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How to Export – 10 Top Tips And 9 Costly Mistakes

The Basics Of Import Export

Knowing how to export or import is important knowledge to have for many businesses for obvious reasons.  If you’re selling products nationally and want to expand, the international market is available to you and the globe is a much smaller place today than it once was.  Finding international buyers for your products now, isn’t as difficult with such a connected world. It’s actually possible to find buyers using a laptop, a few well written emails, some key negotiation techniques and importantly, your confidence.

Importing and selling products is an obvious business that many successful entrepreneurs begin with and build sizable companies as their experience and business network grows.  As with anything, the more you do it, the more you learn and the easier it becomes.  We are often asked, what’s out there so here’s 12 ideas from 6 different countries that we researched as far as some ideas for what you can import and sell.

So, the next question to answer becomes how to export, or import? This guide is going to touch on the basics that you’ll need to know. There’s a lot of content to cover if you want to import export as a career but this will get you started.

Methods of Payment

Within international trade there are various methods of payment used.  There’s obviously cold hard cash where banks and wiring transfers work well for “smaller” manageable budgets. However, what happens when contracts become larger, perhaps even into millions of dollars? How can you safeguard being paid and what if you have to buy stock or materials when you’re strapped for cash?

One method for this is through the use of letters of credit.  We have already written an in depth blog on this so we won’t repeat it all here but knowing what methods of payments are available to you and how to use them is very important.

Other methods of payment are documentary collections or consignment but we will leave these to be discussed at a later date.  One of the most important things to really consider when it comes to payments within international trade is that if you’re exporting products, a sale isn’t a sale until you get paid and for an importer, you haven’t bought the goods until the moment you receive them. Keep that in mind!

Your EORI Number

In the UK if you are going to trade internationally, you’ll need an EORI number.  This is particularly relevant at this time as we are on the verge of leaving the EU, at the time of writing, without a deal.  This means that while trading with the EU, before Brexit was relatively hassle free, it will adversely change and trading with any EU country post Brexit (as it stands) will be like trading with one outside the EU, for example Brazil.

This is a much more complex process and if you want to know more about this, see our recent blog, “How To Prepare Your Business For Brexit“.

Freight Forwarders

Eventually you’re going to need to the services of a freight forwarder.  These guys will be the guys that actually move your goods from the source to your destination.  Using the post office is only so good as it only works for smaller packages that you can take to the post office and send. you obviously won’t be able to drive forklift trucks there and leave them with your pallets of amazing products.

There’s always Fedex and UPS but these can get expensive so it’s best to be aware of freight forwarders and how they can help you.  Luckily, we also have a blog on that so we have you covered, “What’s a freight forwarder and how to they help me?“.

Insurance

Insurance is never the most interesting subject and one that we would all like to skip over but it’s super important.  If your goods doing arrive at their destination, who’s fault is it? Who has to suffer the financial loss?  How will it all be rectified? Being insured takes care of those issues, accidents happen and things get lost.  Make sure you’re not on the wrong end of that scenario.  As you’ve probably guessed, check out a recent blog on marine insurance to learn some of the details involved in covering yourself.

Pack It And Book It

Simple enough, when you’ve got your order, you’ve packaged up your products safely, got all your documentation together, it’s time to book it with your freight forwarder.  Always best to get a few quotes as with anything, to make sure you’re paying a fair rate. By this time, you should have already nominated your freight forwarder and it’s time to get it booked in for shipping.

Document It

There’s a lot of documentation that’s required for moving goods internationally so make sure you know what you need and that it’s all correctly completed and processed. Airway bills, bills of lading, certificates of origin all need to be in order. It’s a little too much to go into detail here but we do offer an online course if you want to sign up and learn more about this important side of learning how to export.

Feel free to print out our handy guide as a reminder to these important 6 steps.

How To Export

Top 10 Tips For Importing And Exporting

Now we’ve got the basics, and they are just the basics, it’s a good idea for us to give you our 10 best tips for importing and exporting. This comes with years of experience and the pain of sometimes getting things wrong and having to suffer the financial loss of those mistakes so hopefully our top 10 will help you avoid doing the same:

1. The Tariff Book

If you’re importing any products, you must be aware of the tariff book and consult with this before you place any orders.  The tariff book is the bible of international trade and tells you the rate of import duty, if you need a license to import the products you’re buying or if there are any restrictions on quantities that an enter the country. This is very important so don’t neglect to check the tariff book before you place any orders.

2. Get Written Quotations

It may seem obvious but it’s still worth stating, get written quotations from any third party that you’ll be doing business with.  This can be freight forwarders, transport company’s or clearing agents for example.  Once you’ve got a written quotation there can’t be any argument later on about what the cost was or what it was supposed to be.  Make sure you have that written confirmation for a much more stress free process.

3. Do NOT Estimate Costs

Estimating costs is painful lesson to learn in knowing how to export. There is no place for estimating any costs for the simple reason that at times, you may find yourself working with very small profit margins. Deals can still be worth it and some good profit realised, even if the profit margin isn’t exactly what you want but by estimating the costs and getting it wrong, it can wipe out any profit and even leave you at a loss.  Don’t do it.

Take the time to get quotations, get them in writing as mentioned in the previous point and open a spreadsheet and input all of your actual costs.  From there you can do the numbers and see if the risk to reward is worth it.

4. Use Incoterms

When shipping your goods, it’s vital to use Incoterms 2010. If you’re not familiar with these, check out our blog on, “What are Incoterms and how are they used?” and it will hopefully become clearer to you.

Think of Incoterms as code words used within the shipping industry that let the parties involved know their exact responsibilities. We won’t go into it again, just check out the blog.

5. The Terms and Conditions

None of us really have any interest in reading the terms and conditions and the small print in anything. We’ve all got better things to do but a big lesson in learning how to export is to read the terms and conditions.  In fact, read them and then re-read them.

You do not want to be caught out on something that you weren’t aware of that ends up taking a chunk out of you later. As boring as it is, read the terms and conditions!

6. Make Your Terms and Conditions Solid!

As boring as it is to read someone else’s terms and conditions, make sure your terms and conditions are solid and fulfill all the conditions that you need.  You can always negotiate the terms with a particular client individually if they aren’t happy and it’s worth it but start off with everything in order and as you need.

If you can afford it, it’s worth consulting a lawyer just to make sure everything is legally water tight.

7. Understand Freight Rates

Understand the rates that you’re paying and shop around.  In our blog discussing freight forwarders, we have an example of a client who was being heavily over charged for a long time by his freight forwarder.  Had he have understood and done a little research he could have saved such a lot of money. Ignorance costs you, no one else.

8. Costs

Understand all of the costs involved in sourcing, buying, shipping, duty, how long it will take, marketing and selling. You need to know your costs before you can figure out how much to sell your products for, whether anyone will buy them at that price and what your profit margin will be.  Be precise.

9. Question Invoices

Don’t hesitate to question invoice if they don’t look right. Don’t worry about coming across as rude, you can be polite but make sure you get an explanation if the invoice isn’t correct.  This is where you can always fall back on your written quotation and show that the invoice amount is not in line with the amount you were quoted. If you got your quotation in writing there won’t be any arguments or problems and the invoice will be amended.

10. Don’t Be Blind

Knowing how to export is a fairly complicated process. There’s lots of parts and you must be aware of what you’re doing.  Whatever you do, don’t wing it…it will cost you.

Keep this guide handy to remind you of our top 10 tips for importing and exporting:

The 9 Most Common and Costly Mistakes

So in this short journey of learning how to export, we’ve gone through the basics and you’ve got our top 10 best tips for importing and exporting.  There’s much more to learn but this gives you a good foundation to spring board from.

Now it’s a good idea to run through the 9 most common and costly mistakes made by international traders, so you hopefully won’t!

1. Understand Sourcing

If you don’t know how to effectively find products you’re massively limiting your import business.  You must know how to find the products you’re looking for, from price, build quality, working relationship with your supplier, reliability and credibility to name just a few of the aspects that are important.  Knowing how to source goods internationally is huge.

Our blog goes into some ideas on how to do this to give you a head start so check it out. It’s going to be key to a successful importing business.

2.  Not Identifying All Your Costs

Don’t cut corners, don’t guess, don’t estimate. Make sure you have the entire import or export process covered and you know your costs from start to finish, to the last penny. Keep track in a spreadsheet. If you don’t know your costs, you don’t know what you need to sell your goods for and you won’t have a clue what your profit margin is.

Include the products themselves, the shipping costs, the import duty, warehousing, cost for distributing to your customers, VAT and any other cost you can identify.  You will lose money if you don’t do this.

3.  Not Understanding Import Regimes And Correct Tariff Number

If you don’t understand how to correctly import your products, it’s likely to cost you more than you need to. You may end up paying more import duty than you should have for example. Take the necessary steps to ensure you understand the import regime and tariff number.

4.  Not Understanding Air or Sea Freight Structure

Take the time to get to know how freight rates work and get a variety of quotes to make sure the company you want to use is competitive. Our blog on freight forwarders give you some good advice so make sure you check this out.

5. Not Understanding Methods of Payment

Whether you are paying your supplier or you are to be paid, make sure you understand the methods of payments available to you. A sale is not a sale until you’re paid and things can and will go wrong in between. Letters of credit is one such method of payment that all international traders should know how to use.

