In today’s shrinking world, there is hardly any business transacted which does not require goods and services to cross national shores. Import and export activity is routine for many businesses, and the lifeblood of others. No doubt, you have used imported materials in your company before, but if this is the first time that you are importing or exporting something directly yourself, the following checklist will help you.
It is said that international trade does not deal with goods or services, but with documents. Strange, but true! The importance of correct paperwork cannot be overstated when it comes to import and export transactions. If you’re the type who cannot abide paperwork, may we suggest that you hire someone who can! Documentation is crucial to international trade, and there’s plenty of it to deal with.
The documents required to successfully complete an import and export transaction vary from country to country, but broadly they will cover the following:
Purchase order ?" sure, this is a business requirement, but a purchase order may also be needed by the buyer or seller for arranging finance. A bank may ask the importer for a copy before it issues a letter of credit to him, which will be used to pay the exporter. On the other hand the exporter might be able to get financing from his bank, on the basis of a confirmed order (also called purchase order financing).
Letter of credit ?" this is used for making payments for imported goods, once the necessary documents are handed over (see, we told you they were important). A letter of credit basically says that the importer’s bank guarantees to pay provided all the papers stipulated in it are in order.
Shipment documents ?" a bill of lading is needed for sea shipments or an airway bill when goods are sent by plane, as proof of dispatch.
Certificates of origin ?" some countries have restrictions on the volume of business that can be done with other countries. Alternatively, there may be tariff benefits accorded to goods from specific supply sources. In such cases, an exporter will need to submit a Certificate of Origin, which is endorsed by a designated regulatory authority or Chamber of Commerce.
Quality or inspection certificates ?" if the buyer specifies an inspection prior to shipment, be sure he wants to see some proof of that on paper!
Packing list ?" finally, something that makes sense! How would you like to receive a container full of cartons with no clue as to which one contains what item?
Invoice ?" but of course! Make sure you’ve written everything correctly, including the currency of transaction.
Others(!) ?" these are specific requirements, and change from country to country. For example, Australia has stringent quarantine restrictions governing the trade of food and animal products. You would need to secure a permit, or subject your goods to an inspection or both.
This might seem like a long list, but is in no way exhaustive. That is why you need to hire someone who understands import and export documentation, so that you can be sure that your international business proceeds smoothly.
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