If you are starting an export-import business, then it is imperative that you understand all of the import and export procedure(s) and documentation. Knowing import and export procedure(s) and documentation makes sure that your business runs smoothly without obstacles.
Running an export-import business requires handling export procedures. You need to be aware of import and export procedure(s). Knowing the procedures will allow me to plan and prepare all the actions in the right order.
Additionally, documentation is an important part of this business. It is because if you don’t prepare the right documents or you prepare those incorrectly, then your export or import will struggle or incur a loss.
Failing to provide the required and related documents or failing to perform some export procedure can lead to the failure of your business. Then, instead of making profits, you will incur losses.
This article will provide an in-depth discussion on the import and export procedure(s) and documentation.
First, let’s take a look at the import and export procedure(s), and then, secondly the documentation.
IMPORT & EXPORT PROCEDURES
Establish company, open business bank account, and apply for export/import license
Followings are the important import and export procedure(s). Entrepreneurs need to follow these principles. The principles are applicable if you are involved with exporting or importing. If you are an export/import company or export-import agent, you have to go after them.
In order to set up a company, you need to comply with your country’s appropriate authorities and institutions.
Firstly, you need to fill out the forms, verify your initial capital, contact details, address details, and other formalities. After some time, the domain of your company will be established. To set up a company, you also need to pay some government fees.
N.B. Before, you decide to open a company; we suggest your export business needs to be determined properly. It is smart to decide your export business plan as well. An export business plan will be helpful in formulating the right activities. Businesses can set goals and priorities accordingly.
You need to submit your company corporation docs with the local bank (if you have a business plan, take this as well) and finish some paperwork for a bank account. You need again to fill out special forms and answer banker questions about your future business activities.
After some time, you have to consent to open an existing bank account. You need an international banking service, so you can send and receive money from abroad.
After you have an existing company with a bank account, you need to apply for your export/import license. This is also referred to as the IEC number (your export/import license code no. For example, in India IEC, is a CODE, which contains a 10-digit number issued by the General Director of Foreign Trade, Department of Commerce, and Government of India.
Therefore, in order, to fill up the application, you need to comply with the Department of Commerce in India, in your local branch. There are some important facts you need to consider for the laws about obtaining the IEC in India.
SEND SAMPLES TO YOUR BUYERS
If you found a potential overseas buyer, then definitely, they will ask you to send them a sample first. You need to pack the sample and ship it to your customer, so they can check and test your product.
You need to utilize an airplane as transport. We recommend using DHL, TNT or some other global shipping company. In addition, they will assist you, to fill export documents and will tell you, what you need to provide them.
Even for sample sending, you need to fill out the export declaration, where you mark the product, its HS code and, its value.
With sample sending, you need to prepare and provide the following docs
Performa invoice ( mark the price “0”)
Sometimes you need to provide CO (certificate of origin).
The Certificate of Origin requires you to fill the airway bill with the receiver data, your data, and your destination.
Usually, it doesn’t cost you more than 100 USD to ship small test samples. The cost depends on what you are shipping.
N.B. In the sample sending import-export procedure (stage), you need to be aware of all the restrictions and duties related to your goods.
Sometimes restriction is placed on export goods.
CONFIRM THE ORDER FROM BUYER AND RECEIVE MONEY
Sign sale-purchase contract, then issue a Performa invoice and obtain the first payment.
If your buyer likes the sample, the next import-export procedure (step) is that they will make the actual export order for you. They will confirm the order quantity and terms. Now is time for concluding give and take after what you need to sign the accord of sales and purchase.
This stage belongs to the most vital import-export process.
In a contract, all significant terms and conditions need to be stated and confirmed. At least the following terms need to be negotiated and integrated into the contract.
1. Price of the goods and total price
2. Shipping date
3. Description of the goods with HS code
4. Ordered quantity
5. Delivery term (EXW; FOB; CIF)
6. Payment terms (TT, LC, DC)
7. Inspection and warranty terms
8. Agreed advance-payment % and balance payment %
9. Packing details
Export procedure(s) or import procedure(s) are directly linked with documentation. It is because anyone who wishes to export needs to fill up some paperwork required for export. Every procedure or process involves some kinds of documents.
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.