International trade is not easy. You need a lot of information regarding the taxation, international trading rules and a lot more to make your import-export business successful. While most people emphasize the best ways to improve and grow their export business, they tend to avoid the mistakes that they are making, which results in great loses.
Below I have highlighted the top 6 pitfalls with importing and exporting along with their solutions.
1. Inadequate Information about Exchange Rates
While you are going to deal with the international buyers and sellers, it is important that you understand the exchange rules of the particular country. Currency fluctuations can affect your profit margins greatly. And the result can be either negative or positive.
In order to avoid the negative impacts of the fluctuations in currency rate, it is important that you do your homework well before the deal and speaks to your banker on the best course of action and then come to an agreement with the other, considering the risks of changing currency values.
2. Not Considering the Payment Method
If you have both agreed to the deal and now is the time for payment, have you planned what is going to be the payment mode? Have you decided when the payment will be made – on arrival, prior to arrival?
Taking care of the way payments are made is very crucial to the success of an import-export company. You need to ensure that both parties are secure during the transaction. It is also important to keep in mind that the order is not rejected while you have made full payment causing you loss of thousands or possibly millions of dollars. Placing a Letter Credit from his bank to seller’s bank to guarantee payment, is the best way for assured payment.
3. No Insurance of Goods
Of course, we don’t want to think about the unfortunate situations like if the ship sinks, goods get damaged, products get stolen, etc., but it is always important to consider these risks when making a deal.
While most companies would try to save more by avoiding the premiums for insurance companies charge on goods to be exported. This is the mistake that you must never make as an import-export business. Always make sure to ensure your goods properly before they leave for your Ports of Destination.
4. Submitting Wrong Information about the Goods
The description of every product exported or imported must be very accurate, especially if you are importing and exporting goods to the international clients. Products that are concealed or described wrongly to evade customs oversights will always be confiscated.
Also, make sure you mention the correct names in the Letter of Credit. If the name is not mentioned correctly, you could experience shipment and payment delays because what is to be delivered isn’t the same thing that the freight provider knows it is shipping.
5. Don’t Try to Bribe
The shipment and custom rules vary in different countries. So, make sure you never try to bribe in order to get your shipment faster to its destination. You must try to stay clear of every temptation to pay a bribe to cut corners. Different countries have their own rules to deal with the bribers. And remember that it will do nothing but get you into trouble in the long-run, if not immediately.
6. Bad Record Keeping
This is another great mistake that most companies make. On all your international transactions, keep records for as long as you keep IRS records. Hiring a professional team of expert bookkeepers makes it a great choice for a reliable import-export company to eliminate the risks involved with the mistakes.