Export documentation can be lengthy, confusing, and tedious. Document requirements will depend on U.S. government requirements, as well as the receiving country’s regulations. Small mistakes or omissions can halt the entire process and leave your business with the bill. Each step throughout the documentation process will need to be scrutinized.
Below is the process for shipping documentation. These suggestions are generalized, so please borrow from them to use them effectively for your specific business transactions.
Receive an Inquiry
When there are buyers inquiring about your product, they will send a letter of inquiry. This is the paperwork that expresses interest and hopefully initiates a sale. The letter will include specifics of their request, and include questions or request further information. The letter will also include a request for a quote, which can be either formal or informal.
Screen the Potential Buyer and Country
The first step after receiving an inquiry is to perform your due diligence and determine whether performing a business transaction with them is legal. This can be accomplished by researching possible embargos, restrictions, or other eliminating factors. Additionally, there is a Restricted Party List that will list organizations and individuals who the U.S. government, UN, or EU have restricted from business deals.
Although this step is not a requirement by law, if you perform business with any of the parties on the list, your organization will receive heavy fines and penalties. Some countries also require special exporting licenses, which will need to be applied for through the State Department or Department of Commerce.
Provide a Proforma Invoice
A proforma invoice is used to arrange a letter of credit to pay for goods, or in the event the buyer needs to receive financing. Some countries require a proforma invoice, while others do not. Be sure to research the matter before proceeding. Ideally, the initial invoice will match the final commercial invoice.
This will mean that there is very little variation from the initial quote to the final pricing. It is necessary to decide a timeline for the Proforma Invoice to be valid. With market fluctuations and currency exchange rate changes, the form will need to have a fairly short lifespan.
Finalize the Sale
Once the proforma has been completed in full and returned to the buyer, they will then accept or reject the offer. As with most large purchases, this will likely involve some term negotiations. The price will be the main point of negotiation, but you can also expect payment terms, shipping methods, shipping costs, documents, and payment methods to be a subject of conversation.
The process may take days or weeks, but it is necessary to complete final details before the goods leave your control. Never let the negotiation process continue past the point of shipment.
Prepare Shipping Documents
The negotiation process has been finalized, now it is time to ensure the goods and documents are in order. One document you will always require is a commercial invoice. This document will list a detailed description of all products being shipped, prices, seller and buyer information, as well as the time of shipment. Other required documentation may include:
- Certificate of origin
- Packing list
- Consular invoice
- Dock receipts
- Inspection certificates
- Insurance certification
- Bill of lading
- Shipper’s letter of instruction
Be sure to research thoroughly which documents are needed for the products and port of entry. It is a good practice to have multiple people involved in researching and checking documentation before the shipment leaves port.
Ship Your Goods
This is the exciting part, where all the hard work comes to fruition. As the final portions are being prepared and loaded, the freight forwarder may request additional documentation. Typically, these are basic documents, and completion doesn’t require much time. After ensuring that all documents are complete, ship your product.
Documentation, records, and all paperwork trails involved in the sale need to be kept for at least five years. The documentation can be paper or digital, but ensure that it is accurate and legible. If issues arise in the future, your documentation can be a saving grace.
Resource, guidance, and financing are all available through Drake Finance. We will help you every step of the way, just give us a call today!