Who Receives Payment in Agency Exports? Come and Find Out!

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Our company plans to export goods through an agent but has some doubts regarding remittance. In the process of agency export, does the principal or the agent receive the payment? Are there any regulations or points to note? Will the remittance method affect who receives the payment? We hope experienced friends can help answer this. Thank you!
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In agency export business, there are usually two scenarios for the remittance subject. First, the agent receives the payment. The agent signs the contract with the foreign merchant in their own name and declares customs for export. In this case, the agent is responsible for receiving the payment and then settling with the principal according to the agency agreement after receiving the remittance. Under this method, the agent bears the remittance risk and it facilitates unified management of operational processes.

The second scenario is the principal receives the payment. In some situations, foreign merchants directly pay the amount to the principal. However, this method must comply with relevant regulations, such as filing with the foreign exchange administration department.

Who receives the payment primarily depends on the agreement in the agency contract and the actual trade situation. If the principal wishes to have direct control over the cash flow, they can negotiate for the principal to receive the payment; if the principal values the agent's professional operations and risk-bearing more, it may be more suitable for the agent to receive the payment. It should be noted that regardless of the method, foreign exchange administration regulations must be followed to ensure compliant remittance.

References: Shocking! Chongming District Import Payment Agent Companies Actually Have Such Advantages!

Generally, it's determined by the agency agreement. If the agreement is not clear, it depends on the customs declaration. Whoever declares customs in their name receives the payment, although there can be special negotiated situations.

If the agent has good credibility and strong financial backing, having the agent receive the payment can reduce risks, as they are more professional in handling foreign trade matters.

If the principal has a close relationship with the foreign merchant, and the foreign merchant is more willing to pay directly to the principal, then it can be negotiated for the principal to receive the payment.

Foreign exchange policies can affect the choice of remittance subject. For example, certain special regulated area policies may stipulate specific remittance methods.

The requirements of the remittance bank may also affect the remittance subject. Some banks have specific operational procedures for agency export remittances.

Taxation aspects also need to be considered. Different remittance subjects can have different impacts on tax operations such as export tax rebates.

From a risk perspective, the principal receiving payment allows direct control over funds but incurs remittance risk; with the agent receiving payment, the principal is relatively less concerned but requires high trust in the agent's credibility.

If multi-party trade is involved, such as re-export trade, determining the remittance subject becomes more complex and requires comprehensive consideration of all links in the trade chain.

User-submitted questions and answers reflect personal opinions, not the official stance of this website.

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