Key points
- The test for own-account trade is control: the company bears inventory risk, has discretion over pricing and is primarily responsible to the customer for fulfilment.
- In own-account business, the company invoices the full amount, accounts for the full purchase cost and sales revenue, and carries the inventory on its own books.
- Own-account trade can be combined with any regulatory model – for example own-account general trade exports, own-account processing with imported materials or own-account entrepôt trade.
In practice
Own-account trade means managing four things at once: goods, cash, invoices and price. Once goods are received, title and inventory sit on the company’s books, price movements are its own risk, and so is the credit risk of selling on open account. Own-account commodity business is therefore usually supported by price fixing, hedging, credit limits and credit insurance.
In a system, the distinction between own-account and agency cannot be just a label. It determines how revenue is recognised, how invoices are issued, whether inventory is booked and who claims the tax refund. Many companies run both kinds of business, and if the distinction is not made clear at contract stage it is very hard to correct once the transactions reach finance.
How Tranexio supports it
Tranexio marks each contract as own-account or agency in the commercial model dimension, which drives invoicing, inventory accounting and revenue recognition. Overlay capabilities such as hedging, credit insurance and open-account sales can be added to own-account business. See Own-account import and export and Domestic trade.