Our company plans to carry out entrepot trade business, but we are not quite clear about the settlement methods. We would like to know how entrepot trade is usually settled. Will it be very complicated? We hope that you can introduce the common settlement methods in detail, as well as the precautions in actual operation for each method. Thank you!
The company plans to find an agency company to export products and wants to understand the settlement method of the agency export agency fee, such as whether it is calculated according to the proportion of the order amount, the settlement time node (before shipment, after shipment or after receiving the payment for goods), and the settlement method (cash, transfer, etc.). The best answer points out that the common settlement methods include calculating according to the proportion of the order amount or a fixed fee, and most of them are settled after receiving the payment for goods. Transfer is a common settlement method, and both parties can negotiate to determine the details.
Our company is involved in entrepot trade business but doesn't know how to conduct the statistics. We're inquiring whether to track goods flow or if there are specific indicators and methods, as well as any special circumstances needing attention. The best answer states that entrepot trade statistics should follow specific principles, record goods flow, monitor trade volume indicators, typically handled by customs, while paying attention to special cases like goods processing or multiple transshipments, strictly following rules and verifying documents to ensure data accuracy.
When learning international trade knowledge, there are doubts about the meaning of entrepot trade. Ask for its popular explanation, the difference from general trade, and the points to note in actual operation. The best answer states that entrepot trade refers to the buying and selling of imported and exported goods being transferred through a third country. It takes Chinese clothing being resold to the United States via Singapore as an example to illustrate, and also mentions the differences from general trade and that in operation, attention should be paid to the policies of the third country, warehousing and logistics, and trade documents.
When learning about international trade knowledge, I can't distinguish between entrepot trade and transit trade, and I'm asking about their concepts, differences, and actual application scenarios. The best answer explains that in entrepot trade, goods are transferred through a third country, and the merchants of that country participate in the transaction to make a profit; in transit trade, goods are transported through the territory of one's own country to another country, and one's own country does not participate in the buying and selling, only providing transportation services. Examples are also given to illustrate the differences between the two and the reasons for their applications.
Our company has just stepped into the entrepot trade business and is not familiar with bill of lading operations. We want to understand the specific practices of bill of lading in entrepot trade, such as how to fill in the shipper and consignee information and the process of bill of lading circulation. The best answer indicates that in entrepot trade, house bills of lading are commonly used. The shipper should be filled with the middleman, and the consignee should be filled with the final buyer. Attention should be paid to the type of bill of lading and the circulation links, ensuring the accuracy of information, maintaining communication with all parties, and paying attention to trade terms and special requirements of the port of destination, etc.
The company conducts entrepot trade business, and due to special circumstances such as goods not entering the domestic customs territory, it is uncertain which account the profit should be recorded in. The best answer indicates that the profit from entrepot trade should generally be recorded under the "Operating Profit" account, with sales revenue recorded as "Operating Revenue" and costs recorded as "Operating Costs," which can clearly reflect the business's contribution to the company's operating results.
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Professional consultant answers
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
The common settlement methods in entrepot trade mainly include the following:
First, settlement by letter of credit. The buyer and the seller issue letters of credit through banks, and the banks assume the guarantee of payment. The exporter submits the documents as required by the letter of credit, and the bank makes the payment after verifying that there are no errors. This method is highly secure, but the operation is complex, and the terms of the letter of credit need to be strictly observed. For example, the documents must be completely in line with the provisions of the letter of credit, otherwise they may be dishonored.
Second, settlement by Telegraphic Transfer. The importer directly remits the funds to the exporter through the bank. It is divided into T/T in advance (payment before shipment) and T/T in arrears (shipment before payment). T/T in advance is beneficial to the exporter, and T/T in arrears is beneficial to the importer. When using Telegraphic Transfer, attention should be paid to verifying the information of the other party to avoid fraud.
Third, settlement by collection. The exporter entrusts the bank to collect money from the importer, which is divided into Documents against Payment (D/P) and Documents against Acceptance (D/A). D/P is relatively safe, and the importer can get the documents to take delivery of the goods only after payment; The risk of D/A is relatively high. The importer can get the documents after accepting the bill of exchange and will make the payment when it is due. The exporter may face the risk of not receiving the payment.
Robert ChenYears of service：6Customer Rating：5.0
Customer service consultantConsult
When settling entrepot trade, bill settlement can also be considered, such as checks, promissory notes, bills of exchange, etc. Bills are negotiable and can accelerate the turnover of funds to a certain extent. However, attention should be paid to the authenticity, validity period and the credit status of the drawer to prevent receiving worthless bills.
Amanda YangYears of service：3Customer Rating：5.0
Cost control consultantConsult
In the settlement of entrepot trade, international factoring is also a method. The exporter transfers the accounts receivable to the factor, and the factor provides services such as financing and credit risk guarantee. This enables the exporter to obtain funds in advance, but a reliable factor should be selected, and at the same time, attention should be paid to costs such as factoring fees.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
For the settlement of entrepot trade, the open account method can also be adopted. That is, the exporter ships the goods first, and the importer makes the payment at the agreed time. This puts less pressure on the importer's funds, but the risk to the exporter is high. Unless you are very sure about the importer's credit, it should be used with caution.
James LiuYears of service：10Customer Rating：5.0
Foreign trade tax refund consultantConsult
Bank guarantee settlement is also applied in entrepot trade. The bank acts as a guarantor. When one party fails to fulfill its contractual obligations, the bank shall assume the payment liability as agreed in the guarantee. When using it, the terms of the guarantee should be clearly defined to prevent disputes.
Michelle ChenYears of service：3Customer Rating：5.0
Business coordination consultantConsult
There are also certain considerations in the choice of settlement currency. Generally, internationally recognized currencies with stable exchange rates are selected, such as the US dollar, the euro, etc. Attention should be paid to exchange rate fluctuations, and exchange rate risks can be hedged through tools such as forward foreign exchange transactions.
William YangYears of service：5Customer Rating：5.0
International logistics consultantConsult
When settling entrepot trade, the laws, regulations and policies of different countries and regions also have an impact. Before carrying out the business, it is necessary to clearly understand the foreign exchange control, tax policies, etc. of the relevant countries to avoid settlement obstruction.
Sarah ZhangYears of service：8Customer Rating：5.0
Document expertConsult
During the settlement process, proper documentation and archiving should be done, such as contracts, invoices, transportation documents, etc. These documents are not only the basis for settlement but also play a crucial role in case of disputes.
Andrew HuangYears of service：7Customer Rating：5.0
Supply chain optimization expertConsult
If multiple trading entities are involved, the responsibilities and obligations of each party in the settlement should be clearly defined, and a detailed agreement should be signed to avoid buck-passing and wrangling during the settlement.