On-Behalf Payments

Article information

Audience: Sales, Operations, Accounting, Operations Manager
Estimated time: ~3 minutes to select the right article; processing time is covered in the detail article.
Outcome: Users know how to handle advance payments and collections on behalf of customers or third parties without distorting shipment revenue, costs, or gross profit.

On-behalf payments are amounts the forwarder collects or disburses on behalf of a customer or third party. In sea shipments, these typically include THC, DEM/DET, D/O fees, taxes, quarantine, fumigation, or port charges that arise during the shipment lifecycle.

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Quick checkpoint: If there is no markup and the amount collected matches exactly what was advanced or what the third party charged, verify whether the item should be handled as an on-behalf payment rather than a standard revenue charge.

Common scenarios

Situation

How to handle

Unsure whether a fee is revenue or an on-behalf collection.

Ask: does the forwarder carry markup or pricing risk? If not, read the detail article before creating an invoice.

Shipment profit is unusually inflated or negative.

Check whether any pass-through items were incorrectly entered in Charges as standard revenue or cost.

Customer has not reimbursed an advanced amount.

Reconcile against the source document, sales order, and payment record; assign someone to follow up on the receivable.