Importing/Exporting is big business offering huge profits- yet it can be started by an individual like you without much capital and expensive overheads like staff or office accommodation.There are considerable amounts of benefits of being able to conduct your own homebased Import/Export business on a full or part time basis! In fact there are many advantages to having your own Import/Export business - Here are few powerful Reasons why!
FEW GOOD REASONS TO START YOUR OWN IMPORT EXPORT BUSINESS
1. Become financially Independent- Import/Export offers many unique opportunities, not only to?? make money but to improve your lifestyle. The only limit to your earning capacity is how much time and effort you want to put into it.
2. Keep your present job - Many of our successful clients start part time and easily expanded from part time to full time, if and when you make that decision. This business can always be operated in conjunction with other work.
3. Low start up costs - Import/Export is the one business that can virtually be operated from a desk and filing cabinet yet provide you tremendous profits from home.
4. Be your own boss - All the profits belong to you. Nobody else tells you what to do or how and when to do it. Work your own hours, work own schedule. The choice is yours.
5. No Limitations - There is virtually no other business where you can start so small, with so little outlay, and still have the opportunity of developing your business as big as you choose.
6. Equality - There are few businesses that place so little emphasis on your previous background. You don't need academic qualifications or a business background. Your age, sex or race is unimportant. You just need the know-how!
7. Immediate cash flow - There are no expensive overheads and there is immediate and continuous cash flow. The opportunity is there to make tremendous personal profits. Many people easily earn $300 - $2000 per week or more operating there homebased Import/Export business.
8. Genuine job satisfaction - This is the type of business that can give you the real satisfaction of building your own future and doing something you really enjoy.
I&E Business Flow:
EXPORT-IMPORT PROCEDURE
- Seller and Buyer conclude a sales contract, with method of payment usually by letter of credit (documentary credit).
- Buyer applies to his issuing bank, usually in Buyer's country, for letter of credit in favor of Seller (beneficiary).
- Issuing bank requests another bank, usually a correspondent bank in Seller's country, to advise, and usually to confirm, the credit.
- Advising bank, usually in Seller's country, forwards letter of credit to Seller informing about the terms and conditions of credit.
- If credit terms and conditions conform to sales contract, Seller prepares goods and documentation, and arranges delivery of goods to carrier.
- Seller presents documents evidencing the shipment and draft (bill of exchange) to paying, accepting or negotiating bank named in the credit (the advising bank usually), or any bank willing to negotiate under the terms of credit.
- Bank examines the documents and draft for compliance with credit terms. If complied with, bank will pay, accept or negotiate.
- Bank, if other than the issuing bank, sends the documents and draft to the issuing bank.
- Bank examines the documents and draft for compliance with credit terms. If complied with, Seller's draft is honored.
- Documents release to Buyer after payment, or on other terms agreed between the bank and Buyer.
- Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange for the goods or the delivery order.
The export permit or export license is a form of non-tariff barrier. Its purposes include:
- control of the kind and quantity of products going out of a country (e.g. military or strategic goods and sensitive materials),
- control of the export destination of the product, that is, prohibit exportation to an enemy country or to a country under sanctions imposed by the United Nations,
- regulate the incoming foreign exchange, and
- Stop the underground economy or illegal manufacturers and exporters.
In many countries, the exporter must obtain a specific export permit for each shipment, but a shipment valued below a minimum requirement does not require a permit.
The government foreign trade office or the Central Bank is in charge of export licensing. In many countries, specific export permit can be obtained from authorized banks, with the exception of goods requiring a special permit.
The specific export permit application usually requires the presentation of a valid letter of credit (the original usually). In cases where an authorized bank is the advising bank, presentation of a photocopy of the letter of credit may satisfy the requirement. An application fee may be required.
The specific export permit can be valid for 30, 60 or more days from date of issue. In case the validity of the permit is short in a country, exporters should properly time its application to meet the shipment date. The export permit number is normally required in the export declaration forms.
The exporter may be required to present a valid business license in order to apply for an export permit. In the process, illegal manufacturers and exporters are stopped. In certain countries, the export-trader is required to indicate on the export declaration forms the name and business license number of the manufacturer from whom the export goods originate.
