In the agency import and export business, is it really the case that the party making the foreign exchange payment is also the one making the payment?
Our company intends to carry out agency import and export business. I heard there is a principle called "the party making the foreign exchange payment is also the one making the payment" in agency import and export, but I don't quite understand what it specifically means. In actual operation, is it necessary to strictly follow this principle? What are the consequences if we don't follow it? I hope professionals can help explain it in detail so that our company can be clearer about how to operate when carrying out the business.
Professional consultant answers
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
In the agency import and export business, the principle of "the party making the foreign exchange payment is also the one making the payment" means that the foreign exchange payment entity and the actual payment entity should be consistent. This is because foreign exchange payment involves relevant regulations on foreign exchange management. Ensuring the unity of the foreign exchange payment entity and the payment entity helps the foreign exchange supervision department accurately grasp the capital flow and avoid foreign exchange violation risks.
For example, if Zhongshitong acts as an agent for Company A to import goods, if Zhongshitong is responsible for making the foreign exchange payment, then in the payment link of the goods, Zhongshitong should also make the payment to the overseas supplier in accordance with the contract. If this principle is not followed, on the one hand, it may lead to regulatory penalties from the foreign exchange management department and affect the company's credit record; on the other hand, in subsequent business processes such as customs declaration and verification, there may be obstacles, affecting the normal import and export of goods. Therefore, in actual operation, this principle should generally be strictly followed to ensure the compliance and smooth progress of the business.
Andrew HuangYears of service：7Customer Rating：5.0
Supply chain optimization expertConsult
Yes, the principle of "the party making the foreign exchange payment is also the one making the payment" should be followed. Otherwise, if the foreign exchange bureau finds inconsistencies during verification, it may require the enterprise to explain the situation, and it will be troublesome if the explanation is unclear.
Joseph ZhouYears of service：10Customer Rating：5.0
Senior foreign trade managerConsult
Following this principle can make the capital flow clear. If the foreign exchange payment entity and the payment entity are different, financial accounting will also be chaotic, and there may be problems in subsequent audits.
Robert ChenYears of service：6Customer Rating：5.0
Customer service consultantConsult
If this principle is not followed, the bank may not cooperate with the operation. After all, the bank also has to follow the foreign exchange management regulations, so it is best not to violate it.
Amanda YangYears of service：3Customer Rating：5.0
Cost control consultantConsult
If the principle of "the party making the foreign exchange payment is also the one making the payment" is not followed, the enterprise may be suspected of illegal activities such as money laundering, which will bring great trouble to the enterprise. This must be taken seriously.
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
From a compliance perspective, strictly implementing this principle can ensure the close connection of various links in the agency import and export business and reduce potential risks.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
If this principle is not followed, difficulties will be encountered when handling the verification of import foreign exchange payments after the goods are imported, affecting the subsequent business development of the enterprise.
Emily LiuYears of service：10Customer Rating：5.0
Settlement and payment expertConsult
The principle of "the party making the foreign exchange payment is also the one making the payment" can effectively prevent foreign exchange risks. Enterprises should not break this principle for the sake of convenience or other reasons.
James LiuYears of service：10Customer Rating：5.0
Foreign trade tax refund consultantConsult
Once violated, the enterprise may face penalties such as fines and may also affect the enterprise's reputation in the industry, which is not worth the loss.