Notice of Foreign Currency Inflow

by | May 14, 2015 | Blog | 0 comments

Notice of foreign currency inflow is one of the most commonly seen documents in foreign currency transactions between domestic (resident) and international (non-resident) companies.

Suppose a foreign buyer is making a payment for exports that were made by a domestic business entity. This international transaction is mediated by the buyer’s bank and the seller’s bank. The buyer instructs their bank to deliver payment to the seller. The seller’s bank then receives the request from its correspondent bank and notifies the account holder that funds have been allocated. At that point, the bank will send a notice of foreign currency inflow to the seller.

Before the seller gains access to the allocated funds, they must fill out this notice and deliver a notarized copy to the bank. In addition to the information about the buyer, the seller must state the transaction reason — the invoice or the contract number based on which the payment is made, transaction code from the codebook issued by the National Bank of Serbia, and the relevant amounts. Some commercial banks will require the seller to submit a copy of the document that serves as the transaction reason (pro forma invoice, final invoice, contract, and any other relevant document).

Note that when collecting payment for exports, the full amount invoiced must be listed in the notice along with any deductions. It is common practice that the seller receives the invoiced amount minus any banking fees rather than the full invoiced amount.

For example, let’s assume that the seller exported a service and invoiced for 1,000,00 EUR. When paying, the foreign buyer instructed their bank that both the buyer and the seller bear the expense of the bank fees. At the cost of the seller, the amount is decreased by the fee of 35 EUR to total 965,00 EUR. In the notice, the seller should list the full invoiced price and in the subsequent row list the deduction based on the banking fee with an anteceding minus (-) along with the corresponding transaction code. The sum of these two amounts is the total amount deposited in the account. Any deduction or possible increase that impacts the invoiced amount (e.g., credits to and debits from the accounts) is handled similarly.

In this way, all those who utilize the information contained in the notice, including the seller’s accountant, will be privy to the complete information about the transaction. Otherwise, the accountant may assume that the invoice was not paid in full, but rather that debt of 35 EUR remains for the exported goods. With diligently and adequately completed notice, the accountant will know enough to attribute the amount to banking fees and close the transaction.


Submit a Comment

Your email address will not be published. Required fields are marked *