In a few countries, the export permit is issued once to cover all consignments, except goods falling under the Export Control List, which either require a special permit or are prohibited from exportation. The list of export and import controlled or prohibited goods is available at the customs office or the government foreign trade office.Import Permits (Licenses)
The import permit or import license is a form of non-tariff barrier. Its purposes include:
The government foreign trade office or the Central Bank is in charge of the import licensing. In many countries, the specific import permit can be obtained from authorized banks, with the exception of goods requiring a special permit.
The import permit application may require the presentation of a pro forma invoice (the sales confirmation). An application fee usually is required.
In certain countries, depending on the availability of the country's foreign exchange reserves at the time of an import permit application, the importer may be required to deposit a sum in local currency, or in foreign currency based on the currency used on the invoice which is often in U.S. fund, equal to a percentage (20% to 100% usually) of the invoice value before a permit is granted. A deposit is required in certain countries in the application of a letter of credit (L/C) after the import permit is issued, not before the issuance of the import permit.
The importer may be required to present a valid business license in order to apply for an import permit. In the process, illegal importers are stopped.
In a few countries, the import permit is issued once to cover all consignments, except goods that require a special permit.
The L/C from the importer's country may stipulate that the import permit or license number is to appear on all or specified export documents, otherwise the bank will reject such documents.
International Commercial Terms (INCOTERMS)
The INCOTERMS (International Commercial Terms) is a universally recognized set of definitions of international trade terms, such as FOB, CFR and CIF, developed by the International Chamber of Commerce (ICC) in Paris, France. It defines the trade contract responsibilities and liabilities between buyer and seller. It is invaluable and a cost-saving tool. The exporter and the importer need not undergo a lengthy negotiation about the conditions of each transaction. Once they have agreed on a commercial term like FOB, they can sell and buy at FOB without discussing who will be responsible for the freight, cargo insurance, and other costs and risks.
The INCOTERMS (International Commercial Terms) is a universally recognized set of definitions of international trade terms, such as FOB, CFR and CIF, developed by the International Chamber of Commerce (ICC) in Paris, France. It defines the trade contract responsibilities and liabilities between buyer and seller. It is invaluable and a cost-saving tool. The exporter and the importer need not undergo a lengthy negotiation about the conditions of each transaction. Once they have agreed on a commercial term like FOB, they can sell and buy at FOB without discussing who will be responsible for the freight, cargo insurance, and other costs and risks.
The INCOTERMS was first published in 1936---INCOTERMS 1936---and it is revised periodically to keep up with changes in the international trade needs. The complete definition of each term is available from the current publication---INCOTERMS 2000. The publication is available at your local Chamber of Commerce affiliated with the International Chamber of Commerce (ICC).
Many importers and exporters worldwide are accustomed to and may still use the INCOTERMS 1980, the predecessor of INCOTERMS 1990 and INCOTERMS 2000.
Under the INCOTERMS 2000, the international commercial terms are grouped into E, F, C and D, designated by the first letter of the term (acronym), as follows:
You can think of a Letter of Credit (LC) as a letter that is written by the buyer's bank to the seller, and communicated to the seller through banking channels. The buyer's bank is telling the seller that when the seller presents specified documents containing stipulated information, he or she will be paid for a shipment. It guarantees payment if executed correctly.
The seller wants to be sure of being paid and therefore asks the buyer for a LC. If the buyer agrees, the buyer must apply to his or her bank (the issuing bank) to open a LC in favor of the seller. This means that the bank is pledging to pay the seller if he or she does exactly what the LC specifies. A LC normally specifies that the seller provides documentary evidence, that he or she has shipped the merchandise ordered, by the time and in the matter stated in the LC, including fulfilling any other specified obligations such as purchasing insurance. There are generally eight steps to a letter of credit:
The seller should ask for a faxed copy of the application, so he or she can check that all the terms and conditions can be met within the specified time frame. Be sure to check the expiration date of credit, the latest shipping date and the maximum time allowed between shipment and presentation of documents. As a seller you do not have to accept all the terms that are proposed to you. You can come back with a counter offer and negotiate. The other party may accept your terms.
Nearly all LC's are irrevocable, which means that they cannot be changed or canceled without the consent of the beneficiary. In other words, once a buyer opens a LC and the seller is advised of it, they can't back out unless the seller agrees to let them.
