Basic advice on exporting for small businesses
In our last post we saw how small businesses are thinking globally. In an effort to grow and find new customers many small businesses are now exporting their goods and services overseas. But what are some of the risks & issues that should be considered before deciding to export. The below looks at issues in exporting goods.
Payments:
How are you going to receive payment? Are you willing to risk taking Credit Card details over the phone or internet. Is your store e-commerce compliant. What happens if a credit card transaction is later reversed due to fraud or dispute? Is Pay-pal guaranteed?
To make sure you are not going to have issues with payments you must contact your current provider and discuss the risks and issues. Find out what their requirements are in terms of checking credit card details. How can the risks be reduced so that the credit card company will bear any losses due to fraud. When purchasing items from the States ( I’m in New Zealand) we had had to provide a credit card statement with the address showing as the same address to where the goods are being despatched too. This is extra to the CVV number & lessens any issues if something goes wrong.
Currency /Exchange Rates:
What currency will you be accepting payment in. Are you only going to show prices in your local currency and perhaps give the customer converted amount as a guide. The safest option for you is to only show your local currency as you do not carry any foreign exchange risk. If you give a guide on the overseas currency, check the exchange rate daily as slight movements can mean a lot to a prospective customer.
Delivery Risks:
Are you going to use only a ‘track & trace’ system so that it can be proved that the goods have been delivered to the correct place. What is the level of your carriers insurance? Do you have to pay for extra cover and are you going to wear this cost or include it in the freight charges paid by the customer. Have you advised the customer on the correct freight costs that will be charged” This can be quite an issue. If you expect the costs to be $25-00 but are actually $30-00 you may have to pay the extra out of your profit as the customer is unlikely to accept a further charge.
Import Documentation:
When exporting overseas there must be sufficient documentation for the importing government authorities to assess whether the goods are able to be imported into the country or not. Also what the Value is in your (sellers) currency ($). Consider items such as foodstuffs or seeds. These could be stopped at point of entry by agricultural departments. If this does happen, is it your problem? I would suggest a statement to the customer prior to purchasing that they are responsible if the goods are stopped at customs. Dangerous goods require extra special care, contact your local freight provider for detailed information.
Import Duties:
Many countries require payment of import duties, GST (Goods & Services Tax), VAT etc., if the value of goods are over a certain level. Make sure that the customer understands that there may be local taxes and duties which are required by law at the customers expense. The goods will not be released by the customers local authorities untill the taxes etc have been paid in full.
Warranties:
Are any warranties on the goods able to be preserved when they have been sent overseas? Check with your supplier & add a ‘T &C On Sale’ in regards to warranties or guarantees.
This is just a basic run down of some of the issues to be aware of when exporting goods to customers overseas. It’s not a complete list. Use as a guide of where to start in considering whether or not to export.
All the best with your endeavours.
UPDATE: For an opinion on using exporting for small business growth check out this post
