The enterprises engaged in agency import and export business always make mistakes in revenue recognition. How on earth should it be recognized?
Solved#Export agent#
The enterprise I work for mainly engages in agency import and export business. Recently, I'm a bit confused about revenue recognition. Our business involves helping customers purchase and export goods, or helping customers import goods. Sometimes, nodes such as the customer's payment time and the goods delivery time are inconsistent. I don't know which time to recognize revenue, whether it is when receiving the customer's payment, when delivering the goods, or at some other time. I hope you all can give some professional advice on how to recognize revenue?
Professional consultant answers
Andrew HuangYears of service：7Customer Rating：5.0
Supply chain optimization expertConsult
For enterprises engaged in agency import and export business to recognize revenue, they generally follow the five - step model in Accounting Standard for Business Enterprises No. 14 - Revenue (revised in 2017). First, identify the contract concluded with the customer, clarify the rights and obligations of both parties, etc. Second, identify the single performance obligations in the contract. For example, if procurement, transportation, customs declaration, etc. can be clearly distinguished, they are different obligations. Then, determine the transaction price, considering factors such as variable consideration. Next, allocate the transaction price to each single performance obligation. Finally, recognize revenue when fulfilling each single performance obligation.
For goods delivery, if the control of the goods is transferred to the customer and the revenue recognition conditions are met, revenue can be recognized at this time. If services such as transportation and customs declaration are accounted for separately from the goods sales, they are recognized when their respective performance obligations are completed. If the time of receipt and payment of funds is inconsistent with the time of transfer of control, recognize revenue according to the time of transfer of control, and treat the receipt and payment of funds as transactions.
Robert ChenYears of service：6Customer Rating：5.0
Customer service consultantConsult
Generally speaking, if the contract stipulates that the risk transfer point is when the goods cross the ship's rail, then when the goods cross the ship's rail, revenue can be recognized because the control of the goods is basically transferred to the customer at this time.
Joseph ZhouYears of service：10Customer Rating：5.0
Senior foreign trade managerConsult
You can see how the contract is signed. If it is agreed to deliver the goods at the port of import, then when the goods are delivered to the customer at the port of import, revenue can be recognized. If it is not clear, refer to industry practices and standard provisions to find a reasonable time node for recognition.
Michelle ChenYears of service：3Customer Rating：5.0
Business coordination consultantConsult
If it is a case of receiving payment first and then delivering the goods, record it as advance receipts when receiving the payment. Wait until the control of the goods is transferred to the customer, for example, when the customer signs for receipt, and then recognize revenue.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
In agency export business, when the exported goods are declared for departure from the customs, relevant procedures are complete, and it is expected that the payment can be recovered, revenue can basically be recognized.
William YangYears of service：5Customer Rating：5.0
International logistics consultantConsult
In agency import business, if the goods have arrived at the designated location and the customer has inspected and accepted them as qualified, it is more appropriate to recognize revenue at this time, indicating that the control of the goods has been transferred.
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
Pay attention to the transfer of risks and rewards. When the main risks and rewards related to the goods are transferred to the customer, for example, the customer assumes risks such as loss and damage of the goods, revenue can be recognized.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
If the contract stipulates an acceptance period, wait until the acceptance period ends and the customer does not raise any objections. At this time, it is relatively safe to recognize revenue, indicating that the control of the goods has been transferred and meets the customer's requirements.
Sarah ZhangYears of service：8Customer Rating：5.0
Document expertConsult
Look at the essence of the business. If the agency import and export business mainly charges agency fees, then after completing the agency service, such as handling customs declaration and other procedures, revenue can be recognized according to the amount of the agency fee.