There are numerous variations of Letters of Credit. Some operate like revolving lines of bank credit, and others permit partial payment for parts of an order, others allow a trading company to use its customer's credit to guarantee payment to its supplier. Your bank can advise you on the appropriate type for each situation.
A Letter of Credit is a complex form of international payment. There are at least four documents involved as follows:
Still other documents will be involved in more complicated Letter of Credit transactions, for example, when partial shipments are allowed or a credit is transferred or assigned from one beneficiary to another. There are also special documents for the seller to request, and the buyer to grant amendments to the Letter of Credit.
International Commercial Terms ( INCOTERMS )
E
EXW Ex Works
_______________________________________
F
F
FCA Free Carrier
FAS Free Alongside Ship
FOB Free On Board
________________________________________
C
C
CFR Cost and Freight
CIF Cost, Insurance and Freight
CPT Carriage Paid To
CIP Carriage and Insurance Paid To
________________________________________
D
D
DAF Delivered At Frontier
DES Delivered Ex Ship
DEQ Delivered Ex Quay
DDU Delivered Duty Unpaid
DDP Delivered Duty Paid
In practice, trade terms are written with either all upper case letters (e.g. FOB, CFR, CIF, and FAS) or all lower case letters (e.g. fob, cfr, cif, and fas). They may be written with periods (e.g. F.O.B. and c.i.f.).
In international trade, it would be best for exporters to refrain, wherever possible, from dealing in trade terms that would hold the seller responsible for the import customs clearance and/or payment of import customs duties and taxes and/or other costs and risks at the buyer's end, for example the trade terms DEQ (Delivered Ex Quay) and DDP (Delivered Duty Paid). Quite often, the charges and expenses at the buyer's end may cost more to the seller than anticipated. To overcome losses, hire a reliable customs broker or freight forwarder in the importing country to handle the import routines.
Similarly, it would be best for importers not to deal in EXW (Ex Works), which would hold the buyer responsible for the export customs clearance, payment of export customs charges and taxes, and other costs and risks at the seller's end.
EXW {+ the named place}
Ex Works
Ex Works
Ex means from. Works means factory, mill or warehouse, which is the seller's premises. EXW applies to goods available only at the seller's premises. Buyer is responsible for loading the goods on truck or container at the seller's premises, and for the subsequent costs and risks.
In practice, it is not uncommon that the seller loads the goods on truck or container at the seller's premises without charging loading fee.
In the quotation, indicate the named place (seller's premises) after the acronym EXW, for example EXW Kobe and EXW San Antonio.
The term EXW is commonly used between the manufacturer (seller) and export-trader (buyer), and the export-trader resells on other trade terms to the foreign buyers. Some manufacturers may use the term Ex Factory, which means the same as Ex Works.
FCA {+ the named point of departure}
Free Carrier
Free Carrier
The delivery of goods on truck, rail car or container at the specified point (depot) of departure, which is usually the seller's premises, or a named railroad station or a named cargo terminal or into the custody of the carrier, at seller's expense. The point (depot) at origin may or may not be a customs clearance center. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.
In the air shipment, technically speaking, goods placed in the custody of an air carrier is considered as delivery on board the plane. In practice, many importers and exporters still use the term FOB in the air shipment.
In the export quotation, indicate the point of departure (loading) after the acronym FCA, for example FCA Hong Kong and FCA Seattle.
Some manufacturers may use the former terms FOT (Free On Truck) and FOR (Free On Rail) in selling to export-traders.
FAS {+ the named port of origin}
Free Alongside Ship
Free Alongside Ship
Goods are placed in the dock shed or at the side of the ship, on the dock or lighter, within reach of its loading equipment so that they can be loaded aboard the ship, at seller's expense. Buyer is responsible for the loading fee, main carriage/freight, cargo insurance, and other costs and risks.
In the export quotation, indicate the port of origin (loading) after the acronym FAS, for example FAS New York and FAS Bremen.
The FAS term is popular in the break-bulk shipments and with the importing countries using their own vessels.
FOB {+ the named port of origin}
Free On Board The delivery of goods on board the vessel at the named port of origin (loading), at seller's expense. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.
Free On Board The delivery of goods on board the vessel at the named port of origin (loading), at seller's expense. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.
In the export quotation, indicate the port of origin (loading) after the acronym FOB, for example FOB Vancouver and FOB Shanghai.
