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Top tips for importing goods from abroad
Importers of goods and services from abroad face many challenges and risks associated with international trade, however, getting it right is fundamental and the opportunities and financial gains of importing successfully can be large. Importers of gooods and services from abroad might have the benefit of a diverse supply chain, reduced costs and general business efficiency. Weíve put together a list of tips to check help you succeed in importing from abroad.
1. Analyse your costs
It seems fairly straight forward, but the costs of importing goods from abroad might include trade tariffs, additional import fees, insurance and custom fees versus buying from a local provider.
2. Know your trade tariffs, commodity codes and the CHIEF system
A commodity code is required when importing goods. HMRCs trade tariffs system outlines the key commodity codes and trade tariffs, classifying all goods.
Seek advice and speak to your local advisors to ensure that you get this right.
Currency fluctuations can be the make or break when importing goods, particularly if youíre importing low margin products such as metals or fuel. Itís not unusual for a currency to swing by 0.5-1% in a day, therefore hedging your currency or setting forward options may help protect you against this risk.
Debt finance is complicated, owing to various default structures, capital requirements and fees. It could therefore be beneficial to talk to a finance specialist or broker to search for funding options on your behalf.
Brokers may be able to search for creative solutions or innovative ways to present a funding request to a bank in the most favourable way for an SME. They would also be well equipped to help explain how the financing structures could work.
5. Communicate, communicate and communicate!
Itís so important to ensure that all stakeholders and key people within the supply chain are well informed about an import deal. Everyone from the funders and stakeholders of the business to the transport or freight company should be well informed on the import transaction to reduce any risks that were preventable and could have been avoided.
6. Know your company structure and accounts when applying for funding
Itís essential that the funder or the broker understands the ins and outs of the business, including contracts involved when undertaking a transaction, the capital structure of the business (e.g. holding companies, parent companies and subsidiaries that are / could be involved) and the accounts / trading history of a business.
Having this information to hand will help speed up the process when applying for debt funding.
7. Get insured
Itís important to consider insurance when shipping or handling goods or services. Anything could happen which puts you at risk, especially once the supplier has been paid. These include shipping risks (e.g. the goods get damaged during transit) and production risks (the goods might be produced against the importers requirements or to a poor quality).