How a Colombian Subsidiary Pays Suppliers in China: LC or USDC

A foreign parent overseeing a Colombian trading subsidiary usually asks two questions about paying suppliers in China: which payment instrument is safest, and what does the subsidiary owe Banco de la Republica once the wire or the stablecoin payment goes out. Both questions have answers that do not depend on each other as much as they might expect.

In Soulbit Academy we present this case as an illustrative, composite example, not a real client. The subsidiary, the suppliers and the figures are reasonable assumptions, consistent with typical costs and timelines in Colombia-Asia trade. The goal is to show, instrument by instrument, what changes and what does not when a payment to an Asian supplier is made by letter of credit, by advance wire or in USDC.

The case: a Colombian subsidiary that imports spare parts from Asia (illustrative profile)

Call the subsidiary "Andina Import Distributors," a Bogota-based wholesale importer that is the Colombian trading arm of a mid-sized US auto parts holding company. It has 45 employees, books about USD 4.8 million a year in motorcycle and small-engine spare parts, and buys 65% of its inventory from two factories in Ningbo and Guangzhou. China is now the single largest source of Colombian imports, accounting for more than a quarter of the total according to DIAN figures cited in mid-2025.

The subsidiary's trade finance work sits with one import manager and one assistant, who negotiate each order in dollars and coordinate the letter of credit or advance payment with the bank. Neither supplier had ever been paid in stablecoins before, so the entry condition was that of any change to a financial process: the parent's controller in the US needed to explain it without ambiguity.

Why does ocean transit from Asia create more pressure than the size of the order?

Because between the moment the subsidiary pays and the moment it can sell the cleared part, several weeks of transit plus the customs process pass, and that capital sits idle the whole time regardless of freight cost or how fast the payment traveled.

Paying suppliers in China from Colombia: letter of credit or advance payment

Paying a supplier in China from a Colombian subsidiary today comes down to three instruments with different costs, timelines and risk allocations: the documentary letter of credit, the advance bank wire and the advance USDC payment. A USD 58,000 order for a container of spare parts makes the comparison concrete.

A documentary letter of credit is a payment commitment the subsidiary's bank issues in the supplier's favor, conditional on the supplier presenting shipping documents that match the agreed terms. It protects the subsidiary because the bank only pays once the supplier proves it shipped as agreed, but opening one takes anywhere from several days to two weeks, and the bank charges an issuance fee plus a negotiation fee, typically between 1% and 3% of the amount covered depending on supplier risk.

An advance bank wire is simpler to arrange, but it shifts all non-performance risk to the subsidiary: if the supplier is paid and does not ship, no bank stands behind that failure. Andina Import Distributors reserves this option for the two suppliers it has worked with for years under a stable relationship.

An advance USDC payment carries the same risk logic as the wire, the subsidiary is still trusting the supplier to perform, but it changes speed and traceability: the supplier confirms the payment within minutes, and the subsidiary knows the network fee before sending it rather than after the payment has routed through correspondent banks.

Item (illustrative case)	Documentary letter of credit	Advance USDC payment
Order amount	USD 58,000	USD 58,000
Timing of payment relative to shipment	Once the supplier presents matching shipping documents	Before shipment, within minutes of confirming
Cost on top of the goods	Issuance and negotiation fee, typically 1% to 3% of the amount	Network fee, known before sending
Risk if the supplier does not ship	Low, the bank only pays against matching documents	High, the subsidiary bears the non-performance risk
Time to have the instrument ready	Several days to two weeks to open	Minutes
Filing with Banco de la Republica	Form No. 1, transmitted by the issuing bank	Form No. 1, filed by the subsidiary with its own bank

The average cost of a cross-border payment through the banking channel runs around 15% of the amount sent, according to the World Bank's Remittance Prices Worldwide series. That figure is measured on remittances, not B2B supplier payments, but it gives a sense of why banks and importers pay so much attention to the correspondent route when choosing an instrument.

The exchange declaration and Form No. 1 for goods imports

Form No. 1 is the exchange declaration every Colombian importer files to channel payment for a goods import through the foreign exchange market, regardless of which instrument was used to pay. It is governed by Chapter 3 of Banco de la Republica's Circular Reglamentaria Externa DCIN-83, which covers the import of goods.

Importing goods is one of the mandatory channeling operations under Colombia's exchange regime: the foreign currency must be bought through an authorized exchange market intermediary or through a compensation account, and the importer must file Form No. 1 with the minimum data of the transaction. Colombia's full foreign exchange regime explains this and the other operations subject to the same obligation.

The form distinguishes the timing of payment relative to shipment: whether the subsidiary pays in advance, within the month following the date of the transport document, or on financing terms beyond twelve months. Each scenario is filed under its own exchange code within the same form, per the instructions for Form No. 1 published by Banco de la Republica.

Does the exchange declaration change if the supplier in China gets paid in USDC instead of by letter of credit or wire?

