Rules For Safe Business

In most cases, the main danger for the exporter is to not be paid in full for the goods supplied. These ten rules will help exporters to avoid mistakes and not become victims of a fraudulent company.

1. Very simple rule: never ever ship any goods without having secured the payment. There are many ways to get paid: by L/C or L/G, cheque, direct transfer, open credit using the export insurance, selling your invoice to the bank or insurance company etc. Be careful when shipping to a new buyer on open credit, even if the company is insured. Remember, that if there is a dispute about the quality or quantity and the importer rejects to pay, the insurance is void and you will have to face the consequences.

2. Try to sell on less risky terms as EXW, FOT, FAS, FOB and others. If not possible, consider CFR, DDU, CIF, CIP, etc. DDP should be considered as the last resort. In many countries the customs rules are extremely complicated and if you do not know them explicitly, you can easily get into trouble.

3. Always check the prospective partner using our "company check" services. You will obtain a clear picture of the partner, be able to evaluate its trading volumes, financial strength and aquire other valuable information. It is better to spend a minor sum on "company check" at the earlier stages of cooperation, than to lose a fortune if it turns out that the buyer is not the right one.

4. Payment terms. When you just start working with an importer, we recommend using either L/C or advance payment (or partly advance payment). If you can insure your importer for a certain limit, be aware of two things. First, remember that if the importer refuses to pay you in full because the goods "are not in accordance with the contract" the insurance is void. You should have the reports of pre-shipment inspection to hand to prove the quality and quantity of the goods shipped. Be prepared for time consuming communications between all parties involved: you, the importer, shipping company, insurance company, lawyers. Second, remember that the importer is covered by the insurance company for the total purchasing amount with all his suppliers. The coverage limit might be fully utilised to cover unpaid bills of other suppliers and there is no guarantee that you will be among them.

5. Payment by L/C. Ask the importer to send you a draft of the L/C before issuing the original. Your bank can help you with advice if anything should be amended in the L/C. If the L/C terms are very complicated and you are not sure what papers are required be careful and double check everything. Once the draft is accepted, the original L/C can be issued. Remember that you must issue the papers in strict accordance with its terms. Stick to every letter, every comma in the documents all should be as written in the L/C. The issuing bank can reject your documents even if one letter is different from the one in the L/C and you have no guarantee that the importer will accept the discrepancies. You will lose time changing the documents and the L/C might expire before the new set of documents is ready.