Sure! To getting orders and make agreements, it is very important to talk, be professional, and make sure both sides benefit. Understand who you are selling to, explain what you offer, and discuss terms openly. Keep talking to each other and solve any problems quickly. This builds trust and helps keep working together for a long time.
Trade Query/ Price Quotation To Getting Orders.
All trade starts with a query/ inquiry for a product requesting a quotation. It is highly recommended to give due weightage to each query for Getting orders and then quote a price. For this, one has to examine several things including the following:
- What price should be charged to remain competitive abroad.?
- While calculating prices, one must inculcate all costs including, packing, insurance, credit, agent’s commission, octroi duties13, documentation fee, marking charges14, transportation charges, and export duties, etc.
- To secure a good price one should explore prices of the same product abroad. If there is a good markup in price abroad, utilize the gap to your benefit
In an international transaction, your quote serves as a Proforma Invoice. It helps potential buyers to arrange for financing, open a letter of credit, apply for the proper import licenses, etc. A proforma invoice specifies the following then you can able to Getting orders:
- The buyer and seller in this transaction.
- A detailed description of the goods.
- The Harmonized System classification of those goods
- The price quoted.
- The payment term of the sale would typically be expressed as one of the 11 current Incoterms.
- The delivery details include how and where the goods will be delivered and how much that will cost.
- The currency used in the quote, whether it’s U.S. dollars or else
- Be sure to date your proforma invoice and include an expiration date. There can be a lot of volatility in the export process, so minimize your risk by setting a specific time frame for your quote.
Purchase Order/Export Order.
Once the trade query is addressed and the buyer proceeds with the order, the exporters
must ensure a few things to Getting orders:
- Verifications regarding the import license of the buyer, company registration documents, and any other docs required for vendor registration and authentication. Proforma invoices are mostly checked before finalizing any agreement.
- Send samples to the foreign buyer or get detailed specifications of the required product from them.
- Depending upon the customer’s demand, some certification or third-party inspections may also be needed. Make sure that the final product meets the specifications agreed upon in the beginning.
- In case of no advance payment, make sure that you are dealing with a genuine buyer and that the payment is going to be received without hassle once the order is delivered.
- After a complete understanding of the required order, if the deal is confirmed against the price quotation; a ‘proforma invoice’ is generated which lists down all the details of the order, the quoted price on a CIF or FOB basis, and the delivery terms. Proforma invoice can also be used to open L.C
- Obtain the following documents as per requirement of buyers:
- Product-related certificates if any,
- Certificate of Origin19 i.e. Preferential or Non-preferential
- E-form, Commercial Invoice, Packing List (PL), Goods Declaration (GD), etc
- Obtain a Fumigation Certificate & Phytosanitary Certificates if required.
Negotiate Terms & Conditions of the Contract.
- The terms and conditions of the contract shall depend upon the nature of the goods exported. The buyers usually try to ensure that the quality and quantity of the goods delivered must be according to the specifications required. In turn, the seller must ensure timely payment against the delivery of the shipment to Getting orders.
- Though the goods are mostly exported according to the terms specified in proforma invoice/ price quotation exporters are advised to use written and legal export contracts. The essential elements of an export contract include:
- Names & addresses of the parties: State clear and full names of the parties.
- Products, standards, and specifications.
- Units of measure in both figures and words.
- Total value: The total contract value in words and figures, and in a specific currency.
- Terms of delivery: Delivery terms, are based on the Incoterms.
- Terms of payment: Amount, mode, and currency.
- Inspection: State the nature, manner, and focus of the envisaged inspection, as well as the inspection agency. Several goods are now subject to pre-shipment inspection by designated agencies, and foreign buyers may stipulate their inspection agencies and conditions for inspection.
- Documentary requirements for international trade transactions.
- Delay in delivery: Damages due to the importer from the exporter in the event of late delivery owing to reasons other than force majeure.
- A contract should provide for the insurance of goods against loss, damage, or destruction during transportation.
- Force majeure: Provisions in the contract defining circumstances that would relieve partners of their liability for non-performance of the contract.
- Applicable law: The law of the country that is to govern the contract
- Arbitration clause to facilitate amicable and quick settlement of disputes or differences that may arise between the parties.
Explanation regarding the above Negotiate Terms.
