This page is for anyone who deals with a buying office, a sourcing office or an agent and needs to know whose interests that person represents, and who to invoice or negotiate with. A merchandiser at a factory often talks to someone who is clearly not the buyer's own staff sitting in the buyer's own country, and not the factory's own staff either. Getting this wrong means chasing the wrong company for a decision, or paying a commission to a company that was never entitled to one.
This lesson mainly teaches the flow of money: who pays a buying office, a sourcing office and an agent, and how each is paid. Without this, a factory can sign something with the wrong party, or trust a verbal promise that the person making it had no authority to give. The lesson also revisits a trap from lesson 2.1: a trading company is not one of these three at all, because it buys and resells in its own name, rather than being paid by someone else to act on their behalf.
You need: the idea of a buyer, a factory and a trading company from lesson 2.1. If you have not read lesson 2.1, the key terms below give you enough to continue.
By the end of this lesson you can:
Not covered here: the different types of mill (lesson 2.4) and how to identify a company from a purchase order (lesson 2.5).
| Term | Meaning |
|---|---|
| Buying office | A branch of the buyer's own company, staffed by its own employees, usually based near its factories. Not a separate business. |
| Sourcing office | An office that works exclusively for one buyer near its factories, sometimes a separate legal entity the buyer owns or contracts. |
| Agent | An independent business, hired by the buyer or the factory, paid a commission for arranging or managing an order. Not part of either company. |
| Commission | A payment to an agent, normally a percentage of the order value, agreed in advance. |
| Agency agreement | The written contract stating what an agent may do on the hiring company's behalf, and how it is paid. |
| Trading company | A company that buys goods in its own name and resells them, taking ownership, unlike a buying office, sourcing office or agent. |
| Legal entity | A company recognised in law as able to sign contracts and own property, separately from the people who run it. |
| Authority | What an agent or office is actually allowed to agree to on someone else's behalf, per its written agreement. |
A buying office, a sourcing office and an agent all sit between the buyer and the factory, but they are not the same thing. Who a company legally works for, and how it is paid, are two separate questions, and both differ across the three. A factory that assumes "it's basically the buyer's person, so it must be paid the way the buyer's staff are paid" can be wrong on both counts at once.
A buying office is part of the buyer's own organisation: not a separate company, staffed by the buyer's own employees, and paid through the buyer's normal payroll, not per order. A sourcing office is close to a buying office in daily practice, but it is sometimes a separate legal entity that the buyer owns or contracts, rather than literally the same company. An agent is different again: it works for whichever side hired it, but it is an independent business, and it earns a commission, usually a percentage of the order value, agreed in advance.
| What can differ | The shapes you will meet | Why it matters to you |
|---|---|---|
| Buying office | Part of the buyer's own company, not a separate legal entity, based near its factories, staffed by the buyer's own employees, paid through the buyer's regular overhead. | You are dealing with the buyer itself under a local name; contracts and disputes still run against the buyer's head office. |
| Sourcing office | Works exclusively for one buyer and is based near factories like a buying office, but is sometimes a separate legal entity the buyer owns or contracts. The practical difference to a factory is usually small, but the legal one can matter for contracts. | Check whether the sourcing office itself signs the contract, or only manages quality visits and communication while the buyer's head office signs and pays. |
| Agent | An independent business, hired by whichever side needs it — usually the buyer, sometimes the factory or a domestic brand such as Cedar & Co. — and paid a commission fixed in an agency agreement. | An agent's authority is limited to what its agreement says; it cannot bind the hiring company beyond that, however confidently it speaks. |
| Trading company (contrast) | Buys goods in its own name and resells them, taking ownership, unlike all three go-betweens above, which never own the goods. | If the company in front of you ever takes title to the goods, it is acting as a trading company, such as Atlas Trading, not as an office or an agent. |
| The same agent role, on an export order versus a domestic order | On Order A, Meridian Sourcing earns commission tied to one confirmed export purchase order for Northline Apparel, an order-driven (make-to-order) deal. The same kind of agent working for a domestic make-to-stock brand such as Cedar & Co. instead earns commission on ongoing sourcing against Cedar & Co.'s rolling forecast, with no single confirmed order behind each payment. | An agent's role is not fixed by the job title alone; whether its principal runs make-to-order or make-to-stock changes what "the order" its commission is tied to actually is. |
None of these five shapes is rarer than the others in real trade; a single order can even use more than one at once, as the case below shows.
