Process Of Successful Exporting:

Terms , Documents and Procedures

Targeted Groups:
Small Scale Exporters Small businessmen looking for exporting Employees with medium size firms Export department staff

Our Objectives
Avoid the delays and over costing in deliver your exports as agreed Improve the participants knowledge and skills in export techniques and conditions Analyze the different aspects of export process Leverage costs and risks to conclude a profitable business

The Main Points:

Background 4 Main Terms of Trade transactions:
Delivery Payment Shipping Insurance

Export Documentation & procedures Conclusion

1.BACKGROUND:
Exporters must bear in mind: It is not an easy business The agreement with importer is just the beginning

Terms of a trade offer just the basis for save deal . So.?
Other parties involved. So So many!! Huge number of: Steps ..Documents .. Moves ..Risks ..Costs

Imagine How Complex is?

 Summary of Export Procedure

 Summery of costs and charges

AT 4: Road freight Uninsured damages Theft and pilferages Handling charges Demurrage

At 6: Insurance prem. Air freight

At: 5 Brokerage fees Export levies

At 12: Import duties ,.. Bank charges Import license fees Brokerage fees

2.DELIVERY TERMS
Reflects terms and conditions agreed upon between exporter and importer Forms of agreements:
Evidence for sale International sales contract INCOTERMS

2.1. INCOTERMS
What ? International Commercial Terms (INCOTERMS) Standard international legal instruments Issued and revised by ICC The most recent is INCOTERMS 2000 Classified into 4 main groups and 13 contracts Why? Avoid misinterpretation of sales conditions Firmly determined Obligations and Responsibilities of all parties regard specific Risks and Costs Ease and speed of disputes settlements

4 Groups , 13 Contract 0f ( INCOTERMS 2000) GROUP E F EXW FCA FAS TERM Stands for Ex Works Free Carrier Free Alongside Ship

FOB
C CFR CIF

Free On Board
Cost and Freight Cost, Insurance and Freight

CPT
CIP D DAF DES DEQ DDU DDP

Carriage Paid To
Carriage and Insurance Paid To Delivered At Frontier Delivered Ex Ship Delivered Ex Quay Delivered Duty Unpaid Delivered Duty Paid

How to choose the right contract

Barging power of the parties ( exporter and importer) : The Strategy Mode of transport Accustomed trade practices

Trade terms and Modes of transport

GROUP TERM Mode of Transportation Land Ocean Air Multimodal E F EXW FCA FAS FOB CFR CIF CPT CIP

GROUP TERM Land Ocean Air Multimodal D DAF DES DEQ DDU DDP

Summary of Trade Contract Responsibilities of the Exporter and Importer

GROUP

TERM

Trade Contract Responsibility

1 2 3 4 5 6 7 8 9 10 11
1 2 3 4 5 6 7 8 9 10

EXW
1 2 3 4 5 6 7 8 9 10 11

D DAF DES DEQ

FCA FAS FOB

1 2 3 4 5 6 7 8 9 10 11

DDU DDP

CFR CIF CPT CIP

Seller is responsible Buyer is responsible

see the definitions of 1 - 11

1 11 are ;Activities costs, levies. ect:

1 Inland freight in Seller's country; Delivery to the carrier or frontier. 2 Customs clearance in Seller's country. Payment of customs charges and 3 taxes in Seller's country. Loading to the main carrier or means 4 of conveyance. 5 Main carriage/freight. 6 Cargo (marine) insurance. Unloading from the main carrier or means of conveyance. 8 Customs clearance in Buyer's country. 7 Payment of customs duties and taxes in Buyer's country. 10 Inland freight in Buyer's country. 9

Other costs and risks in Buyer's 11 country.

2.2. Payment Terms

Seller and Buyer whishes to reduce financial risk and get a good deal It cover three areas:
Currency Credit Terms Methods of payments.

Methods of Payment Specified in the contract and shown in the invoice base on:
Available Finance option Accustomed contract terms Timescale ( need for money) Political situation Foreign currency considerations Terms of contract seller & buyer R/S Importer funding Risks of :

Methods of Payment for

Bill of Exchange ( Draft). Open Account: more than 90% of exports. Cash Against Documents. DOCUMENRY CREDIT . Many other methods:

Documentary Credits
Provide a better method to obtain payments: Secure payments to exporter enable importer to receive goods as ordered The usual form is irrevocable credit Set out details of goods: price, packing, origin & destination, type of price ( FOB, CFR,CIF) , .etc. Allied with basic documents such as: Invoice, Bills of Lading ( Sea way Bill, Multimodal transport document, Airway bill,..) , Insurance policy. DC my be the type issued and revised by ICCC and subject to UCP 600

Documentary Credits .cont.

Methods of payment:
by Sight, deferred, Negotiation sight, Acceptance . Transferable credits ( when obtaining goods from a 3rd party) Back-to-Back credit: Revolving credits: Red clause credits: pay a portion before shipment

Types:

2.3. Shipping Terms

SHIPPING service of high quality and low cost is a source of exporters advantages Shipping vary according to:
Type of commodity Modes of transports Means of shipping

Freight vary widely according the above items

Containerization is recommended to copy with the revolution in the shipping industry

7 Rights:
Container: 20, 40 . Dry, reefer. Packing Packaging Stowage Trucking Vessel or Jet Freight forwarder or broker

2.4. Insurance Terms

Insurance policy is your way to averse risks Different risks required different insurance Commercial insurance is very important Dont look to premiums a additional cost You forwarder can advise you and get discounts in premium

3. Export Documents & Procedures

Document: Official and obligatory Commercial Additional and optional Procedures: Customs and release Shipping: arrange for space booking Applications for documents

At Least 4 documents required:

Invoices ( pro-forma and commercial) Packing List Shipping Document: B/L , Airway Bill, Consignment notes, etc Certificate of origin
see the attached file for copy documents

4. Conclusion
Export business need more than just agreement with an importer Remember that you need to check for 4 types of terms and conditions: delivery, payment, shipping and insurance INCOTERMS reduces conflicts and avoid additional costs Good shipping save money and improve your image DC is a guarantee for payments Prepare right documents and start o release early facilitate trade