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International trade is one of the fastest-expanding business sectors today.
In fact, in 2021, the value of US exports of goods and services was a whopping $2.56 trillion — and it's only expected to increase in the coming years.
With millions of cargo ships and trucks moving goods internationally every day, the increasing popularity of online shopping sites, and international shipping options becoming increasingly affordable, export has never been easier for businesses of all sizes.
Whether you're just starting out in exporting or are a seasoned veteran, this introductory guide to exporting will help you navigate the complex world of export documents, regulations, and practical considerations.
Let's start by defining what or who an exporter even is.
What Is An Exporter?
An exporter is an individual or company that sells goods or services internationally.
Typically, they will export to customers in other countries, but the term can also be used to describe businesses that export within their own country or region.
How To Become an Exporter?
Exporting goods to other countries is a process that anyone can legally undertake, so long as they have the required documentation.
First and foremost, you must have a tax ID or be a registered business in order to ship goods to any other country. To start exporting, you'll need to find a customs brokerage firm specializing in international trade.
Additionally, it is recommended that you find a customs brokerage firm specializing in international trade in order to avoid any potential issues. Once you have found such a firm, you will need to apply for a license to operate as an importer/exporter. Depending on your location, you may also need to register with a local government agency.
Finally, if you are planning on shipping goods internationally, you must have a valid value-added tax (VAT) registration in your home jurisdiction. By following these steps, you can ensure that you are legally able to export goods and avoid any potential problems.
How to Start Working With a Customs Broker Company?
Before you start working with a customs broker company, it is important to understand their role in the export and import process. As experts in customs law, procedures, and documentation, customs brokers are responsible for ensuring that all shipments are in compliance with regulations.
They also work closely with shipping companies to ensure that goods arrive at their destination on time and without incident. When choosing a customs broker company, it is essential to select one with experience in your particular industry and with a proven track record of success.
Customs clearance is a complex and time-consuming process, so working with a customs broker can save you a lot of time and hassle. They are authorized to carry out export and import transactions at customs on behalf of their customers, so they can help with everything from export licensing and approvals to organizing shipping logistics and customs declarations.
To start working with a customs broker company, you will need to provide them with all the relevant export documentation for your goods or services and detailed information about your export process.
By now, you're probably wondering what the exporting process even looks like. Let's take a look at how to export in practice with a step-by-step guide.
7-Step Exporting Guide
Exporting can be a complex and multifaceted operation with a lot of moving parts.
If you're ready to start exporting, we'll break down how and in what order the export stages take place, including:
- The documents needed for export, such as export licenses and export declarations
- How to organize shipping logistics, including choosing a customs broker company and selecting the best transportation option for your goods
- Tips for complying with export regulations in different countries
- How and by whom are customs procedures carried out
#1 The Offer and Negotiation Stage Between The Exporter and Importer
The export process begins with making an offer to sell your goods or services to a potential buyer in another country, often through export brokers or trade fairs.
The exporter company submits an offer form or proforma invoice containing the characteristics of the exported goods and unit pricing measures such as units, kg, and m2 to the buyer’s approval. If the parties approve the offer form, purchase order, or a pro forma invoice with the exporter’s signature must be prepared.
In the prepared proforma invoice, all the export explanations and technical details of the product should be specified, leaving no room for dispute later. Again, there should be sections related to export, such as deadline, delivery address, name, address, and contact details of both companies.
The conclusion of a contract that includes the general trade rules between the two companies, the parties’ expectations, and the resolution and punishment of possible disputes will be binding on both companies.
For example, if a buyer who places an order with a deadline specifies the latest deadline in the contract determines the daily penalty fee for the delay, and the exporter commits to it, the two companies will be bound by the export contract.
Once both parties have settled on the export terms and conditions, it's time to get started with export logistics and shipping your goods overseas.
Incoterms or Choosing the Delivery Terms
To use a common language in the export offer form or proforma, it is necessary to specify the delivery term or the so-called Incoterms. These are export rules and procedures to be followed, from the time of export until export receivables are collected.
For example, suppose a company located in Sydney has given a price delivered to the port of Hamburg. In that case, it should state “Incoterms 2010 CIF Hamburg” in the “Delivery terms” line in the proforma or offer form.
Payment Terms or Determining the Payment Method
Another export trade rule to be considered is the export payment method. In your export offer form or proforma, you should add an article titled “Payment Terms” and specify how the invoice amount will be paid and which payment methods, such as cash, maturity, or letter of credit, are valid.
For example, if you decide to export your goods and expect payment in advance, you should write “Cash In Advance” here.
Bank Details or Bank Information
To facilitate receiving payment from your buyer, you must add bank details to your export offer form or proforma invoice.
Therefore, at one point on the invoice, a line titled “Bank Details” is opened, and these details are entered. This includes bank name, branch address, SWIFT code, IBAN account number, and the currency in which export payments will be made.
#2 Production, Procurement, and Preparation for the Shipment Period
Once export negotiations with the buyer have been completed, it’s time to turn your attention to production and shipping logistics. As part of this process, you will need to coordinate with suppliers and partners to ensure that all materials needed for export are available when they are needed.
As the exporting company, you may be the manufacturer or supplier of the product you sell or export. In this case, you will need to coordinate with your suppliers and ensure that the export products are produced according to export requirements and standards.
