Exporting and Trading info

Customer Care - Relationship with your Customers A good working relationship with your customers is very important to minimise the risks in delivering your goods and getting paid. Negotiation will invariably lead to agreement on the crucial issues of trade terms and choice of currency for payment. It can often be the key to obtaining delivery and payment terms that are most advantageous to you. For instance, if you begin trading using a Confirmed Irrevocable Letter of Credit you may agree to switch, after a given period, to a cheaper and more manageable payment method such as Documentary Collection or Open Account. You should involve your bank at this stage as they can provide expert advice on financial issues and the potential risks involved in international trade. Customer Service Remember that international trade does not stop at the delivery of goods and receipt of payment. To be a successful exporter and to open up new markets you must have a strong commitment to customer se...

Insurance Export Credit Insurance It is good practice to insure your export orders against non-payment, even if your customer is a well-known or reputable company in a low-risk country. Your chosen insurance company will cover the payment risks involved in international trade and provide you with an important safety net. Cargo Insurance Cargo Insurance covers loss or physical damage to goods whilst in transit. The Incoterm specified in your contract of sale will determine who is responsible for arranging this cover. Only under CIF and CIP will you be obliged to arrange cover, in which case you should build this cost into the selling price. One of the main benefits of arranging insurance for your customer is the control you have over the process should a claim arise. If you are not responsible for Cargo Insurance you have the option of Cargo Insurance Contingency Cover for cases where cargo arrives damaged and the importer refuses to accept it. Insurance companies generally pro...

Payment Methods Any exporter will wish to minimise the credit risk, so any method of payment you agree should be appropriate to the risks you run. The main factors affecting payment terms you would wish to consider are:     * Your own cash-flow situation - this will decide the credit terms you are willing to offer your customer.     * The payment terms acceptable in your customer's country, e.g. a Letter of Credit for Nigeria, open account trading for Northern Europe.     * The bank charges involved, particularly where small quantities of a product are involved. Profit margins can quickly be eroded.     * The shelf-life of your product - you will want to avoid offering a credit period which is longer than the life of your product.     * What are your competitors offering? If they are trading on an open account basis you are likely to have to do likewise in order to break into the market. The methods of payment available, starti...

Delivering the Goods Incoterms An important consideration at quotation stage is the use of a delivery term (Incoterm). A common Incoterm is EXW (ex-works) where the obligation for collection of goods and responsibility for export and import procedures is solely with your customer. At the opposite end of the spectrum would be DDP (delivery duty paid). Here the onus is on you as the supplier to provide carriage to a named place of destination and to be responsible for all export and import clearances, including the payment of local duties and taxes. For example, if you have quoted £10,000 EXW but the signed contract stipulates £10,000 DDP Hong Kong, you will find yourself liable for freight costs, responsible for all export and import paperwork and the payment of appropriate import duties. If you have not accounted for this you will soon see a decrease in your profit margin or could even suffer a loss! Tags  delivering the goods  delivery term  import procedures ...

Quotation In essence, quoting for business in overseas markets is no different from quoting for business in the domestic market. Typically, the costs to include in quotation are:     * Costs of raw materials - include all components, labelling and packing costs.     * Manufacturing costs - include all production costs, particularly labour costs.     * Overheads - running costs, depreciation, rent, utilities and transport costs.     * Profit margin - this may vary depending on whether you are trading in a buyer's or seller's market. Profit margins may also be affected by the flexibility of demand for your product (the more flexible the demand, the greater the possibility of increasing sales - but at the right price). Tags  price quotation  labour costs  profit margins  s market  increasing sales  overseas markets  transport costs  running costs  profit margin  depreciation  raw mater...

Risks <strong>Financial Risk</strong> When you have established whether your product will sell overseas and have identified the most effective route to potential customers, it is worth spending some time examining the financial risk in your chosen market. While it is probably obvious to undertake a credit check on your customers, it is easy to overlook other factors that could have an important bearing on first winning the business and then getting paid. <strong>Foreign Exchange Risk</strong> When dealing in your customer's currency it is possible for the exchange rate to move between the quotation date and the date of settlement. In a seller's market, you may eliminate Foreign Exchange Risk by quoting in sterling. In a buyer's market, however, your competitors may be prepared to invoice in the customer's currency as an inducement to buy and you may be forced to follow suit. If you are dealing in convertible currencies you can enter in...

<strong>The Market Research</strong> The first thing you will want to know when researching a new market is the potential for sales of your product. Today it is possible to conduct valuable research from the comfort of your office desk due to the large number of resources available over the Internet. UKTI, for example, provides vital information on their website to help you build up an accurate picture of your target market. Details of the services offered by UKTI can be found at http://www.uktradeinvest.gov.uk/ukti/market_sector_research (Link to an external site - Disclaimer External Link Icon). In order to be a successful exporter you need to travel overseas and build lasting commercial relationships with your clients and partners. This will also allow you to assess the competition from locally produced products and other exporters already in the market. With this information you will be able to gauge whether your product will sell or will need to be adapted to suit...

Export Strategy To ensure your first venture into exporting is a success you must have an effective export plan. When developing your strategy you should use all available tools and techniques to establish best international trading practice. Some of the components that build a convincing and dynamic export plan are:     * commitment from senior management     * market research, including the identification of national standards or import restrictions     * adopting a professional approach to international trading, including a training programme for your export staff (both sales and marketing, and physical distribution)     * an export price that includes the additional costs of exporting     * your terms of trade, including delivery term and payment method     * selling in the local currency and invoicing in the local language Your strategy should aim to get your product or service to the marketplace without involv...

<strong>Getting Started in International Trade</strong> This guide will help you to take the first steps in the export process and exploit the opportunities of international trading. In a simple checklist format, it provides important information about developing an export strategy, the business issues you need to consider and where to go for help. You should read it if you are a company, especially an SME (small to medium sized enterprise) that is looking to expand your business or searching for new markets Most enterprises go through a well defined and recognised business cycle that starts with building a presence in the marketplace, through developing products (or services) and a customer base to establishing a robust, sustainable domestic market. When you reach the final stage of business development you may be thinking about setting your horizons further afield. When this happens you could be ready for your first venture into the global marketplace. <strong...