6. Not Doing Your Homework

We’ve all seen Dragon’s Den where the entrepreneur thinks he’s got a world changing product which is promptly shot down by the dragons after a little digging.  You may think you’ve got a great product that’s going to sell like hot cakes but you need to know others think the same thing and want this product before you part with any cash.

If you don’t do your market research that container load of yo-yo’s that you were sure would be the next big thing may be stuck in your garage and spare bedroom for years to come.

Find your customer base for the products you’re selling and don’t limit that audience.

7.  Not Identifying All Sales Channels

Not finding as many sales channels as you can is a waste.  If you can sell your product directly to retail shops in the high street, wholesale to distributors or online globally, take advantage of all those opportunities.

Get out and make sure to meet people, go to meet ups and conferences and get your products out there.

8.  Not Understanding Terms of Delivery

If you don’t understand the terms of delivery you could be charged for costs that you’re not actually liable for, further reducing any profit margins. Knowing exactly what your responsibilities are is important and can save you hard earned money.

9.  Lack of Negotiation Skills

Negotiation skills are a massive part of international trade and business in general.  You need to hone your skills and make sure that you are able to always get the best deal you possibly can.  If you can crack this, you will very likely make it as a successful international trader and be able to run a very profitable business. Negotiation skills will increase with each deal that you seal and with that, your confidence will also grow.

how to export from the uk

Be Proactive, Not Reactive

Obviously like any new business or career there’s a lot to learn but one of the best pieces of advice we can give is to be proactive, not reactive.

By being proactive, you will firstly make sure that you have gained the knowledge you need to import or export your products globally and really understand the issues that you’ll face. You’ll take all the necessary steps to have a streamlined import and export process, you’ll have done all your research and homework and your process will be organised, efficient and you will have all your costs to hand. You’ll be able to analyse your risk within the process and foresee any problems or issues and develop any contingency plans to handle  these problems.

By being proactive it will save you a lot of time, stress and ultimately money, keeping your profit margins healthy and your work life relaxed.

Being reactive is usually the exact opposite. Not being fully prepared, not having a good understanding of what you’re doing, estimating costs and when there’s problems and issues, trying to deal with them at the time and figuring out how to handle on the fly. This obviously leads to hugely increased stress levels, valuable time been taking from you and of course, in many cases money being lost or wasted, which is critical, especially when working on on tight profit margins.

How To Prepare Your Business For Brexit

UK import and export businesses need to know how to prepare for Brexit, urgently. At this stage, we had hoped to know much more detail on how the UK is going to exit the EU but still, no one quite knows where we will be on the 29th March.  Call it what you will but the one thing we do know is, that without a deal, trade with the EU will bring about very major adverse changes.  UK traders will of course, want and need to continue trading with their established EU partners and EU traders will want to strengthen trading ties with their UK counterparts.

Until now, inter EU trading has been a very easy process, with minimal customs involvement, open borders, unimpeded deliveries, largely paperless and declaration of VAT post delivery just to mention some of the advantages we had as a member of the EU.  This could be about to completely change.

Life After Brexit and International Trade

With a hard Brexit, this frictionless trading will come to an end and as we’ve been seeing on the news, the UK will be thrown into the world of International Trade, with all its impositions, rules and regulations trading under WTO rules and tariffs.

Our EU trading partners will have the same status as any of our other international trading partners outside the EU such as Russia and will have to follow the same customs procedures such as declaration on the new CDS system, which is replacing the old CHIEF system.

This means that consignments will need to be given specific statuses of route 1, 2, 3, or 6, all of which are time consuming. This could cause severe delays at the UK border for EU member consignments, with some predicting up to six hours.

What Could Be The Impacts Of Brexit At Customs?

Again, right now, no one knows for certain what the full impact of Brexit will be but without a deal, something that is looking increasingly likely and only 6 weeks away, we’re highlighting some the unknowns that should be considered for your import export business.

The impact of Brexit on international customs and trade compliance is not yet clear but the following factors are something that must be considered at this stage.

What will happen without an agreement?

  • 48% of UK shipments go to EU countries
  • 54% of UK arrivals come from EU countries

…without customs clearance and duties to be paid.  This would change over night.

Those movements will become third-country imports or exports, including the need for customs declarations and duties due to a missing agreement. Export control regulations will be affected as well.

Just two minutes more for customs inspections per truck, could result in approximately 27 extra kilometers of traffic jams with an obviously massive impact on the supply chain.

Additional custom specialists will be required.

The administrative burden could increase from five minutes before Brexit to more than one hour of workload per export! 185,000 UK traders could be making their customs declarations for the first time.  This is not going to be a smooth or streamlined process so you must know how to make a customs deceleration if you are going to prepare your business for Brexit.

Customs declarations in the UK are expected to increase from 55,000,000 to 255,000,000 per year. It could be very, very costly, with an estimated €50 or more per declaration.

The OECD estimates that inefficiencies relating simply to the process of customs clearance could result in additional costs of up to 10% of the value of the goods.

Beyond this, increased duty rates on imports to the UK, from non-EU countries due to the UK losing access to EU free trade agreements will apply. New free trade agreements need to be negotiated with all relevant countries which could take 5 to 7 years per free trade agreement as they have done with several countries already.

Lastly, more questions still need to be answered that we just don’t know the answers to right now:

  • Will the new customs authority system CTS be ready?
  • Will support systems be ready?
  • Will there be enough capacity and customs brokers?
  • Will the companies export control management be ready?

There are many questions to be answered but it is important to understand what is at stake and how your business will be affected. Take the time now to understand how Brexit could directly effect you and research what changes you need to make, so you are not caught out and your business does not suffer come March 2019.

What You Should Be Asking Yourself

As a business owner, you should really at this know how to prepare your business for Brexit and grasp this as a great opportunity to become part of a global explosion in trade. UK businesses must identify how international trade post Brexit will affect their trading position within the EU and beyond and be prepared to meet the new challenges.

The following are a set of questions that is advisable to ask yourself and research, pre-Brexit. Be proactive, no reactive and prepare for a worst case scenario and how a hard Brexit will effect you. Waiting for the 29th March 2019 may well be too late.

1. Understand how to export. How will the new import export regulations impact upon my business?

2. Will I have to change my Terms of Delivery (Incoterms 2010)?

3. Will I now have to employ the services of a freight forwarder or clearing agent and at what additional cost?

4. Does my company have the necessary import export training to work alongside the new rules and regulations?

5. Am I registered for EORI status (see below for more information on this)?

6. Do my goods attract an import export licence?

7. Can I identify a customs regime which may help me reduce my import costs?

8. How will VAT be collected on inter EU trade (see below for more information on this)?

9. Do I understand the new Customs Declaration System CDS for imports and exports?

10. Can I provide the relevant information for inputs into CDS (i.e. new tariff changes as introduced in Volume 3 of the Tariff Book)?

11. Have I subscribed to the Government Gateway Account (See below on how to do this)?

12. Will my existing supply chain timing be affected? What adjustments do I have to make to counter any extra delays?

13. Will I have to make changes my company terms and conditions?

14. Will Post Brexit rules affect my competitive edge? If so how can I retain my competitive edge?

15. Will my existing EU customers impose a different method of payment other than the one currently in use?

16. Do I fully understand the methods of payment associated with International Trade (ie. Letters of Credit, CAD, Bills of Exchange)?

17. Have I arranged for an AWARENESS COURSE for ALL members of staff to attend pre-Brexit 29th March 2019?

Check out our top ten tips on on importing and exporting to get you started.

Two Simple Actions You Can Take Right Now

Importing and exporting within the EU could be vastly different with either a Hard or Soft Brexit. With only 6 weeks left, now is the time to prepare. We address two simple action points to get you started.

The Guardian has reporting that two thirds of British businesses had made no preparations at all for Brexit. I’m not aware if that figure is still the same today but if it is, it’s very unwise to be leaving your preparations this late.

Should the UK does leave the EU on the 29th March 2019 without a deal, the EU as far as trade goes, will become like any other “foreign country”, take for example Venezuela.  British companies will need the same documentation to trade with the EU as you would Venezuela.

Currently, trading with the EU is very easy, there’s no major documentation required, no customs, any import export documentation that is required is filed remotely after the import or export is completed. That same export to France will be much harder.

Be proactive, not reactive, have everything in place before the end of March. If you trade solely with the EU, you are running at this point, a very high risk of being completely caught out and your business potentially coming to a halt if you don’t know how to trade outside of the EU.

Prepare for Brexit – A Checklist

  1. Do you have an EORI number?
    If not, go and get one. If you’re trading outside the European Union already, you’ll have an EORI number, so you don’t need to worry about this. If not, depending on whether you’re registered for VAT or not and whether you’re importing or exporting, here’s how to get your EORI number.
  2. Customs Clearance will be using the new CDS system, we’re told by the end of 2018. You will need an EORI number to access this system.
  3. Delivery Times: Without a deal, delivery times of goods coming in and out of the EU will be delayed with some estimating very severe delays as shown above in our infographic.  Analyse how your business will cope if this becomes a reality and goods you’re importing are held up for days before you receive them and equally, how this will effect your shipments outbound to your customers. If you’re offering guaranteed delivery times, you may well want to rethink this.
  4. Brexit Risk Assessment: Perform a risk assessment on your entire company, from the warehouse to the managing director . Where is your company vulnerable, what will need to change, where are your biggest risks and how can you minimise them?

ABTS Training can help should you need it.  For more information on our Brexit Breakdown membership, please feel free to contact us.

How Could A No-Deal Effect VAT Procedure?

