the different suppliers that have an offer and the different clients that have a demand, these operations are increasingly common, from the scope of export or import and in the distribution of products and / or services locally.

A fairly practical example can be seen in supermarkets, they are responsible for acquiring a large number of products from different suppliers at a wholesale price, so their cost is lower, making it available to their customers at a price higher than allows you to obtain a profit margin that is profitable for you. This modality assumes all the prices and benefits.

On the other hand, there are methodologies where the intermediary only earns a commission for the purchase of the items through their sales work, but at no time do they buy the product, their participation is limited to the placement of the product, as if it were a service Marketing will be covered.

Legal intermediaries

The legal intermediaries can be seen more clearly in the law known firms, as the premise of his work is the reconciliation between two parties to reach an agreement, based on what established contracts versus what is established and regulated by the law.

These will be responsible for reaching an agreement through negotiation between the parties, and ultimately before a jury, in general, the income that these legal intermediaries will receive will be based on a fixed fee income already established or they will receive a variable profit, depending on the remuneration agreements agreed between the parties.

Regardless of the type of intermediary, the basic function continues to be to simplify transactions between two parties in exchange for an economic benefit for this service.