The case we followOrder A is the 15,000-piece basic cotton T-shirt order between Northline Apparel and Delta Garments. For this order, Northline Apparel uses a small sourcing office based in Egypt, near Delta Garments' factory, to manage quality visits and day-to-day communication. Northline's head office, in its own country, handles the contract and the payment.
The sourcing office is Northline's own staff, working exclusively for Northline. It is not a separate business partner of Delta Garments, even though the two teams speak daily and the sourcing office's staff visit the factory floor. Delta Garments still contracts with, and is paid by, Northline Apparel directly — not the sourcing office. If Delta Garments ever needed to enforce a payment claim, it would enforce it against Northline Apparel, the party named and signing on the contract, not against the sourcing office.
| Who Delta Garments deals with | What that party does on Order A | Who Delta Garments' contract and payment are actually with |
|---|---|---|
| Northline's sourcing office (Egypt) | Quality visits, day-to-day communication, passing messages between the factory and Northline's head office | Not the contracting party — it acts for Northline, it does not stand in Northline's place |
| Northline's head office | Signs the purchase order, agrees any change to price, quantity or delivery, pays by the agreed terms | Delta Garments' actual counterparty for the contract and the payment |
If Northline Apparel had instead used an agent such as Meridian Sourcing for this order, the picture would differ again: Meridian Sourcing would be an independent business, paid a commission by Northline, and its authority to agree changes on Northline's behalf would be limited to whatever the agency agreement said.
The worked numberA simple agent-commission example, framed as a generic teaching figure, not an Order A fact: suppose an agent is paid a 5% commission on an FOB order worth USD 48,000 — the value of Order A, 15,000 pieces at USD 3.20 from lesson 1.3's costing.
The USD 2,400 commission is paid by whichever side hired the agent — commonly the buyer, sometimes split between buyer and factory — as set out in the agency agreement. It is not added on top of the factory's price without agreement; a factory that pays a commission it never agreed to, or a buyer that assumes the factory absorbs it silently, is heading for a dispute.
Do this on every order, even one you have shipped before with the same names involved, because the same buyer can use a different mix of office and agent from one order to the next.
The trapA common mistake is paying a commission to, or signing a contract with, a buying or sourcing office as if it were the buyer's separate business partner, when it is legally the same company as the buyer. If a dispute arises, there is then no separate party to enforce anything against — only the buyer itself, under another name.
The reverse trap is just as common: treating an independent agent as if it were part of the buyer's own staff, and assuming the buyer is automatically bound by everything the agent says. An agent's authority is usually limited to what its agency agreement actually allows, and a verbal statement from an agent is not the same as written confirmation from the buyer.
A buying office and a sourcing office are usually the buyer's own people, near the factory, paid the buyer's normal way, not per order. An agent is a separate, independent business, hired by the buyer or the factory, paid a percentage of the order's value once the deal is agreed. A trading company is different from all three: it buys and resells in its own name, so it is not being paid by someone else at all. To know who you are really dealing with, ask whose staff the person is, check whether they ever own the goods, and get the contract and payment terms confirmed in writing before you rely on anything said out loud.
An agent representing Northline Apparel calls Delta Garments' merchandiser and says that Northline has agreed to a two-week extension on the delivery date for Order A. No email or written confirmation follows the call. Delta Garments has not heard anything directly from Northline Apparel itself.