Under the rules of the INCOTERMS 1990, the term FOB is used for ocean freight only. However, in practice, many importers and exporters still use the term FOB in the air freight.
In North America, the term FOB has other applications. Many buyers and sellers in Canada and the U.S.A. dealing on the open account and consignment basis are accustomed to using the shipping terms FOB Origin and FOB Destination.
FOB Origin means the buyer is responsible for the freight and other costs and risks. FOB Destination means the seller is responsible for the freight and other costs and risks until the goods are delivered to the buyer's premises, which may include the import customs clearance and payment of import customs duties and taxes at the buyer's country, depending on the agreement between the buyer and seller.
In international trade, avoid using the shipping terms FOB Origin and FOB Destination, which are not part of the INCOTERMS (International Commercial Terms).
CFR {+ the named port of destination}
Cost and Freight
The delivery of goods to the named port of destination (discharge) at the seller's expense. Buyer is responsible for the cargo insurance and other costs and risks. The term CFR was formerly written as C&F. Many importers and exporters worldwide still use the term C&F.
Cost and Freight
The delivery of goods to the named port of destination (discharge) at the seller's expense. Buyer is responsible for the cargo insurance and other costs and risks. The term CFR was formerly written as C&F. Many importers and exporters worldwide still use the term C&F.
In the export quotation, indicate the port of destination (discharge) after the acronym CFR, for example CFR Karachi and CFR Alexandria.
Under the rules of the INCOTERMS 1990, the term Cost and Freight is used for ocean freight only. However, in practice, the term Cost and Freight (C&F) is still commonly used in the air freight.
CIF {+ the named port of destination}
Cost, Insurance and Freight
Cost, Insurance and Freight
The cargo insurance and delivery of goods to the named port of destination (discharge) at the seller's expense. Buyer is responsible for the import customs clearance and other costs and risks.
In the export quotation, indicate the port of destination (discharge) after the acronym CIF, for example CIF Pusan and CIF Singapore.
Under the rules of the INCOTERMS 1990, the term CIF is used for ocean freight only. However, in practice, many importers and exporters still use the term CIF in the air freight.
CPT {+ the named place of destination}
Carriage Paid To
Carriage Paid To
The delivery of goods to the named place of destination (discharge) at seller's expense. Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks.
In the export quotation, indicate the place of destination (discharge) after the acronym CPT, for example CPT Los Angeles and CPT Osaka.
CIP {+ the named place of destination}
Carriage and Insurance Paid To
Carriage and Insurance Paid To
The delivery of goods and the cargo insurance to the named place of destination (discharge) at seller's expense. Buyer assumes the import customs clearance, payment of customs duties and taxes, and other costs and risks.
In the export quotation, indicate the place of destination (discharge) after the acronym CIP, for example CIP Paris and CIP Athens.
DAF {+ the named point at frontier}
Delivered At Frontier
Delivered At Frontier
The delivery of goods to the specified point at the frontier at seller's expense. Buyer is responsible for the import customs clearance, payment of customs duties and taxes, and other costs and risks.
In the export quotation, indicate the point at frontier (discharge) after the acronym DAF, for example DAF Buffalo and DAF Welland.
DES {+ the named port of destination}
Delivered Ex Ship
Delivered Ex Ship
The delivery of goods on board the vessel at the named port of destination (discharge), at seller's expense. Buyer assumes the unloading fee, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs and risks.
In the export quotation, indicate the port of destination (discharge) after the acronym DES, for example DES Helsinki and DES Stockholm.
DEQ {+ the named port of destination}
Delivered Ex Quay The delivery of goods to the quay (the port) at destination at seller's expense. Seller is responsible for the import customs clearance and payment of customs duties and taxes at the buyer's end. Buyer assumes the cargo insurance and other costs and risks.
Delivered Ex Quay The delivery of goods to the quay (the port) at destination at seller's expense. Seller is responsible for the import customs clearance and payment of customs duties and taxes at the buyer's end. Buyer assumes the cargo insurance and other costs and risks.
In the export quotation, indicate the port of destination (discharge) after the acronym DEQ, for example DEQ Libreville and DEQ Maputo.
DDU {+ the named point of destination}
Delivered Duty Unpaid The delivery of goods and the cargo insurance to the final point at destination, which is often the project site or buyer's premises, at seller's expense. Buyer assumes the import customs clearance and payment of customs duties and taxes. The seller may opt not to insure the goods at his/her own risks.
