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Who actually makes and receives foreign exchange payments in agent import and export?
Resolved
Our company plans to engage an agent for import and export business and is somewhat unclear about the rules regarding foreign exchange payments and receipts. We'd like to ask, in the process of agent import and export, who exactly makes the foreign exchange payments and who receives them? Is it the principal or the agent? Are there any special circumstances? We hope for a detailed explanation so we can be more informed when choosing an agent and conducting business.
Trade Expert Insights Answers
In agent import and export business, it generally follows the principle of "whoever makes the payment receives the foreign exchange." Typically, if the agent signs the import and export contract in its own name, the agent is responsible for making and receiving foreign exchange payments. This is because, from a contractual relationship perspective, the agent is the entity that directly conducts business transactions with overseas trading partners.
However, if the principal and agent agree that the principal directly settles with overseas trading partners, and relevant foreign exchange administration regulations permit this operation, then the principal can also make and receive foreign exchange payments.
For example, in import and export businesses within certain special supervision areas, policies may provide convenience for the principal to make and receive foreign exchange payments. Regardless of the situation, it must be ensured that it complies with national foreign exchange administration regulations to avoid compliance risks. Before conducting agent import and export business, enterprises should clarify the responsibilities for foreign exchange payment and receipt with the agent to avoid future disputes.
Generally speaking, if the agent is responsible for a series of import and export procedures such as customs declaration, it is highly probable that the agent will make and receive foreign exchange payments, as it leads the entire business process.
In fact, it mainly depends on how the contract is signed; if the contract explicitly states that the principal is responsible for foreign exchange payments and receipts and can meet foreign exchange administration requirements, then the principal handles it.
The State Administration of Foreign Exchange has regulations on this matter, and it must be done according to the regulations. Regardless of whether the principal or the agent handles it, the procedures must be compliant.
For some simple agent import and export operations, if the principal is familiar with the process and capable of handling foreign exchange matters, the principal can also make and receive foreign exchange payments after negotiation.
If the agent has more convenient foreign exchange operation channels and experience, to improve efficiency, it is often the agent who makes and receives foreign exchange payments.
From a risk perspective, whoever makes and receives foreign exchange payments bears the risk of foreign exchange fluctuations, and enterprises can negotiate and decide based on their own risk tolerance.
In actual business operations, banks will also determine who makes and receives foreign exchange payments based on specific circumstances, and compliance is key.
For agent import and export foreign exchange payments and receipts, trade modes must also be considered, as different trade modes may have different requirements.