On the other hand, if you are purchasing goods for export from a third-party supplier, you will need to work closely with them to make sure all materials are available in time for production.
Once the product has been manufactured or sourced, it's time to procure the materials needed for shipping. This includes things like packaging, pallets, boxes, etc. It's essential to procure these items in advance, so they are available when needed.
After you have coordinated production schedules and streamlined procurement processes, the next step is to prepare shipments for export. This includes ensuring that shipments are properly packaged and labeled and that all required documentation is included.
#3 Shipment and Exit Customs Clearance
The Exporter or the Importer makes export shipments according to the chosen incoterm, but sometimes both parties coordinate work in certain parts of the shipping process.
For example, in FOB incoterms, shipping is the Buyer’s responsibility. However, the exporting company is responsible for inland transportation from the factory to the port. In this case, the Importer must ensure that the shipper contacts the Exporter, and the parties must coordinate so that the internal transport takes place on the date of shipment.
For Exworks shipments, the customs procedures in the Exporter’s country belong to the Buyer. In general practice, the Exporter carries out the customs clearance but adds the costs to the invoice.
In Incoterms C group exports, the exporting company undertakes to transport the material to a port or address in the Buyer’s country.
For Incoterms D group exports, the Exporter is responsible for all costs, including customs costs in the Buyer’s country and paying local taxes for DDP exports. Read more about different between CIF and DDP.
#4 Documents to be Prepared By the Exporter
To export your goods or services, there are a number of documents that you will need to prepare.
Having these documents in order will help your exporting process go smoothly and ensure that your goods arrive at their destination safely and on time:
- Commercial Invoice
- Packing list (Weight list)
- Certificate of Origin
- Bill of Lading, Airwaybill, or CMR
- Insurance document
- Import License (if required)
- Movement Certificates (EUR.1, A.TR) (if needed)
- Quality, Test, or Inspection Certificates (if required)
A Bill of lading is prepared for the cargo to be transported by ship or plane, and CMR is ready for the load to be shipped by truck. Shipping companies prepare these documents.
The exporter company should check, approve, and ultimately share the information in these documents, such as product name, HS number, quantity, weight, number of containers, shipping address, and contact details of the Buyer with the carrier.
#5 Sending the Export Documentation Set to the Buyer
Once you have prepared all the export documents, it's time to send them to your buyer. In most cases, this will be done electronically through software like Cargoflip or through courier services.
Sea or Air Shipments
In maritime exports, the Bill of Lading document, which the shipper prepares according to the information received from the Exporter, is the shipping bill of the goods. It is printed after loading and when the ship leaves the port in the export country. Without a Bill of Lading, the Importer cannot withdraw the goods.
After the sea shipment, the exporter company sends the bill of lading, English invoice, packing list, and the set of documents consisting of proof of origin to the buyer company through international courier companies.
In the country where the recipient company is located, sending documents such as movement certificates is essential for the recipient to benefit from tax exemptions. In addition, upon the Buyer’s request, various documents such as quality documents, surveillance certificates, and technical documents should also be sent.
Road shipments
In road shipments, the addition of the CMR document is essential in order to have a successful transaction. The CMR corresponds to the bill of lading in road cargoes, and it outlines all of the important details regarding the shipment. In contrast to a bill of lading, however, CMR notes are neither documents of title nor declarations.
This document goes with the driver and the vehicle during transport, and it serves as a legal record of the shipment and proves that the goods have been delivered.
#6 Customs and Inland Shipping Procedures in the Buyer’s Country
Once your export documentation set has been successfully sent and received by the buyer, you must comply with any customs and inland shipping procedures required in their country. This may include submitting export declarations to local authorities and arranging transportation of your goods from the export port to the final destination.
Suppose the Exporter has agreed with the Buyer to deliver the exported goods to the Buyer’s warehouses, for example, if the delivery term is CIP or DAP. For instance, if a container shipment is made by ship. The internal transportation process from the port where the container is unloaded in the Buyer’s country to the Buyer’s address is the responsibility of the Exporter.
If the delivery method is DDP, all costs, including customs duties and local taxes such as VAT in the Buyer’s country, are the Exporter’s responsibility. It is always important to carefully review any export requirements and regulations in the buyer country before exporting to ensure smooth customs procedures upon arrival.
#7 Finalize the Export Stage
Completing the export stage means that the shipment process is finished, the products have been delivered to the buyer, and the export price has been collected. There should be no damage or quality complaints about the exported products.
In order to finalize the export stage, the customs consultant will send the exporter company the expense receipts and a declaration regarding the exported file. The exporter company will then take copies of the bill of lading and other original documents to add to its file before sending it to the buyer company.
If there are invoices for later costs, such as freight invoices, delivery orders, storage, demurrage, and foreign tax payments, the initially anticipated costs should be compared with the actual costs of the completed export in order to make any necessary adjustments.
Start Exporting With Ease
Exporting goods can be a lucrative business venture, but it is crucial to understand the documents, rules, and regulations involved in the process.
Our export business guide provides an overview of the most important aspects of exporting, as well as practical information on how to get started. If you are looking to export goods and need more specific assistance, our tem can help.
Whether you are just starting out or looking to grow your export business, we can guide you every step of the way, from digitizing your paperwork to managing your cash flow. Let us help you export with confidence and success.