Delivered Duty Unpaid The delivery of goods and the cargo insurance to the final point at destination, which is often the project site or buyer's premises, at seller's expense. Buyer assumes the import customs clearance and payment of customs duties and taxes. The seller may opt not to insure the goods at his/her own risks.
In the export quotation, indicate the point of destination (discharge) after the acronym DDU, for example DDU La Paz and DDU Ndjamena.
DDP {+ the named point of destination}
Delivered Duty Paid
Delivered Duty Paid
The seller is responsible for most of the expenses, which include the cargo insurance, import customs clearance, and payment of customs duties and taxes at the buyer's end, and the delivery of goods to the final point at destination, which is often the project site or buyer's premises. The seller may opt not to insure the goods at his/her own risks.
In the export quotation, indicate the point of destination (discharge) after the acronym DDP, for example DDP Bujumbura and DDP Mbabane.
Letter of Credit
The seller wants to be sure of being paid and therefore asks the buyer for a LC. If the buyer agrees, the buyer must apply to his or her bank (the issuing bank) to open a LC in favor of the seller. This means that the bank is pledging to pay the seller if he or she does exactly what the LC specifies. A LC normally specifies that the seller provides documentary evidence, that he or she has shipped the merchandise ordered, by the time and in the matter stated in the LC, including fulfilling any other specified obligations such as purchasing insurance. There are generally eight steps to a letter of credit:
The buyer and seller agree on terms including price, quality, transportation, freight and insurance. Also, as a seller you should request that the buyer use your bank as the advising bank. Be sure to inform your buyer of all your needs before he or she applies for a LC.
The buyer applies to the issuing bank for the LC.
The issuing bank sends the LC to the advising bank in the seller's country.
At this point the advising bank's purpose is to authenticate that the LC is genuine. It then informs the seller of the LC.
The seller is advised of the LC and receives a copy, he or she should study it carefully to make sure that each of its terms and conditions can be met. Otherwise, there will be a problem that may cause the payment to be delayed until the discrepancy is waived or otherwise resolved. If anything will cause the seller a problem, the applicant must be contacted immediately and an amendment requested.
The seller ships the goods, assembles the required documentation such as a bill of lading and a weigh ticket. The seller makes sure that these documents conform exactly to all the terms and conditions set down in the letter of credit.
The seller presents the documents to the advising bank which checks the documents and, if they are in order, pays the seller immediately. The documents are then sent on to the issuing bank.
The issuing bank checks them again and, if they are in order, the issuing bank will pay the advising bank and pass the documents to the applicant (buyer) who uses the documents to receive the goods from the carrier.
Nearly all LC's are irrevocable, which means that they cannot be changed or canceled without the consent of the beneficiary. In other words, once a buyer opens a LC and the seller is advised of it, they can't back out unless the seller agrees to let them.
There are numerous variations of Letters of Credit. Some operate like revolving lines of bank credit, and others permit partial payment for parts of an order, others allow a trading company to use its customer's credit to guarantee payment to its supplier. Your bank can advise you on the appropriate type for each situation.
A Letter of Credit is a complex form of international payment. There are at least four documents involved as follows:
1) Application for Letter of Credit - The application for a Letter of Credit must be completed by the buyer and given to the opening bank. It is fairly complicated, and should definitely be completed only with help from your banker.
2) Letter of Credit - The actual letter of credit (LC) is transmitted to the opening bank's branch or correspondent in the seller's country. It tells the seller exactly which functions to perform, and which documents to provide, in order to get paid.
3) Advice of Letter of Credit - The advice of a Letter of Credit is a simple form that is sent to the seller by a bank in his country. It says that a credit has been opened in his favor, and it is followed by the actual Letter of Credit. It gives the seller notice that they can begin preparing the goods for shipment.
4) Drafts drawn on a bank payment - Finally, the seller must present drafts for collection to the paying or negotiating bank. For example, if you receive a Letter of Credit that is payable upon presentation of documentary evidence that you have shipped as instructed, you can go directly from the port to the bank, with a draft for collection and the required documents. More likely, you will ask your freight forwarder to do this for you.
All the above basic information are collected from various sources @ WWW, i have just compiled the various topics in to simple headings so that any one can read and understand I&E basics easily.
