Export proceeds control: what the bank expects from an exporter

An exporter is responsible not only for the delivery but also for making sure the money for it arrives in Russia on time. The bank monitors this for every contract. Below we look at how this control works, which documents are needed and where exporters most often get questions.

What exactly the bank monitors

Under Federal Law No. 173-FZ, an exporter must ensure that the proceeds are credited to its account at an authorized Russian bank within the deadlines set by the contract. This requirement is called repatriation.

The bank compares two lines: what you delivered and what you were paid. If the contract is registered with the bank, both lines are visible in the bank control statement. When the payment deadline under the contract has passed and the delivery has not been paid in full, the bank sees the discrepancy and reports it to the tax authority.

Important: the bank goes by the deadlines in your contract and supplementary agreements. So control of proceeds starts not at the bank but when the contract is signed.

The control works both ways. If the buyer has paid an advance and the shipment is delayed, the statement shows a payment without a delivery. The bank expects shipping documents within the deadlines in the contract. An exporter needs to track both the money and the delivery documents, not just incoming payments.

The contract: where future problems are built in

• Payment deadline. It must be realistic. If the buyer pays through intermediaries or from a country where payments take a long time, allow a margin.
• Payment terms. Advance payment, payment after shipment, installments. This determines how the bank will count your obligations.
• Who pays. If the money may come from a third party or through an agent, provide for this in the contract or a supplementary agreement. Otherwise it is harder for the bank to link the incoming payment to the delivery.
• Bank charges. Who bears them: with the OUR option the buyer pays all fees, with SHA each party pays its own bank, with BEN all charges are borne by the beneficiary. An amount deducted by banks along the way may also look like an underpayment, and you will have to explain it.
• Currency. If the price is in one currency and payment will be made in another, specify at what rate and as of what date the amount is converted.

Documents the bank expects

• The contract and supplementary agreements. If the amount is above the threshold, the contract is registered with the bank before the first transaction. Any change in the amount, the deadline or the payment terms is passed to the bank.
• Delivery documents. For goods with a customs declaration, the bank usually receives the declaration data itself. For deliveries without a declaration, for example to countries of the EAEU (Eurasian Economic Union), and for services, the exporter submits a statement of supporting documents together with the waybills or completion certificates.
• Documents on the incoming payment. Proceeds from the buyer are credited first to a transit currency account, not straight to the current account. The bank can move them on once your papers make clear what the money is for.
• Sale of foreign currency. In certain periods, some exporters were required to sell part of their foreign currency proceeds. Whether this requirement applies now, and to whom, check with your bank as of the date the money arrives.

Common exporter mistakes

• The payment deadline was moved by agreement with the buyer, but there is no supplementary agreement, or it was not passed to the bank.
• The buyer paid less because of deducted fees, and nobody explained the difference.
• Payment came from a third party that is not named in the contract or in any supplementary agreement.
• The shipment was split into consignments, payments came in lump sums, and the record by consignment was lost.
• The documents for services were not submitted because “there was no customs”.
• The contract was moved to another bank, but the buyer paid to the old bank details out of habit.
• The buyer was given a long deferral to win the deal, without considering that this is also a long period during which the proceeds hang in the statement as expected.

If the buyer is late with payment

Act before the deadline expires, not after.

1. Record the delay in writing: a letter to the buyer, then a formal claim.
2. If the parties have agreed on a new deadline, sign a supplementary agreement before the old one expires and pass it to the bank right away.
3. Find out the reason. Often the buyer is ready to pay, but its bank cannot send money to Russia. Then the issue is not the buyer but the route.
4. If payment still does not arrive on time, keep evidence of the steps you took. It matters when the company’s fault is assessed.

When the money is stuck on the buyer’s side, lawful instruments work: another agent and another route, a change of payer under an agreement of the parties, an assignment of claim (cession). More in the article on repatriation of export proceeds.

What it looks like with settlements through an agent

When a direct payment from the buyer does not go through, the proceeds are received through an agent. The buyer pays foreign currency to the agent’s bank details, and the agent credits roubles to your account at a Russian bank. For currency control, it is important that the bank sees the whole chain: your contract, the buyer’s payment to the agent, the crediting of roubles from the agent. The chain is confirmed by the agency agreement, the payment order, the confirmation of the buyer’s payment and the agent’s report. Agree with the bank before the first payment how such settlements will be reflected in the contract records.

VEDmost selects an agent from our pool for the buyer’s currency and country. We write the conversion rate and fee into the payment order before the buyer pays, and the deadline for crediting the roubles into the agency agreement; we put together the package for the bank. More on the repatriation of export proceeds page, and for regular payments from buyers, on the export payments page. This is a general overview, not advice. We will give you an answer on your deal after reviewing the documents and before the buyer pays.