International Trade: Terms, Transport and Payment
Whether you decide to tap into an overseas market as a result of expansion or a purposeful attempt to market your product to a certain international demographic, you should consider how best to protect your business interests in your endeavour to reach a wider audience.
Terms and conditions for exporting goods abroad
It’s always important to make sure that you agree on a specific set of terms of trade at the outset of any business relationship. But language barriers and cultural differences mean that it’s even more vital to ensure that both parties are aware of their respective obligations. Some companies expanding their businesses abroad initially decide to make an agreement with an agent or local distributor, so that they can test the water before making a more concrete commitment. Whilst this can be an effective way of bringing their product to a foreign market, it’s important to check that the terms of this type of agreement are formalised and deal with matters such as jurisdiction.
Transporting goods and the Incoterm rules
Ensuring the safe passage of goods to their destination overseas can be a tricky process. Fortunately, the International Commercial Terms (Incoterms), a series of pre-defined commercial terms that are widely used in international commercial transactions or procurement processes, drawn up by the International Chamber of Commerce (ICC), can help to ensure that your products get from A to B without complications. They are updated on a regular basis and essentially consist of 11 terms, primarily designed to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods.
Dealing with international payments
Once you’ve agreed on terms of trade and managed to work out a way of getting your products safely transported to the relevant international location, you’ll need to consider payment issues. Check if there are any trade restrictions which may prevent payment or if the local currency is particularly volatile. There are various types of payment process which are routinely adopted by companies engaging in international trade. These range from open account trading, where there is an established relationship of trust, to a method using letters of credit which gives far greater assurance to the exporter.
If you’re doing business abroad, Terms and Conditions of Export can minimise disputes and strengthen the business relationship. A credit application form can help with reducing the risks and agency or distribution agreements can allow you to test international waters.
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