Below is our quick guide on how a no-deal Brexit could effect VAT procedure. Make sure you understand how this will effect your imports and exports from the United Kingdom as you will have to understand these changes if you want a streamlined import export procedure:

Imports:

  • Postponed accounting for EU imports
  • Importers will account for import VAT on their existing VAT returns

Exports:

  • Retain your evidence that goods have been exported to EU member states
  • Remember that the customs declaration system will be paperless
  • Exported goods to EU will be zero rated on commercial invoice
  • EC sales list will no longer be used to declare exports to EU
  • Make sure your company’s export software is adjusted to reflect changes
  • Register for AEO for imports and exports

No Deal Brexit and VAT Procedure

The Brexit Breakdown

A new subscription service where we do the research, contact relevant agencies and get to the bottom line on Brexit import and export.

We cut through the complicated web of information to give you need-to-know facts for your business, post Brexit, keeping you informed through webinars, videos, email alerts and printable fact sheets.

See The Brexit Breakdown for more information.

How To Use A Letter Of Credit

Knowing how to use a letter of credit is an important part of international trade as it’s a very versatile instrument and when used correctly, a very import method of payment to have in your arsenal.

Simply put, under a letter of credit a bank guarantees payment which can allow the seller to receive funds before the goods are delivered, which can be advantageous if capital is needed up front.  This may sounds little confusing to start but we will break this down.

The Four Types of Letters Of Credit

Firstly, lets start with the four most common types of letter of credit and when to use them.

IRREVOCABLE:  An irrevocable letter of credit, once it’s born, cannot be changed or amended without the consent of both the buyer and the seller.

RED CLAUSED:   This clause is very useful when the seller needs to raise funds from the letter of credit, for example to buy raw material for a building contract. The amount available is usually printed on the letter of credit in red ink, hence the name “red claused”.

TRANSFERABLE:  This can used by the seller  to purchase goods needed to fulfill the contract from a third party. For example, steel, concrete and brinks to complete a building contract. This is extremely useful when the seller may not have available funds to purchase the goods to complete the contract, so could use this method to raise those funds by guaranteeing payment to the third party supplier.

CONFIRMED:  This is used when the seller is unsure of the buyers’ bank’s ability to honour the letter of credit perhaps due to political or financial unrest in the buyers country. The letter of credit is confirmed by a second bank which usually the sellers bank. The confirming bank becomes the prime payer and seeks reimbursement from the buyers bank.  This is a little complicated but will be made clear as we dive into the detail.

Types of Letters of Credit

Are Letters Of Credit A Method To Make Money Without Money?

A transferable letter of credit enables the seller to buy products to fulfill the sales contract from a third party without using their own funds, instead using the funds from the contract itself. Think of it as an advance on the payment that will be received on completion of the contract.  Once this “mother” letter of credit has been born, it can be split up and transferred to as many parties as needed as long as the total does not exceed the amount of the original “mother” credit.

Transferable letters of credit are often successfully used to purchase high value goods without having to dip into company funds where cash flow may be tight and the company may not be sitting on bundles of cash.  Be warned however, they are not as simple to obtain and use as some would like you to believe.  It certainly should not be a way to make money, without money.

Why Aren’t Letters Of Credit Always Used?

Letters of credit as you can see are a versatile method of payment and an excellent way for the seller to deliver a contract even if they don’t have the needed funds to hand.  However, as with anything in life, there’s advantages and disadvantages.  Here’s some of the pitfalls that you would be wise to be aware of:

  • The buyer may not want to give you a transferable letter of credit as they can be very expensive to establish. As we all know, banks seldom do anything for free and establishing a letter of credit is no different.  The bank will charge the buyer a fee for this service, something that the buyer may not be willing to pay.  This could be where your negotiating techniques will come in very handy in convincing your buyer that this is the best course of action.
  • If you are not familiar with letters of credit and do not have a good track record of trading under a letter of credit, you can make costly mistakes. Make sure you know what you’re doing.  There could be a lot of money at stake and you you certainly don’t want to chance it.
  • Some third party suppliers take a lot of persuading to release their goods against a transferable letter of credit, especially when they have no previous experience of trading under such a credit. It could take some time and reassurance explaining why a transferable letter of credit is a guaranteed payment and trust between you will have to be established.
  • You may have to do a lot of “hand holding” with your third party supplier and allow them gain their confidence in you and your ability to successfully negotiate the original “mother” credit and ensure that their “child” credit is a guaranteed payment. One way to establish confidence is by explaining once the contract is delivered, it is the bank themselves that will pay out all the “child” credits to the debtor, so there is no need to chase any payments.
  • You must be confident in your own ability to utilise a transferable letter of credit which really only comes about from hands on experience and training.

See below for a handy print guide that we have developed on letters of credit:

Letters of Credit

A Real World Example

Not so long ago we were asked to work with a small London based building company who had been awarded a nicely sized contract to build a brand new, modern sports facility in the United Arab Emirates.

The high end sports facility would include a swimming pool, saunas in the changing rooms, two basketball courts, a full size gym with aerobic equipment as well as a lounge area complete with table tennis and pool tables and health bar.  As you can imagine, this type of facility doesn’t come cheap and the contract value was negotiated and agreed at just over £1.6 million (GBP). This included the raw materials, exporting of the required materials that could not be sourced within the UAE and the construction of the facility.

How To Raise £1.6m

As you can probably imagine, most businesses don’t have £1.6m sitting in their company bank account so raising the funds to complete the project was something that needed to be handled.  This company took the traditional avenue and approached their bank for finance but for one reason or another weren’t granted the entire amount.  They subsequently approached other finance companies who offered them funds but the terms of repayment weren’t suitable.  At this point, the project looked to be in jeopardy and the contract had to be reconsidered.

On contacting ABTS Training, we suggested that they ask their client in the UAE for a transferable letter of credit from their bank.  What this meant was that the client approach their bank and ask them to issue a transferable letter of credit for the value of £1.6 million, which is passed to the UK building company.  This assures that funds are available and that the payment will be made if the correct documents are presented by the UK company, such as invoices, bills of lading, packing list and others.  The bank is guaranteeing the money and becomes responsible for the payment.  Negotiation skills need to be on point with this as, as mentioned before, there is a cost to the client in the UAE to issue this transferable letter of credit.

Breaking Down The Transferable Letter Of Credit

As this is a real-word example, lets break down what was actually included in this letter of credit and the inner workings of it.

CONFIRMED
This particular letter of credit was issued from the clients bank in the UAE via a bank located in the UK, so it was this UK bank that was ultimately responsible for paying out the £1.6m.  This UK bank was unknown to the building company in the sense, they had no relationship with the bank, so in order to minimise their risk, they asked their bank, Natwest to “confirm” the letter of credit.

What this means is, Natwest confirms the letter of credit exists (taking away the risk of any fraud, which unfortunately does happen) and that they (Natwest) will honour it on the presentation of all the relevant and correct documents.

As you may have guessed, Natwest do not do this for free and charge our building company a fee for this service but it’s a fee that gives our building company peace of mind.

TRANSFERABLE
A transferable letter is a letter of credit that simply means the building company can “break up” the letter of credit and use it to pay who they need to pay, for example, steel suppliers.  As mentioned earlier, a transferable letter of credit can be broken up from one “mother” credit, into “child” credits and distributed as long as the combined value does not exceed the mother letter of credit.

RED CLAUSED

As mentioned above, a “red clause” allows a stated percentage of the value of the credit to be received by the building company, effectively in cash and be used for immediate expenses, such as paying staff during the building period.

In this case of the UK builder requested a 5% red clause and used this money for up front costs such as architects fees and plans, staff costs and engineer’s site visits.

Know What Your Doing

Almost half of letters of credit received in the UK are unworkable according to some research, the buyer requests documents which the seller is unable to produce, so be aware and be proactive, not reactive.

As you can see, letters of credit are a great way to fulfill projects when cash is tight but it’s really important to know what you’re doing as they can be complicated. If you get it wrong, you could be left holding the can and unfortunately there are many horror stories of contracts going desperately wrong due to people not understanding how to properly establish and use letters of credit.  Don’t be one of them!

How To Source Products Internationally

Sourcing products around the globe is a much easier task than in years gone by. Jumping on to Google, makes it much easier and quicker and is certainly the first port of call but there are still other avenues that shouldn’t be ignored.

Finding An Edge

We once had an importer and retailer of pine furniture sign up to our online course as he wanted to learn other methods of sourcing and increase his options of suppliers and not be limited to his sole supplier in China.

This entrepreneur had seven furniture retail outlets throughout the UK and his business was growing. He felt he was vulnerable having just one supplier and for security needed to look at other options potentially in other parts of the world. At the same time, he wanted to gain a competitive edge being that all his competitors were selling the same furniture designs as him, so all he could compete on was price which was squeezing profit margins.

After some consideration and research with his customer base, he decided he needed to develop bespoke designed furniture, which he felt would give the needed edge and these designs would be marketed as exclusively his. After listening to his customers, he catered for their needs and desires and went about drawing up a range of furniture.

He approached his Chinese supplier and manufacturer and inquired about producing this range of bespoke pine furniture but they were unable to accommodate this request because of the large cost involved to them in retooling their machinery for a comparatively small order.

Sourcing New Suppliers

With this, we advised on sourcing alternative manufactures and looked closer to home. On doing some initial research, we suggested Cyprus as a first point to finding new sources as we found it to be a pine furniture manufacturing base and pine wood was in abundance, lowering the price of the raw material.

