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!
In Jiangmen, I want to try to do international entrepot trade but don't know where to start. I'm asking about the implementation conditions, building business channels and precautions. The best answer suggests doing market research first, building a high-quality supply chain, choosing a suitable logistics solution, being familiar with trade rules and policies, and building good customer relationships to help carry out international entrepot trade in Jiangmen from multiple aspects.
The company intends to find an agency to handle the export tax rebate. It wants to know how the export tax rebate for agency services is settled, whether it is based on the proportion of the export amount or other methods, whether the settlement process is complicated and how long it will take to receive the tax rebate. The best answer states that the common settlement methods are to charge agency fees according to the proportion of the export amount or a fixed fee. The process includes signing an agreement, collecting documents to declare the tax rebate, and after the tax authorities' review is passed, the agency deducts the fees and transfers the money. Normally, the settlement can be completed within 2 - 4 months.
Our company plans to engage in entrepot trade but has doubts about tax collection during payment process, such as whether taxes are based on goods value proportion or other methods, and policy differences across regions. The best answer indicates that entrepot trade generally doesn't incur tariffs but may involve VAT, calculated as added value multiplied by applicable tax rate, with varying regional policies. It's advised to consult local tax authorities and keep transaction records before operation.
Just started involving in entrepot trade business and have doubts about the payment collection process. Want to learn about safe, convenient and compliant payment methods and key points to note. The best answer indicates common payment methods include Letter of Credit, T/T, Collection, etc. L/C is secure but involves complicated procedures; T/T can be divided into advance T/T and post T/T; Collection includes Documents against Payment and Documents against Acceptance. For payment collection, it's important to clarify contract terms, understand counterparty's creditworthiness and ensure compliant operations.
Our company encountered goods subject to legal inspection when doing entrepot trade and didn't know how to handle it. We were worried that the inspection and quarantine process would be complicated and delay the transshipment. The best answer pointed out that we should first clarify the HS code to determine the requirements, prepare the basic trade documents and related certificates, declare to the port inspection and quarantine agency, plan the time in advance, and if necessary, entrust a professional customs broker to ensure the smooth completion of the entrepot trade of the goods.
Confusion about the concepts of entrepot trade and indirect trade, asking whether entrepot trade is indirect trade. The best answer points out that entrepot trade is not completely equivalent to indirect trade. Indirect trade emphasizes that the producing country and the consuming country conduct trade through a third country, while entrepot trade focuses on the transshipment of goods in the third country. Entrepot trade may be a form of indirect trade, but it cannot be simply equated.
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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.