Want to understand if remittance is necessary for entrusted agency import and the specific process. The best answer states that entrusted agency import usually requires remittance because payment needs to be made to overseas suppliers. The general remittance process involves first signing an agency agreement, then the agent applies to the bank with relevant documents, and the bank makes the payment after review. However, there are special circumstances, such as specific settlement arrangements or duty-free projects, and foreign exchange management policies must be followed during operation.
Who should make the payment when importing goods through an agent?
Resolved
My company plans to import a batch of goods through an agent, and we have almost finalized the negotiations with the agency company. However, I am a bit confused about the payment. As the principal, we feel that since the agency company is responsible for the import operations, they should be the ones to make the remittance. But the agency company says they are just providing services, and we should make the payment. So, I would like to ask, in the case of importing goods through an agent, who is it reasonable for to make the payment?
Trade Expert Insights Answers
Olivia LiuYears of service：6Customer Rating：5.0
Foreign Exchange Risk ManagerStart a Chat
In agency import business, generally, the party that actually bears the cost and risk of the goods is responsible for making the payment. Typically, the principal is the actual demander and owner of the goods, bearing the cost and market risk of the goods, so it is more common for the principal to make the payment.
The main responsibility of the agency company is to assist the principal in completing the import process, including customs declaration, inspection, and other procedures, by utilizing their professional knowledge and resources. If the agency company makes the payment, it means they have to advance a large amount of funds, which not only increases the financial pressure and risk for the agency company but also deviates from the conventional agency business model.
However, both parties can negotiate and determine this based on the actual situation in the agency agreement. For example, if the principal has difficulties with cash flow and the agent is willing and able to advance the funds, and both parties reach an agreement on advance payment interest, risk bearing, etc., then it is feasible for the agency company to make the payment. But in any case, it must be clearly stipulated in the contract to avoid subsequent disputes.
David ChenYears of service：10Customer Rating：5.0
Trade Compliance AdvisorStart a Chat
Generally, the principal makes the payment. After all, the goods are for the principal's use, and the agent is just helping to handle the import matters. Having the agent make the payment might lead to financial risks and unclear responsibilities.
Emma ZhaoYears of service：3Customer Rating：5.0
Export Documentation SpecialistStart a Chat
In common situations, the principal pays. If the agent pays, it requires high capital for the agent, and if the principal does not repay promptly, the agent will also face trouble. Therefore, it is more reasonable for the principal to pay.
Richard WuYears of service：8Customer Rating：5.0
Global Trade Operations ExpertStart a Chat
In most cases, the principal makes the payment, unless the agency agreement specifically states that the agent will pay. Otherwise, the principal is defaultly responsible for the payment.
Anthony LuoYears of service：10Customer Rating：5.0
Trade Compliance ExpertStart a Chat
From a conventional business perspective, the principal makes the payment, because the principal is the ultimate beneficiary of the imported goods, and making the payment aligns with common sense and business logic.
Thomas LiYears of service：7Customer Rating：5.0
Import Licensing AdvisorStart a Chat
Usually, the principal pays. After all, the agency company primarily receives service fees, and it is more appropriate for the principal to bear the burden of large fund payments.
Daniel KimYears of service：4Customer Rating：5.0
Commodity Inspection and Quarantine ConsultantStart a Chat
Generally, the principal makes the payment. The agency company is only responsible for operational procedures, and the principal handles the financial aspects. This way, the division of responsibilities is clearer.
Robert TanYears of service：5Customer Rating：5.0
International Market Development AdvisorStart a Chat
The principal makes the payment in most cases. If the agent pays, settlement issues are likely to arise later, so the principal paying can better ensure the smooth progress of the business.
Sophia WangYears of service：6Customer Rating：5.0
International Logistics CoordinatorStart a Chat
In most situations, the principal pays. The agent generally does not easily undertake the responsibility of making the payment, otherwise, it would bring them a lot of potential trouble.