The relevant line in the agency agreement between Northline Apparel and its agent reads:
You are the merchandiser at Delta Garments. Can you safely treat the delivery date as extended, based on the agent's verbal statement alone? Decide before you open the decision.
No. The agency agreement limits the agent's authority to negotiating, with the Buyer's written confirmation still required for any change to a signed purchase order — and a delivery date is a term of the signed purchase order.
Delta Garments should ask Northline Apparel directly, or ask the agent to obtain written confirmation from Northline Apparel, before relying on the extension. Acting on the verbal statement alone risks being told later that the change was never actually approved, after Delta Garments has already planned production around it.
If the agreement had instead given the agent authority to confirm delivery-date changes without further sign-off, the answer would reverse — but this agreement does not.
If Delta Garments planned production around the unconfirmed two-week extension and it later turns out the change was never approved, the order reverts to its original delivery date, and Delta Garments faces the late-shipment exposure from lesson 1.4's penalty clause: liquidated damages of 0.5% of order value per week late.
USD 480 is the exposure Delta Garments avoids simply by getting Northline Apparel's written confirmation before treating the delivery date as changed — a cost that comes entirely from trusting a verbal statement the agent was not actually authorised to make binding.
Add this column to your company directory for every buying office, sourcing office, agent or trading company you deal with. Fill it from the contract and the agency agreement, not from who you email most often.
| Question | Order A (filled in) | Your order |
|---|---|---|
| What kind of company is this? | Sourcing office (Northline's own staff, near Delta Garments) | |
| Whose employee or contractor is it? | Northline Apparel's | |
| Does it ever take ownership of the goods? | No | |
| Who does Delta Garments actually contract with? | Northline Apparel's head office | |
| Who pays this company, and how? | Northline Apparel pays its own sourcing office through its regular overhead, not per order | |
| Confirmed in writing before shipment? | Yes — the purchase order names Northline Apparel as the buyer |
1. Who normally pays a buying office's staff costs?
2. How is an independent agent normally paid?
3. Cedar & Co. hires an agent, at a 4% commission, to negotiate an order for 15,000 basic cotton T-shirts at USD 3.20 FOB (USD 48,000) with Delta Garments. The agency agreement requires Cedar & Co.'s own written confirmation for any change to a signed order. Whose confirmation should Delta Garments rely on for a change?
| EN | AR | FR | TR | Meaning |
|---|---|---|---|---|
| Buying office | مكتب شراء | Bureau d'achat | Satın alma ofisi | A branch of the buyer's own company, staffed by the buyer's own employees, usually based near its factories. Not a separate business. |
| Sourcing office | مكتب توريد | Bureau de sourcing | Tedarik ofisi | An office that works exclusively for one buyer near its factories, sometimes set up as a separate legal entity the buyer owns or contracts. |
| Agent | وكيل | Agent | Acente | An independent business, hired by the buyer or the factory, that is paid a commission for arranging or managing an order. Not part of either company. |
| Commission | عمولة | Commission | Komisyon | A payment to an agent, normally a percentage of the order value, agreed in advance in the agency agreement. |
| Agency agreement | اتفاقية الوكالة | Contrat d'agence | Acentelik sözleşmesi | The written contract that states what an agent is allowed to do on the hiring company's behalf, and how it is paid. |
| Trading company | شركة تجارية | Société de négoce | Ticaret şirketi | A company that buys goods in its own name and resells them, taking ownership of the goods, unlike a buying office, sourcing office or agent. |
| Legal entity | كيان قانوني | Entité juridique | Tüzel kişilik | A company recognised in law as able to sign contracts, own property and be sued, separately from the people who own or run it. |
| Authority | صلاحية | Pouvoir (autorité) | Yetki | What an agent or office is actually allowed to agree to on someone else's behalf, as set out in its written agreement. |
You now know how to tell a buying office, a sourcing office, an agent and a trading company apart. The next lesson turns to the mills themselves, and shows when spinning, knitting, weaving, dyeing and finishing sit in one company and when they sit in several. Back to the course map