Cost Insurance & Freight (CIF)
Under CIF the seller delivers the goods, cleared for export, onboard the vessel at the
port of shipment pays for the transport of the goods to the port of destination and also obtains and pays for minimum insurance coverage of the goods through their journey to the named port of destination.
Free on Board (FOB)
Under the terms of FOB, the seller clears the goods for export and ensures they are delivered to and
loaded onto the vessel for transport at the named port of departure. The buyer takes over risk and costs, including import clearance and duties, as soon as the goods are loaded onto the transport vessel at the port of departure.
Letter of Credit (LC)
A Letter of Credit (LC) is a payment term generally used for international sales transactions. LC is a payment undertaking issued on behalf of the applicant (buyer) by a bank to the seller. The Buyer is the Applicant and the Seller is the Beneficiary
Certificate of origin (CO)
A certificate of origin (CO) is a document declaring in which country a commodity or good.
Commercial invoice
The commercial invoice is the primary documentation used for import control, valuation, and duty determination when shipping internationally. It is required for all international shipments, except documents of no commercial value.
Sign the Contract with the buyer.
When prices are accepted then a contract is signed with the firm/company/ buyer for the supply of goods which becomes binding on both the buyer & seller. The contract is a document that normally contains;
- Name of exporter
- Name of Importer
- Item of sale
- Unit price
- Total Quantity
- Terms of delivery (FOB, C& F, CIF, etc.)
- Terms of payment (Consignment, deferred LC irrevocable, LC confirmed revolving LC)
- Mode of shipment (Sea, Air, Road)
- Currency in which transaction will be made
- The validity period of a contract & delivery period.
- Shipping marks if any
- Arbitration clause.
- The responsibility of dealing with the NTSBs of the destination country should rest with the buying firm/company/entity
Packaging and transporting goods to the port
- Details of packaging are decided in consultation with the foreign buyer
- The exporter has to make sure that the packaging layers of cargo are resilient enough to bear the kind of journey the cargo will be taking.
- Containers can broadly be divided into
- Standard
- High Cube
- Open Top
- Flat Rack, and Flat Rack, and Special types
- The container has to be thoroughly inspected for damages before it is picked from e thoroughly inspected for damages before it is picked from the shipping line yard.
- Weight mentioned in the packing list and bill of lading must match the actual weight.
- Once the cargo is packed in the container, the truck carries the cargo to the port for custom clearance and onward loading onto the transportation carrier.
FIVE DON’TS OF CONTRACT NEGOTIATION !!!
DON’T NEGLECT TO INVESTIGATE
Whether the foreign market in which you are exporting your product has any Import Controls related to the sale of your product. Import Controls are broken down into import prohibitions, import restrictions (quotas), and import licensing requirements. They may be based on country of origin, product type, or product characteristics.
DON’T NEGLECT TO EVALUATE
Country’s risk and buyer’s risk in selecting the proper payment method for your export transactions. Countries frequently experience political and economic problems. Exporters that ship to such countries without having investigated the country’s political and economic situation and without having selected an payment method appropriate run the risk of not receiving payments against their export sale.
DON’T FORGET TO ANALYZE
The adequacy of insurance coverage on your export transactions, given the transfer points for title, risk of loss, and the payment method selected. Determine the type and extent of insurance overage required and assign responsibility for procurement and payment.
DON’T THINK
That your use of a letter of credit is a substitute for a valid, enforceable export sales contract. A letter of credit deals only with payment and the documents required to be presented to obtain payment. It does not deal with many other equally important issues, such as product acceptance, product warranties dispute resolution procedures, etc. These issues are typically dealt with in an export sales contract. An export sales contract should prescribe and incorporate the selected payment method and deal with any issue deemed significant to the exporter and the importer. Without having an export sales contract, exporters remain exposed to significant transaction risk which in most of the circumstances is beyond their control.
DON’T RANDOMLY ASSIGN
Your product has a harmonized code number. Most countries subscribe to the Harmonized Tariff Schedule to classify products for duty purposes. However, there is often room to maneuver about the applicable harmonized code for a particular product, i.e., there is generally not one correct product code. Since the choice of a harmonized code impacts the duty rate to be applied to a product and since duty rates vary country by country, it does not make sense to select one harmonized code over another, without also considering the applicable duty rates.