The next step was of course to find a supplier and manufacturer there, so we decided to contact the Cypriot embassy in London and ask them if they would be able to recommend any reputable and established companies. They were very helpful and of course, happy to promote Cypriot furniture makers and we were pleased to receive credible recommendations.

The Embassy made several introductions to manufacturers that were fit for purpose and eager to win the contract. Our entrepreneur discussed his needs for his bespoke pine furniture to be manufactured and exported to the UK which were well received and two reputable and established companies submitted quotations, both within the same ball park figure.

Both companies invited our entrepreneur to visit and have a tour of their factories, see firsthand the quality and craftsmanship of the furniture and discuss his final requirements.

Keeping It Competitive

After reviewing both proposals, further negotiations and being impressed with the manufacturing process of both companies, the order was actually split between the two companies giving our entrepreneur further security in having two reliable manufacturers but also being able to gain an air of competitiveness between them, ensuring that price would remain competitive.

The Chinese supplier was kept and continued to ship furniture and was offered to customers as a lower priced range, keeping this target market but putting our entreprenuer in a position to up-sell the bespoke range when possible.

All Your Eggs

The saying goes, “don’t keep all your eggs in one basket” and in this case it was great advice to follow. The result was an increase in customers, sales and profits due to people being unable to buy this range of furniture anywhere else and the retail business has gone from strength to strength.

The Internet is without doubt the easiest and fastest way to find suppliers and manufacturers but there are alternatives. In this case, it was beneficial to make contact with people that we were able to trust in the Embassy and use their knowledge and credibility to find these reputable manufacturers.

Keep Thinking Outside the Box

When starting of growing your business, it’s worth keeping your options open and checking all avenues as well as continuing to ask yourself, how can I keep my edge?

What Can I Import And Sell?

The story of Lord Alan Sugar is a great one, from selling radio aerials for cars and other electrical goods out of a van, to a market stall, to multimillionaire. Buying and selling really isn’t rocket science and can be hugely rewarding and make you financially successful.

However, as with any business venture, sometimes we need help getting ideas together as a kick start to moving things to the next level.  In setting up an import export business, the first question is always, “What can I import and sell?”.  Finding a niche or a gap in the market takes some time and research but there’s generally a market out there for everything.

There is literally a world of opportunity and the best part of researching what’s out there  to import and sell at home is the chance to travel and discover amazing products from other cultures and countries.

So pack your bags and grab your passport, here’s some ideas to get you thinking from six countries.  Once you’ve figured out what you want to sell, check out our guide on how to find buyers for your products.

India

Leather Products

Leather is a prominent industry in India with leather also being one of the most widely traded items in the world, always in demand and can be considered ageless.  Shoes and coats never go out of fashion and can last for years.  Leather purses, bags, briefcases, belts, wallets, gloves, the list goes on, there is a huge range of products to import.

There are more than 1000 leather exporting companies in India. Some of the prominent players are Prara Leathers Private Limited, Rahman Industries Limited, Farida Prome Tannery Private Limited, Tata International Limited, Super Tannery Limited and Blue Diamond Leaders.

ABTS Training also has a contact in India that has joined our Facebook group offering leather goods and handicrafts.

For more information and data see IBEF.

Jewelry and Precious Stones

India has long been considered to be the hub of the global jewelry market because of its low costs and and highly-skilled labour. India is the world’s largest cutting and polishing centre for diamonds. The gems and jewelry market in India is home to more than 300,000 players, with the majority being small players, so this is a great opportunity to go to India experience the culture, speak to jewelry dealers and see what opportunities are there.

Jewelry is such a huge market in India with a market size of US$75 billion as of 2017 and is expected to reach US$ 100 billion by 2025, there’s no reason why you can’t take a piece of the pie.

For more information and data see IBEF.

Egypt

Cotton

Egypt is famous for having the highest quality cotton in the world and is always in demand, worldwide. Production using fine Egyptian cotton includes  shirts, fabrics for trousers/shorts, worsted wool fabrics, denim, fleece, jersey, flat/woolen knits and much more. Apparel production includes active sportswear, outerwear, underwear, suits, socks, infant wear etc. Production of arguably the most famous use of Egyptian cotton includes a wide variety of bed sheets and bath towels.

Perfumes and Cosmetics

Egypt was once the prestigious center of the international perfume industry. Perfumes were created and mass-marketed elsewhere in the ancient world but it was Egypt that was most renowned and identified with the international perfume trade.

80% of the world’s natural jasmine products, come from Egypt, where specialists in this ancient art extract the aromatic oils from a profusion of flowers, leaves, roots and herbs and export them to perfumers in Paris, London, New York and even Moscow. Egyptian perfumes is a huge export market with some great opportunities.

Nigeria

Locally Made Weaves

According to some estimates, Africa’s dry hair market, this being the market for weaves, wigs and hair extensions, is right now worth over $6 billion a year and growing rapidly. Western countries, particularly the US and UK are in high demand of weaves and will pay top dollar for real human hair.  Incidentally, Thailand is also a great source for real human hair, sold in many of the markets for very reasonable prices.

Ginger, Garlic, Sesame Seeds and Nuts

Nigerian exports of nut related produce including oil seed, oleagic fruits, grain, seed, fruits is massive. Sesame seeds are in much higher demand too being that Sushi restaurants are now so popular.  Ginger is one of the most traded spices in the world and Nigeria has an abundance. Starting a Trans-Sahara or Trans-Atlantic trade with these products will be profitable but take some research and time to find buyers for your exports. Garlic is also on top of the list and is easily exportable from Nigeria.

In our Facebook group we have suppliers in Nigeria offering tigernuts, garlic, ginger, sesame seeds and palm kernal oil.

Turkey

Knitwear

Exports from Turkey are exploding with 2018 setting a record year of $168.1 billion, demonstrating the high level of demand for Turkish products.  Turkey is one of the world’s leading manufacturers of knitted fabrics, having the largest share in Turkish industrial production and being one of the first established industries in Turkey.  Turkish knitwear is known to be of the highest quality with worldwide competitive pricing making it an ideal product to import.  The potential for solid profits within this textile is huge.

Carpets

One of the world’s most prominent carpet manufacturers, Turkey is continuously expanding its global market share with increasing exports year-on-year. The Turkish carpet industry is renowned  worldwide due its superior-quality products and advanced technology in production. Turkey currently holds a 15 per cent world market share in carpet trade and ranks in the number two spot behind China who takes the top spot.

In our Facebook group we have supplier offering carpets from Gaziantep in Turkey.

Thailand

Mobile Phone Accessories

In every mall, high street and market stall, there are shops selling just mobile phone accessories. From unique looking earphones, crazy and cool phone cases, to selfie sticks and battery packs the appetite for the latest, coolest phone gadget is is enormous, worldwide. Importing these products  is a great opportunity and the cost of these products in Thailand are significantly lower than other countries worldwide, coupled with quality craftsmanship.

Shoes

Shoe shoppers love Thailand! There are a gazillion varieties of shoes available in Thailand and at great prices. Importing shoes is a relatively safe investment as demand is stable and profit margins are solid.  Street markets and local retailers are a good place to start when it comes to finding buyers.

South Africa

Wine

South Africa’s wines are held in very high esteem but South Africa is not taking full advantage of and could export more wine to the rest of the world. With a weaker currency, South African wines are comparatively cheaper to those of other countries with stronger currencies. South Africa is currently the 12th biggest exporter of wine, with wine exports of SA bringing in $661.6 million. However, South Africa’s wine exports was the 2nd cheapest of the top 13 wine exporting countries in the world. This is an export market waiting to be taken advantage of and will likely see comfortable profits.

Gems and Precious Metals

South Africa Exports of Pearls, precious stones and metals was US$14.9 billion in 2018. Needless to say there is always a demand for diamonds and gold around the globe. The nations with the highest demand are Japan, USA, UK, Hong Kong, Germany, UAE and Belgium.

Be Your Own Boss

Hopefully this have given you some ideas to starting up your own import export business. Some reports state that around 70% of us are unhappy in our job. This being true, it’s always possible to change career and take the plunge and start up your own business. It’s scary but for those that do it and are willing to take the time to learn a new business, do their research and have the guts to take action, it’s well worth it.  For a little inspiration, here’s a story of how one of our students did exactly that and is now exporting Spanish wine to China.

How to Find Buyers For Export

One of the most common questions we’re asked by entrepreneurs thinking about getting involved in importing and exporting is, “how to find buyers for my exports”. There is no single or straight answer to this question, as you can imagine it depends largely on what your exporting and to what country or region.

It’s wise to spend time researching the market online for your export in various countries and areas before you take the leap. Ask questions on forums, Facebook groups and any other ways of getting some opinions from local people. This will be valuable as you can’t beat the feedback from local people who live and work in your target area. Asking about pricing and even product opinion can be very beneficial feedback.

We recently wrote an blog on how to sell globally from your own website so we won’t go into any detail on this avenue in this blog but there are plenty of other ways to find buyers for exports to think about.

Do It Yourself

With so many websites now online that allow you to sell your own products, why not consider listing your products? The biggest and most well known are Ebay, Amazon and AliExpress and as they’re international this is a great place to start. Register an account and add your products to these sites and see if you place any orders. If you do, you can be more confident about demand for your product in that country or area.

There are many smaller but well known sites online that specialise in smaller retailers and handmade goods such as Etsy and NotOnTheHighStreet. A small amount of research for your target country I’m sure will reveal others.

