What Export Procedure Do You Need to Know?

What Export Procedure

Export Procedure Details


Operating an export business can impose a number of risks, particularly if you’re unfamiliar with export procedures. Rules and regulations regarding imports, exports, and international trade differ depending on the country, but the International Chamber of Commerce (ICC) has developed several rules to keep the playing field as fair as possible.

Letters of Credit

A reputable bank that supports international trade transactions is very important to an export business. In addition to financing and currency exchange services, banks are responsible for issuing letters of credit, which is essentially a promise of payment that is guaranteed by the issuing financial institution. In export procedures, the letter of credit is typically initiated by the buyer and outlines the details of the transaction.

When you fulfill the stated requirements – shipping and packaging terms, insurance, etc. – the appropriate documents, usually the original bill of laden, are presented to your bank so that you can receive payment. Commercial letters of credit are the most common International Trade Payment method because it protects both you and the buyer, but advance payments, documentary collection, and open accounts are also options.

International Commercial Terms

The preferred export procedures for shipping are typically outlined in the letter of credit, but an understanding of International Commercial Terms, or Incoterms, is beneficial. These terms are established by the ICC and are accepted worldwide to minimize confusion over the responsibilities and risks associated with export procedures. The first Incoterms were published in 1936 and are periodically updated.

Incoterms 2010 is the most recent version and contains 11 different rules. FOB (Free on Board) is preferred by many export businesses because it equally divides the risks and costs of the transaction between the buyer and the seller. You are responsible for getting the merchandise to the buyer’s specified port and having it loaded onto the carrier. Once the goods are on the boat, the buyer assumes all of the responsibility.

Customs Regulations

The export procedures above apply to all international trade transactions and are globally accepted standards. However, every country still has its own set of import rules and regulations that are strictly enforced by the country’s customs department. Failing to comply with the customs regulations in the country you are shipping to can delay or even deter your payment. Noncompliance can also result in fines, but these are generally imposed on the importer.

Services for Export Procedures

Because of the risks involved in exporting, many business owners employ the help of other trade professionals who are experienced in export procedures. Freight forwarders are the most commonly used because they can assume the responsibilities involved in shipping and will also handle most of the necessary paperwork. Customs brokers can ensure compliance with the destination country’s regulations and are often part of the services offered by forwarding agents.

Export procedures can seem daunting when you first get started in the export business, but understanding the basics isn’t too hard. Remember that there are several options that can make export procedures easier and less risky, including freight forwarders as well as import export coaches who can offer guidance in all aspects of your business and export procedures, improving the likelihood of long term success.


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