No. The obligation to channel the currency purchase and file Form No. 1 arises because a goods import took place, not from the instrument the subsidiary used to pay for it. Andina Import Distributors files the same form with its bank, acting as the exchange market intermediary, regardless of whether the payment went out by letter of credit, wire or USDC.

When the subsidiary uses a letter of credit, the issuing bank itself requires and transmits the exchange declaration when negotiating the shipping documents, because the bank is the one selling the currency. When the payment is an advance, whether by wire or USDC, the subsidiary files the declaration directly with its bank before the bank sells it the dollars that fund the payment.

Ocean transit from Asia and matching the payment to customs clearance

Ocean transit between the ports of Ningbo or Guangzhou and Buenaventura runs, depending on the carrier and route, five to six weeks, on top of the clearance process once the container docks. That timeline determines how long the capital the subsidiary already paid stays tied up, and it does not change based on which payment instrument was chosen.

For Andina Import Distributors, the USD 58,000 order is fully paid four to six weeks before the goods are available for sale, the transit time plus the days the customs broker needs to file the import declaration and get clearance from DIAN. That gap is a feature of the trade transaction itself, not of the payment method.

What does change between instruments is how much of that gap the subsidiary funds before it has certainty the goods actually shipped. With a letter of credit, the bank only pays once the supplier presents the documents, so the subsidiary does not part with cash until the container has already left port. With an advance payment, whether by wire or USDC, the subsidiary hands over the money before shipment, and the whole gap between that payment and customs clearance sits on its own books.

Banks and payment platforms that facilitate these transactions review them under the anti money laundering rules Colombia's UIAF oversees, especially when an order's amount or frequency departs from the subsidiary's usual pattern. That review applies the same way to a letter of credit, a wire or a USDC payment.

Reconciling the payment and what still runs through the bank

Reconciling a USDC payment leaves an on-chain identifier that Andina Import Distributors matches the same day against the purchase order, the gross amount and the network fee paid. A letter of credit or wire payment, by contrast, arrives with a bank reference that the trade team has to break down manually against the order and the shipping documents. The full accounting procedure is in how to reconcile stablecoin payments in accounting.

The subsidiary still relies on its bank for two things Soulbit's V1 does not solve: converting pesos to dollars to fund the payment, and filing Form No. 1 when the bank acts as the exchange market intermediary. A subsidiary that imports as often as this one and wants to hold dollars offshore between orders can look at opening a compensation account, covered in Colombia's compensation account: what it is and when companies need one.

The cost and route of a traditional bank wire for this same order, including its correspondent banks, is broken down in how much a SWIFT transfer costs and in the full comparison of SWIFT versus stablecoin for international payments.

What Soulbit's V1 does not solve when paying suppliers in Asia from Colombia

Soulbit's V1 settles the advance payment in USDC, but it does not replace the letter of credit, does not remove Form No. 1 and does not manage customs clearance. Andina Import Distributors came with six concrete expectations about paying its Asian suppliers, and the actual outcome meets some and rules out others, as Table 2 shows.

Initial expectation	Actual outcome in V1	How the subsidiary handles it
Eliminate the exchange declaration	Form No. 1 still applies either way	Files it with its bank regardless of the payment instrument
Replace the bank letter of credit	Soulbit does not issue letters of credit or documentary guarantees	Keeps the letter of credit with its bank when a supplier requires one
Have a local banking rail to send the payment abroad	The local banking rail only exists for transactions inside Colombia	Converts pesos to dollars at its own bank before funding the account
Earn yield on the balance while the container transits	Not available in V1	Holds the balance as operating treasury, unremunerated
Have every supplier accept USDC	Only suppliers already holding stablecoins do	Keeps the letter of credit and the wire as standing options
Have Soulbit manage customs clearance	Not available in V1	The customs broker files the import declaration with DIAN

Using USDC does not replace the letter of credit when a supplier requires one as a condition of the order, and it does not exempt the subsidiary from filing Form No. 1 with its bank. It also does not manage customs clearance or the peso-to-dollar conversion, those two pieces still sit with the customs broker, the bank and the subsidiary itself before DIAN.

What another Colombian importer can take from this case

Another Colombian subsidiary can take three lessons from this case: the exchange declaration does not change with the payment instrument, no instrument shortens the ocean transit, and keeping several instruments available protects the supplier relationship.

First, the exchange declaration does not go away with the payment instrument. Form No. 1 depends on the fact that a goods import took place, not on whether the supplier was paid by letter of credit, wire or USDC.

Second, no payment instrument shortens ocean transit. Five to six weeks between Asia and Buenaventura is a fact of the trade lane, not of the payment method, and capital paid in advance sits idle for that whole window regardless of how it was sent.

Third, keeping several instruments available, rather than forcing one, protects the supplier relationship. Letting each factory choose between a letter of credit, a wire or USDC avoids losing a manufacturing relationship over a treasury preference, especially with a factory that has met its deadlines for years. Colombia's crypto payments country guide covers the wider operating picture for a parent evaluating this change.