Best Practice

If you take this approach, it’s worth spending some time studying the best practices for listing your products so that you can take full advantage. For example, make sure photos of your products are well lit and show enough detail. Take photos from various angles so potential buyers can clearly see all of the product and consider even developing a short promo video. Write a descriptive title and description and answer any of the most common questions about the product so users don’t have to contact you and wait for a reply in order to get the answer to their question. When they’re ready to buy, you want to make sure there are no obstacles in the way and they “Buy Now”.

Customer Service

Make sure you offer an excellent level of customer service. Answer questions promptly, when you have your confirmed orders, ship your goods quickly and don’t delay. Update the customer with shipping and tracking codes so they can keep track of where the delivery is. Zappos has sold over a billion dollars in shoes and it built this off the back of excellent customer service. There is a lot to learn from Zappos and how they made customer service their priority and in return their customers gave them loyalty.

We All Read The Reviews

In return for great customer service, ask for a favorable review which are obviously important for credibility. This gives your next potential customer confidence, not just in your product but your service. With some good reviews, they may not hesitate to click the “Buy” button.

Bringing It Together For Wholesale Export

Once you’ve sold some products and built up a base of customers and good reviews you can use this to a second advantage. Contacting wholesalers and having a credible track record can be a big advantage. To be able to say that you’re already selling your products in the local market reduces risk to the wholesaler. If you can say that you’ve already sold “X” number of products in their country and you have “X” number of positive reviews that your potential wholesaler can verify, this is a great way to begin a pitch of your products and will no doubt get the attention of both wholesalers and retailers.

This begs the next question of how to find wholesalers and retailers for your products?

Google Search

It may sound obvious but Google as we know is the king of search so start here. For example, if you are exporting rugs or carpets from Turkey, perform a Google search on “rug wholesalers in UK”.

You’ll get plenty of wholesalers that you can contact and see if you can generate any interest in your products. Wholesalers received many emails and calls, being offered products all the time, so try and stand out from the crowd. A well written email, with clear and professional photos of your products is a good start. We will write another blog on the best approach to contacting buyers and wholesalers.

Follow The Kompass

Kompass is an online business to business directory, with more than 20 million companies, in 70 different countries. This is a great business resource and have a good chance of finding buyers for your exports within its listings. The information is not free and you have to buy lists of companies but the contacts are a great place to start.

National Embassy’s

This is more of an old school approach but still relevant. National Embassy’s want to promote trade between their country and the world and are there to help create these links. Contacting the commercial section of a country’s embassy and asking if they can provide you with a list of wholesalers of your export product is well worth doing.

This also works in reverse, if you are looking to source particular products from a country, contacting the embassy of that country is a good idea. For example, some years ago, we had an entrepreneur looking to source pine furniture to import to the UK and sell. He contacted the Cypriot embassy in London, where he was based and asked if they could help. Cyprus has many pine trees and is well known for its furniture so this was an obvious place to source. The embassy was happy to help and promote its exports and give a list of reputable and well established factory wholesalers and our entrepreneur went on to negotiate some great deals and setup a successful business.

Chambers of Commerce

Chambers of Commerce (e.g. British Chamber of Commerce) are another good resource to make contact with, much like national embassy’s. The Chambers want to promote international business and commerce and have close links with many industries and companies in local areas. They can offer advice and help and often support businesses by offering training so are able to certainly push you in the right direction.

ABTS International Trade Facebook Group

Lastly, ABTS Training has recently setup a new Facebook Group free to join, where we hope we will be able to match up buyers and sellers worldwide and answer any questions on international trade as well as any tips and discussion.

Feel free to join our group.

Import Export Training Course Online

Hopefully this blog gives you a few ideas on how to get started with your import export business and in particular how to find buyers for your export products. There is one more option which is to find stockist or commercial agents but we’ll save this for another blog, so make sure to follow us.

We’re currently offering our online import export training course for just £99 so now’s a good time to get stuck in and get to grips with all aspects of international trade, particularly trading under WTO rules. Learn how to streamline your import export process and keep your profitability as strong as possible.

We were voted Best Trade Education Provider in 2017 by Trade Finance Global and our course has been validated by the London Institute of Shipping and Transport.

Check out our reviews on multiple sites and let us know if you have any questions.

Marine Cargo Insurance Explained

In order to try and steer away from Brexitmania, we thought we would take a break and address marine insurance.  Whilst any form of insurance is never the most riveting subject of discussion, we all know it’s still very important.

Take the following news story for example, 277 containers washed overboard this container ship:

Containers Overboard

This footage clearly illustrates that accidents do happen and cargo ships loose containers perhaps more often than we may think. The seas that these vessels sail can get extremely treacherous so understanding how marine insurance works really is vital to any import export business.  It doesn’t take much to understand if your goods were to go overboard and you have to cover the financial loss yourself, it will likely lead to a serious dent in your cash flow and in some cases can be fatal to your business itself.

Are Your Containers Insured?

Two simple but very important questions come to mind when seeing this report of shipping containers being lost overboard:

  1. Were the containers insured?
  2. If so, was there adequate insurance cover to cover all the financial losses involved and would the shipper be able to make a successful claim with their insurance company?

So, the first question, “were the containers insured?”, might sound like a silly question to ask but many shippers falsely believe that their cargo is automatically insured  by the shipping line against loss or damage once the goods or containers are onboard.

It’s important to note that this is not always the case! You as the shippers should very carefully read the terms and conditions contained in the shipping line contract of carriage.  As much as we all hate to read the small print, it really is vital, as if you neglect this, you are taking a massive risk should there be any unforeseen circumstances.

The Contract Of Carriage

The Contract of Carriage is printed in plain speak, on page one of the Bill of Lading and is there for all to read, including you.  Make absolutely sure you read this and pay attention to all parts.

The contract of carriage will clearly set out the shipping lines liabilities under many different circumstances. Without going into the full detail of the many clauses that there can be, it’s very important to understand, you as the shipper WILL NOT receive full compensation for loss or damage of your UNINSURED cargo, except under certain circumstances, such as a General Average clause.  The scope of this clause and others is a little too much to delve into with this article but we do cover this in our online import export training course.

Adequate Insurance

Having “insurance” alone, as you may have guessed, may not be enough.  If you’ve taken the key step to have your cargo insured, you must go the extra mile and make sure that your containers have adequate insurance.

As with car insurance, you would not want to insure your lovely, brand new Ferrari with just third party, fire or theft, you would need to make sure you have adequate insurance, fully comprehensive to cover any damage in an accident or any other circumstances.

As Simple As Your ABC’s

Marine Insurance cover is either Clause A, B or C.

If you as the shipper have Clause A insurance cover, you are insured under “ALL RISK” insurance.  Therefore, were they your containers washed overboard in the above news story, your goods would be covered and you would be able to breathe a sigh of relief!

If you had Clause B cover, you would also be covered as containers being washing overboard is covered.  Again, take that sigh of relief, go and make a cup of tea and then call your insurance company!

However, if you as the shipper had Clause C Insurance cover, you would not be covered and you would have to suffer the financial loss of those containers being lost.

Hopefully this story illustrated that cargo insurance whilst it may not be all that interesting to talk about, it’s really very  important that traders fully understand what is and what isn’t  covered by their marine insurance policy.  Never leave it to in the lap of the gods and certainly never ask a third party to ”Insure my Cargo”.

You must take the responsibility for your own goods and be specific, making sure you have the correct insurance cover for your cargo, otherwise you may well be throwing the cost of your insurance premium overboard to the bottom of the sea with those lost containers!

Start Wine-ing And Get Exporting

Importing and exporting doesn’t have to be rocket science. Sometimes a simple idea can kick-off a successful career and doesn’t need to be over complicated.

In November 2017 a young lady, 23 years of age, enrolled on an online import export training course, which she completed and gained the understanding she needed to move goods around the world.

To Or From China?  Research Is Key

This young entrepreneur had been looking at China, as many do, to import goods to sell to Europe and on doing more and more research, came across an idea where she saw a gap in the market.  This gap however, was in the reverse direction, rather than import from China, she believed that exporting to China was more advantageous, in particular, exporting Spanish wine to China.

A simple product, a simple idea and something that can be relatively easily filled. Sometimes we don’t have to find some far out there, brand new product that no one has ever seen.  Keeping an open mind and let your research tell you what’s needed. Then trust your research and your gut feeling!

With alcohol sales increasing significantly year on year and China’s middle class expanding, finer wines are more in demand. Also the explosion of Chinese tourism across the globe means that Chinese are travelling further abroad and finding a taste for quality wine and spirits.

With further research, our entrepreneur selected 3 wine producers in Spain and was grounded in negotiation techniques, therefore able to negotiate a solid and successful contract with them.  The wine supplier as you may imagine, was  only too happy to help her penetrate the Chinese wine market and was very helpful.

Stockist Agents

In China, after talks with several potential stockist agents, she selected one that fit her personal criteria and potential future expansion plans.

The first deal was agreed and signed and the stockists agents terms of delivery were CFR  Chinese Port subject to Incoterms 2010.  Our entrepreneur was familiar with and understood these Incoterms and able to make the necessary arrangements for the delivery.

She promptly contacted a freight forwarder in the UK and negotiated a freight rate for collection from the Spanish wine supplier and delivery to the specified Chinese port.  Her knowledge of Incoterms 2010 and the research she had conducted ensured she accepted a fair price for this delivery therefore maximising her profits.

