Export Readiness: Company, Product, and Documentation

Posted on Feb 18, 2025 in Commercial and Financial Management

Company and Product Readiness

Company Readiness

  1. Established domestically
  2. Have sales grown for 3 years?
  3. Covers all domestic market
  4. Price-competitive in the domestic market
  5. Has conducted market research
  6. Payment terms you can offer
  7. If there is foreign demand
  8. Transport costs manageable?
  9. Has knowledge to export
  10. Adaptation in new market

Documentation

Internal Documentation

External Documentation

  1. Proforma Invoice (contractual offer)
  2. Transport document
  3. Purchase order (client order nº)
  4. Consular invoice (additional proof)
  5. Order confirmation
  6. Certificate of value (no double invoicing)
  7. Picking list (Dispatch order)
  8. Certificate of origin
  9. Delivery note (First transport document)
  10. Preshipment Inspection Certificate (quality)
  11. Packing list (Obligatory document, initiates transport)
  12. Commercial Invoice (basis of transport)

Bill of Lading

Cargo Insurance

  1. Clean (No negative statement)
  2. Open (all for a period)
  3. Straight (no need for possessing goods)
  4. Specific (particular shipment)
  5. Order (necessary for possessing goods)
  6. Contingency (exposed to risk)

Payment Terms

Cash in Advance

Letters of Credit (confirmed or advised)

The customer solicits a letter of credit in your name. Same as Documentary Collection, but the confirming bank guarantees the payment. Arrangement with both Banks. Expensive but safe. Agree to certain conditions; if you fulfill them, you’ll get paid. Do it when the amount is high (+20.000€, it depends on the margin of customer). If the bank gives the letter of credit, it is because it knows the customer can pay, doesn’t know willingness to pay. For the 1st operation, it allows the seller to manufacture with absolute reliance.

  • Irrevocable Document credit confirmed à IDC
    1. The customer solicits a letter of credit in my name.
    2. I accept.
    3. Two parties are obliged:
      • Buyer (gets the goods) = Issuing Bank, has the risk.
      • Seller (gets the money) = Advising Bank, gives advice.
    4. You send the goods.

Documentary Collections

Ships goods where there are borders. The seller instructs his bank to forward documents related to the export of goods to the buyer’s bank with a request to present these documents to the buyer for payment. The documents are sent by the exporter through their bank to the importer’s bank so that the importer bank can collect the payment or obtain the commitment to pay at some future date. The bank doesn’t act as a guarantee, but it reduces risk. Without the document, you don’t get the goods. Basic Documents to obtain the goods: Transport Document, Invoice, Delivery Note, SAD, Certificate of origin, Time draft.

  1. Against Payment (D/P) à Importer pays immediately when they have paid the bill of exchange and then receives documents. Sight collection.
  2. Against Acceptance (D/A) à Accepts to pay but in the future, gives time to pay. Time collection.
  3. Cash Against Document Collection à Abandons the goods; the maturity can only be as long as the shipment (they tend to be longer because the value of the transaction is higher).

Open Account

You ship the goods and documents and wait for payment. You may not get paid, and you cannot do anything about it.


Harmonized System, TARIC, and SAD

Harmonized System

Code to track merchandise (what & where) – 6 digits

TARIC

Integrated Tariff of the European Community

SAD

Documentary basis for customs declarations in the EU

  1. EFTA (Switzerland, Norway, Iceland)
  2. No EU countries
  3. Goods are from outside the EU

External Tariff

Group of countries introducing a common external tariff.