Which Way to Pay the Agency Fee is better? Leave a comment

Case

Our company agents the export of a domestic manufacturing factory, and has signed the agency agreement. The agency agreement stipulates that the agency fee is 2%, paid in US dollars, and is deducted from the payment received from the customer. However, I think of another method. After the execution of the contract and receiving the foreign exchange, I directly convert all the payments into RMB and pay it to the manufacturer. Then I will settle the fee with the manufacturer. Which way is more reasonable?

Analysis

There are two ways to pay the agency fee:

One is that after you receive all the foreign exchange, you convert it into RMB and pay it to the manufacturer. And manufacturers generally provide VAT invoices to foreign trade companies. After manufacturers receive all the remittances, trade companies issue invoices for the fee and manufacturers pay them.

The other is that after you receive the foreign exchange, you deduct 2% of the agency fee. Then you convert the rest into RMB and pay it to the manufacturer. The advantage of this way is that the foreign trade company can take the part of the agency fee soon. Otherwise, there is not only a time lag but also another invoice. It is also very troublesome in case you cannot collect the agency fee. Also, the invoice involves the issue of tax. So I prefer the second way.

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