Method Of Payment

The final part of the contract was to negotiate with her Spanish wine supplier,  a 60 day payment against a Bill of Exchange, availed by her bank and a 30 day bill of exchange, availed with her stockist agent thus enhancing her cash flow, giving plenty of time to receive funds from her stockist agent and make the payment to the Spanish vineyard.

The initial trial order was for 4 pallets of wine by LCL service, with the bills of lading to be produced and forwarded to the stockist agent, together with other commercial documents as a Cash against Documents Transaction.

Bring in a Range

After this successful shipment, the first consignment was sold to one outlet by the selected Chinese stockist agent and a partnership has now been agreed and contracted to jointly finance and purchase a Full Container Load (FCL) of Spanish wine.

With the potential to supply a range of products, negotiations are underway to bring in more related products to maximise this business relationship as joint profit margins.

 Lesson Learned

You can turn a relatively simple idea into reality if you follow some simple rules:

  1. Identify the product(s) you wish to buy or sell through solid research.
  2. Research the market you intend to sell to.
  3. Research and find several suppliers. Just one is risky as if there are any issues or problems, you may find yourself with no stock to sell.
  4. Negotiate commercially and legally sound contracts.

No business and making profit, doesn’t come easy.  Be prepared to put in the hard work, stay focused and keep yourself driven. Once you’ve navigated your first deal and made your first delivery, you’ll continue to learn and it will get a little easier each time.

Above all don’t “wing it” get trained in the practical aspects of importing and exporting or the risks of losing money are significantly higher.

What are Incoterms and How Are They Used

Knowing what Incoterms are and why they are so important is to going to be the foundation of your exporting process.  Think of Incoterms as code words that are used within international trade that make it 100% clear where everybody’s responsibility lies as far as the place of delivery, the division of cost and where the risk passes to the buyer.

Why Do We Need Incoterms?

When we buy something from eBay, we expect the seller to receive our money and send us the product that we’ve paid for. If we don’t receive this product, we can contact the seller and address the problem or should that fail,  contact either our credit card company and/or eBay and they will act on our behalf and settle the dispute.

Obviously in buying something on eBay the process is pretty simple but the seller may say once they put the product in the post and have the proof of postage, it’s no longer their problem.

If the package is lost in between, it could be the fault of the post office or maybe it was delivered to a neighbor.  There are variables that come into play and if something goes wrong, the responsibility of the buyer and seller is not so clear. However, on this small scale it’s usually reasonably easy to resolve.

Incoterms, or these “code words” were developed to clear up any issues on exactly who is responsible for what and make sure that there cannot be any misunderstandings.  The prime purpose in developing Incoterms is to identify where the buyers and where the sellers responsibilities lie under three main areas:

  1. The place of delivery from the seller to the buyer.
  2. The transfer of risk from the seller to the buyer.
  3. The division of costs between the seller and buyer.
How Many and What Are They?

There are 11 Incoterms that are divided into 4 categories.  There are new Incoterms due to be developed for 2020 so this may increase but these are currently the 11 Incoterms in use on the international logistics stage today:

  1. EXW (Ex Works)
  2. FCA (Free Carrier)
  3. FAS (Free Alongside Shipping)
  4. FOB (Free on Board)
  5. CPT (Carriage Paid To)
  6. CIP (Carriage and Insurance Paid To)
  7. CFR (Cost and Freight)
  8. CIF ( Cost, Insurance and Freight)
  9. DAT (Delivery at terminal)
  10. DAP (Delivery at place)
  11. DDP (Delivery Duty Paid)
Which One Should I Use?

It’s beyond the scope of this blog to go into detail on each Incoterm as it would take quite some time but as you’ve probably guessed, which Incoterm(s) you should be using depends on  various circumstances. Not least, your customer may ask you to deliver under a preferred set of Incoterms, so it’s wise to be well informed on what all 11 Incoterms mean and how to use them.

In my experience, the majority of companies that I deal with, tell me that they try to trade under EXW as its ‘Easy” and requires the minimum involvement in the logistics of delivering to their overseas customer.

Two Very Different Examples

Using the following two examples, you can see there are two very different ways to achieve the same thing, namely getting a delivery of your goods to your customer.

Scenario One Using EXW

Here’s an example of what’s needed if you as a seller were to export under the Incoterm EXW (Ex Warehouse):

  1. Place of Delivery: The sellers warehouse door
  2. Risk Passes: At the sellers warehouse door
  3. Cost: Cost of production plus profit (or the price on the invoice)
  • Export packing (if required)

 

As you can see, by using EXW, you have very little work to do other than preparing the goods, boxing them up and have the shipment waiting at your door ready for collection.

Delivery Ex Works is great if you can agree on that with your customer but what if they request any terms of delivery? This is where you’ll need to know and understand Incoterms.

Scenario Two Using CFR

Now let’s say that you’ve negotiated and landed a large order, that’s a profitable deal with a new customer and they’re potentially going to make many more orders in the future.

They don’t want to organise the logistics of collecting their order from your warehouse but instead want you to organise the delivery to them.  They ask you to complete the order under the Incoterm CFR.  This very much changes the work involved from the sellers point standpoint:

  1. Place of Delivery:  On board the vessel
  2. Transfer of Risk:  When goods are placed on Board the vessel
  3. Division of cost:  Cost of production plus profit (or the price on the invoice)
  • Export packing if required
  • Export Entry Declared to HMRC
  • Weight Certificate
  • Transport to dock of Export
  • Terminal Handling Charges
  • Security check if required

 

Contrary to EXW, by trading under CFR there is much more work to do in preparing the order for export and transferring the shipment to the dock in order to be transported, not to mention you as the seller are extending your risk because you’re not “off the hook” until the goods are on the vessel.

There may also be a cost implication as you’ll have to cover transportation from your warehouse to the dock and the various documentation as listed above.

As a seller, EXW is preferable of course but there will be times where a buyer asks you for something different, so be prepared.  In this case you would need to know that trading under CFR will require the following:

  • You as the  seller must have a basic knowledge of the export procedure
  • Obtain Export Licence IF required
  • Arrange transport to port of loading
  • Make an export entry to HMRC
  • Register for EORI status
  • Obtain freight quotation from Freight Forwarder or direct from shipping line
  • Issue Bills of Lading Instructions
  • Arrange for Bills of Lading to be forwarded to the seller according to the method payment involved in the contract between seller and buyer

 

There’s much to understand in exporting your orders around the world and if you really want to grow to a global scale, you must have an excellent grasp of export procedure.

Import Export Training Course Online

We’re currently offering our online import export training course for just £99 so now’s a good time to get stuck in and get to grips not just with Incoterms but all aspects that you need in order to streamline your import export process and keep your profitability as strong as possible.

We were voted Best Trade Education Provider in 2017 by Trade Finance Global and our course has been validated by the London Institute of Shipping and Transport.

Check out our reviews on multiple sites and let us know if you have any questions.

Profit From Britain’s Greatest Export For Next To Nothing

Britain is a country of innovation and excellent quality products. There’s so many incredible exports the United Kingdom has to offer that the opportunities are literally endless.

“Can Do”

I’m a big believer in the “can do” mentality. Elon Musk, Jeff Bezos, Warren Buffet, Bill Gates and Walt Disney all started with an idea. They took that idea, believed in it and never stopped running with it. Here’s a reality check, the photo on the left was Jeff Bezos office in 1999.

He is now the world’s richest man and he achieved it in less than 20 years.

Britain’s Visiting Tourists Will Spend £26.3 billion In 2018

A friend recently asked me to help him think up a business importing exporting. As I got to thinking, I realised his biggest advantage is where he lives, Oxford. On doing just a small amount of research, the figures show that Britain’s tourism industry is huge and only getting stronger. Here’s a few facts from Visit Britain:

  • 2017 set a record for inbound tourism to the UK in terms of both visits and spend. There were 39.2 million visits to the UK in 2017, up 4.3% on 2016, with these visitors spending £24.5 billion, an 8.7% increase on 2016. The growth in visits was in line with the trend seen over the past five years. The growth in spending was the highest since 2013 and the second highest since 2006; spend per visit rose by 4.3%.
  • Our revised forecast for visits for the calendar year 2018 is for continued growth. We are forecasting 40.9 million visits in 2018, an increase of 4.4% on 2017. Our forecast for spending by visitors in 2018 is £26.3 billion, an increase of 7.1% on 2017.
  • London obviously receives the most visitors but Oxford is already 8th on the list

A very interesting article in The Guardian gave interesting statistics on the amount of Chinese tourists that are now travelling the globe and the UK.

The Back of Your Hand

£26.3 billion is more than enough to go around so why not take your slice? My friend has lived all his life in Oxford and knows it like the back of his hand. His whole network is there so rather than think too far afield I suggested he start at home. Why not create tours of Oxford with your own flare. Sure there’s people doing it already but there’s no market in the world that’s untouched and without competition. He knows Oxford better than anyone and can take visiting tourists not just to the usual sites but his favorite places.

He can try and negotiate deals with local businesses, many of which he already knows, offering his tour groups a discount if brings them.

Home On The Range

One of the points we teach in our free import export training tips is the have a range of products. Always easier to come away with a sale if you offer a range of products opposed to just one. Our Oxford tours idea is no different, which could offer several tours to cater to different audiences:

  • The Pub Crawl: Who doesn’t love a pub crawl. Take your guests on a tour of some of the best local pubs, try some of Britain’s best beers and ale’s!
  • Food Tasting: Tour Oxford’s tea rooms, fish and chip shops, bakery’s, the many places that my friend knows and loves. Ask if they will cater for a group offering smaller portions as a few hours of eating at different places means you can’t eat the usual full size plate.
  • Movie Sets: There’s many movies and series that have been filmed in part in Oxford, running a tour visiting these and giving some local insight is something tourists love to see.
A Captive Audience

Once the tour group is in front of you, there’s a captive audience. Personality will make a difference so interjecting this would make the tour more enjoyable, interact with the group and this builds levels of trust. Building on trust then look to sell products to the group. We all love a souvenir, so negotiating with local businesses that offer fine, perhaps hand made products and these can be offered to the group.

I suggested my friend also makes sure to get the groups contact email and any other details as many tourists will return to a holiday destination. They may want to take another of the tours or hear about newly created ones.

Get their feedback and make changes as that feedback suggests.

Export Britain

Perhaps another piece of the jigsaw is to then get an online ecommerce site and promote this to the same audience and export Britain around the world. See our blog post with practical advice on how to go about getting online and exporting globally, without having to have a huge budget.

Offering tours as well as fine British products online is a double income stream.

You Won’t Know Until You Do It

As you can see, setting up this business really won’t cost a fortune and all you’re doing is taking the knowledge you have and using it to build a business. Take what interests you have and stick to what you know, this is key. Focus on one thing to start with, then grow your business organically.

Once you start to get the audience, you can market to them. The UK has some fantastic products and places to see and millions of people from around the world come here to experience it every day.

Creating your own import export business isn’t rocket science, it just takes a thought and a little imagination.

How Sell Internationally Online

Once you know how to export, the bigger question becomes, how do you sell to an international market?  The Internet is the obvious way to reach a global market without needing millions in advertising budgets through traditional advertising.  Our simple guide below explains the basics of getting your website online and key points to marketing.

The Big Idea

That idea that began in your head, you acted on, you’ve found a way to take it and turn it into a reality. Congratulations indeed, you are part of the minority. For many, taking the risk, working that hard, probably your current job in the day, then getting home and working another shift on your own company is too much for the majority. Putting up your own money to finance your new company, keeping the motivation and drive can be difficult but you’ve not given up, what you’ve achieved is admirable and you’ve proven yourself braver than most.

You’ve achieved so much, you’ve sourced or are manufacturing your products, importing them to your warehouse and now they’re selling. The next question now is, how to sell to more of your products and how to sell to a global market?

It’s Not Easy But You Already Know That

Selling is not rocket science, you have to sell your products at a higher price than you buy them. However, especially in this day and age where competition is fierce, it’s easier said than done. It’s not easy but you already know that coming this far. You’re obviously up for the challenge. Selling globally is something that we can all do these days thanks to the Internet. That idea of making money and taking orders while you sleep is reality.

Buy A Domain

A domain is where it all starts online – www.mysite.com. Registering one is easy enough, go over to Go Daddy, search for your name and register it. Two quick tips:

1. Registering a domain name with your main keyword in it can help with rankings. You can register two names, one being your company name and the other more keyword friendly. You can promote your company domain on business cards, letterheads etc. but promote the keyword rich one within Google and online.

Don’t overdo the keywords though, keep it simple and still has to look professional.

2. The longer you buy the domain for, it could help your ranking in Google. Google ranks websites on many hundreds of points so buying a domain for 10 years won’t get you to the top on it’s own but it’s something that Google does measure.

Google’s logic is simple, if you spend the money to register it for a long period of time, you plan on being around, opposed to someone who is taking it year by year.

Build Your Site

It’s obvious but the best thing you can do is build yourself a website. Years ago this used to be an expensive and time consuming project but now it’s really become much more simple. There are “open source” free website platforms out there, the most common being WordPress. You will need a little tech knowledge but there are so many free tutorials on Google for WordPress that at every step you’ll be able to fall back on some video help.

Magento is a second step up, more powerful as a ecommerce platform but you’ll need more tech knowledge.

Shopify is an option as somewhere you can setup shop quickly and easily but doesn’t give you all the control you may find you need.

WordPress may well be the best place to start. It used to be that you had to find a designer that would create your design then a coder to implement that design. Now you can simply go to a site like Template Monster and search for WordPress templates. Buy one, grab some hosting and install. That is a little tricky and will take some time but here’s a quick guide on how to start . Check out Woocommerce as this is what you’ll need to install to actually run the ecomm side of your site.

Keep It Simple

The temptation when building your shiny new website is to put everything you can think of in it. There’s literally thousands of free plugins and features you can add. Best advice, keep it simple. The advent of the internet has made us much less patient. If we can’t find what we’re looking for in a few seconds, we hit the back button and bounce off the site. The same will be true of your website; your competition is one click away. Keep things simple, clear, to the point and quick.

Search For It And Make It Snappy

Add a site search or a product search, especially if your site has many pages and/or products. Allow people to find what they want quickly. Quick being another key point for Google, as something else it looks for in the site speed. If your site take a long time to load, Google penalises you. “Long” on the internet is measured in seconds. So keep your site light and make sure it loads quickly, especially on mobile as I’m sure you know, most of us access the web through our mobiles more than desktop now.

Speak Their Language

If you want to be global with clients worldwide, you’re going to have to speak to them. Translations of the site will be needed. You can try and sell to Spain in English but your sales will inevitably be stronger if you sell in Spanish. You’ll also have to consider what you’ll do if you have a Spanish customer that has an issue and can only talk in Spanish, a problem if you only speak English.

Customer Service Is All That Matters

Lessons can and should be learned from Zappos. Zappos has sold a billion dollars worth of shoes so if there’s anyone to learn from, it’s these guys. Customer service wins loyalty. When we call a company, we want to speak to a human, we don’t want to dial more numbers to get there, we want a response quickly. If we have a problem or a complaint, make it right. The best way of keeping customers loyal is to deal with problems and issues, quickly and to fix the problem. We all understand that there are problems in life, it’s how you correct them that can make a disgruntled customer, a happy and forever loyal customer.

Make that happen. Have a read on Forbes about Zappos customer service.

Analytics

Install Google Analytics on your site, it’s free. Setup goals and study the data. Without knowing what your audience is looking at on your site, what’s working, what’s not working, you won’t be able to progress. Analytics offers a wealth of information for you to study. Without using this, you’re blind.

Why No Traffic Jam?

After all this, you may find yourself wondering why you’re not getting any traffic or sales. Well, there’s around 645 million websites online today. How are people going to find yours if you don’t tell them about it? Means more work but we already know you’re not scared of that! Here’s a few ideas to get you thinking.

Google Adwords

Getting a high ranking in Google is what we all want but it’s no easy task. It takes time and a lot of work. A quick way to Google is using Adwords. Pay to appear at the top of Google. Yes it means you have to find more funds but it’s a quick way to get off the ground. The other advantage is that it will give you an idea of traffic, whether your site is working well, if you have customers calling you you’ll understand their needs better.

Blogging

WordPress is actually a blogging platform so use it. Create blogs that are interesting and relevant to people. I hope you are finding this blog useful and that you’re benefiting from the information. The next post I write, you will hopefully be interested in and continue to read. Over time, I hope you’ll become a loyal follower and share the information I’m writing about with others that will find it useful. The same applies to whatever you’re doing.

Don’t write blogs where you’re simply trying to get people to buy what you’re selling, drive people to your site with interesting and relevant content, then they may visit your site and look deeper, perhaps taking the plunge and buying something.

For example, if you sell cakes, don’t just try and sell your cakes on your blog. You can write recipes, make a few videos of how to make the best brownies at home, what are some of the best ingredients to use in cakes, what are your favorite cakes, whats the best cake tin…you get the idea. These subjects will be more interesting and if you post them out on social media, may get a lot more interest than, “Please Buy My Great Cakes”.

Be Social

Once you’ve written those great blogs or created a few great videos, send them out on Twitter, Facebook, Instagram, YouTube and all the networks. Use hashtags to gain more exposure.

The main thing to remember is not to get bored and give up. Blogging and gaining traffic takes time, you need to think of this as a 12 – 18 month project, it won’t happen over night. Be consistent and you’ll get there.

Take A Piggyback

Another idea is to use sites that allow you to sell but take a commission. This may not work for you if you’re working off tight commissions but in the long term it can still work, so consider it. Sites like Not On The High Street, Etsy and even Amazon and Ebay can really work to springboard some product awareness.

By adding your products to these, you’ll have to pay a commission on sales but you’re products may start to get exposure and any sales, means you’ll have the details of that customer to market to in future. Rather than looking at it as a commission on sales, you could look at it as paying to gain the customer.

Email Lists

Last point is to make sure you’re creating an email list of users. It’s an old form of marketing now but it’s still effective. Offer something for free on you’re site, a discount, an ebook, a free cake! Get the user to leave their email and you’ll be able to keep them up to date with new products, discounts and other exciting bits and pieces!

I hope this information helps get you off the ground towards finding your global market place and if it did, perhaps share it with others! (See what I did there?!)

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How to Export and Sell Globally

Importing and Exporting Negotiation Techniques

Negotiation is a fundamental part of international trading.  You’ll negotiate every part of a deal from sourcing your products from suppliers, dealing with wholesalers and retailers, negotiating price and therefore your profit margin as well as the terms of delivery.  Understanding how to negotiate is one of the cornerstones to making any business successful not just importing and exporting.

What Is An Effective Negotiation?

Deals come in all shapes and sizes but they are really only effective when both sides are happy.  Making a deal where you get everything but the other side comes away with nothing, in the long run won’t be good for you as you could find yourself dealing with someone who’s unmotivated and doesn’t care about losing your business, therefore gives you a terrible or non existent customer service and perhaps cut as many corners as possible to save on their budget.

Effective negotiations works when both sides gain. Both sides are then motivated and want to work together for the long term, resolve problems and issues quickly and continually better the service and relationship.

Personalities and Relationships

This is really important to understand: Many deals are negotiated based on matching personalities, not cost alone. If you can find something in common and personalities work well, this can seal the deal.

Negotiating a deal is much easier when you like the person you’re dealing with.  Think about how much sense that makes for a second?  If you’re negotiating with someone who’s hard headed, stubborn or arrogant and wants only what they want, you probably won’t be that interested in getting the deal done. You’ll see them as someone who’s probably going to cause you a lot of stress and grief as time goes on, which no matter who much money may be on the table, you’ll really have to consider if it’s worth it.

On the other hand, if you’re meeting with someone who’s relaxed and friendly, someone  you can meet for a beer and discuss business, this is a much more likable scenario. They still know and understands business but you can see they’ll be good to work with, understanding when things go wrong and someone that will work with you for a solution, this type of person or relationship is much more appealing.  Money will always be important but may not always be the priority.

Getting to know the person your negotiating with a little can go a long way.

Show An Interest, Understand The Project And Be Excited

Imagine you’ve got a great idea, you’ve spend months researching it, you’ve spent hard earned money getting the idea off the ground. This is now your baby, you’re excited, you love seeing this idea that started in your head, grow and become a reality.  The next phase is to meet two suppliers for example.

The first is a guy who sits across the desk, asks what you want, looks it up, tells you he can do it, gives you a good price and leaves you to it.

The second is someone that takes the time to grab a coffee with you, wants to hear about how you came up with your idea, what steps you’ve taken to get the project to the point it’s at and wants to know about some of the obstacles you’ve faced. They show an interest in your baby, they show some enthusiasm and excitement and understand your project.

Perhaps they ask what other companies or people you’re working with as they may have a relationship with them as well something that could be a mutual benefit.  They ask how you plan to move the project forward, perhaps suggesting they introduce you to a couple of people in their business network that would benefit you as well as ask what problems you foresee in the future to see if they can help combat some of these.

The price they give you is higher than the first but still just within your budget.  Who would you award the contract to?

Being enthusiastic, taking the time to learn a little goes a long, long way.

5 Key Steps Before Starting A Negotiation

Import Export Negotiation

Step 1:  Defining Objectives And Targets: Start with preparing your “L-I-M”.

1. Recognizing the objectives you would LIKE (L) to achieve. What does the perfect deal look like to you? Be realistic with this and make sure it’s not totally one sided. As mentioned, you don’t want anyone unmotivated on the other side.

2. Identify what objectives you INTEND (I) to achieve. Knowing what your objectives are will keep you focused, don’t lose track of these and make sure these are the prioritised in case you have to sacrifice one or two.

3. Finally, recognize the MINIMUM (M) you’ll accept. Know when you’ll walk away. If you cannot achieve what you need minimally from the deal, there will be no point in continuing the discussion.  In these cases, don’t burn your bridges as you never in in future if you can’t do a deal again but be prepared to walk away.

Step 2:  Setting The Negotiation Strategy.

Are you working towards a Win-Win or a Win-Lose strategy? A win-win leads to collaboration, mutual interest, flexibility, joint problem solving and harmony between the parties, a good strategy for a long term relationships.

A win-lose strategy can lead to conflict, inflexibility, competition, one side beating the other and adversarialism. This strategy can be used effectively in one-off deals but be careful as if you need to come back and do another deal, you may find yourself with the door being shut in your face.

Step 3:  Active Listening

Concentrate on what is being discussed. Don’t answer back or interrupt. Try to understand the other persons point of view and don’t jump to conclusions. Understand what you’re being told and put yourself in their position, try and think from their side how you can bridge the gap.

Step 4:  Methods Of Persuasion

One or several of the following methods of persuasion can be used.

  • Logic:  A simple strategy, laying our the facts, the positives, the negatives and talking them through.
  • Bargaining: We’ve seen this many times on Dragon’s Den! Back and forth trying to find the acceptable middle ground.  What will you give up, what will the other person give up to make a deal. Be realistic with what you’re going to bargain with or the other side may not take you seriously.
  • Emotion: Someone that likes you will want to work with you. Find what you have in common, sometimes even ask about their family, do you have kids the same age, family that live in the same town. These things can help to find common ground.
  • Threats: Not perhaps the best or first course of action but it threats have their place. If you are the client, you can threaten to take your business elsewhere unless they give you some kind of a better deal. Sometimes there is only so much the other side can do, they cannot sell to you at a lost for a sustained period obviously so use this tactic sensitively and realistically.
  • Compromise: Find the compromise through dialog. Chat back and forth, listen and compromise.

It is up to you to select the correct one(s) for the particular situation you’re in.  Make sure you have a very good idea of what you want and what you’ll sacrifice before you go into battle!

Step 5:  Style It Out

Find your own style; warm, a little humorous, tough, logical, all business? Negotiations are personality driven. Personalities will either get along or clash. Find a way to get along and recognize these personality traits in the other party and respond accordingly.

Hopefully some of these techniques will help you with your next negotiation. We would love to hear how you get on or what tips you have for a successful negotiation in the comments.

Validated By The London Institute Of Shipping And Transport

Our online international trade course has been validated by The London Institute of Shipping and Transport since 2005, giving our students the confidence in the practical, hands-on way we teach you have to import and export. Our course is streamlined, excluding any logistics theory, getting to the point and showing you what you’ll need to know and understand in order to move your goods from source to destination. We do this with a series of entertaining animated videos, opposed to asking you to read pages and pages of text, or listen to a teach at a whiteboard for hours.

We’ve trained hundreds of students and helped further their careers as well as helped setup countless successful businesses, with many of our students now their own boss running their own successful companies.

With over 30 years of experience, we’re here to offer you one-to-one support and bring your career or business to the next level.

Validated

Best Trade Education Provider 2017

ABTS Training was also awarded BEST TRADE EDUCATION PROVIDER 2017 by Trade Finance Global, a great honour to receive the award which recognises the high level of course presentation and content we deliever.

The judges comment, “We were impressed with the simple, straightforward and clear way that ABTS presents their course. The course covers vital introductory elements such as Transport types, Payment mechanisms and Incoterms.”
Trade Finance: The new funder on the block for importers and exporters

The construction sector is experiencing the fastest rate of hiring for over 15 years, the pound is stronger than it was 2 years ago across 18 major currencies, and countries are beginning to partner on deals which encourage trade globally.

To accommodate this, business funding has become a hot-topic amongst the SME and corporate community, with the rise of alternative debt and equity funders (e.g. the crowdfunding platform Crowdcube and invoice discounting companies such as MarketInvoice).

Yet 70% of businesses are struggling with getting funding, particularly for purchasing goods and services from overseas, which is surprising given the current position of the UK economy.

Sadly, many companies don’t know where to begin when it comes to funding their business, but what doesn’t help, is that business funding is complicated. Depending on the stage of your business, how much capital you already have, how quickly you need the funding and how long you’ll need it for, the funding you require could vary immensely.

Trade finance, an umbrella term for the ‘financing of international trade’, covers a range of financial products which can help importers and exporters trade. International import and export businesses have the added complications of understanding the mechanisms of trade finance, which involves jurisdiction across different countries, language barriers, understanding shipping protocol and insuring their order.

The most common form of trade finance is a Letter of Credit or Bill of Lading, which are both mechanisms to securitise the assets which are being transported or shipped; in other words, the goods or services are the security to which a funder will lend.

For companies looking to import or export, we’ve put together some tips for ensuring success:

1. Do your due diligence

Most business owners in the space will be aware of their competitors in their market, and the competitors of their suppliers. It’s not hard to pull import or export data from government website or through calling local experts on the field. It’s also worth sense checking your suppliers and customers – are they creditworthy and reliable, do they have trusted reviews?

2. Learn about importing and exporting

Aside from a Letter of Credit Trade Finance deal, it’s vital to understand the mechanisms of transporting and shipping – from freight forwarding, to Bills of Lading. It may be a good idea to go on an education course such as ABTS Training.

3. Talk to a broker

Brokers can offer recommendations or suggestions for a business which could save them time and money. Also, because of their established relationships with many funders, they may be able to negotiate a better deal or rate and find the option which is most suitable for your business.

4. Know your risks

Business owners should know from the outset what the risks and challenges are before undertaking a trade finance deal. Mitigating or reducing these risks through insurance, credit checks, independent analysis and understanding the market that they’re operating versus opportunity and financial benefit of a deal can help determine the go-no-go decision.

5. Don’t underestimate the power of negotiation

Whether it’s your customers, suppliers or financiers, negotiation can often be the make or break for your business. Being able to negotiate terms, prices and rates in a competitive market could give your business a financial advantage.

To conclude, raising funding to help succeed in your import or export business is not easy, but can bring unrivaled success and opportunity for your company. Understanding the fundamentals of the import/export market, mitigating risks and planning carefully though are crucial to protect yourself and the company.

 

Courtesy of our partner Trade Finance Global.  Learn more about trade finance and how it can help your import export business.