Export Business: Things you can do to minimize the risk of failure

There are many good reasons for businesses to export; exporting can reduce dependence on the domestic market, diversify sources of revenue, increase sales and profit, extend product shelf life of existing products, normalize seasonality, etc.
When exporting, the right sales contract is crucial. Poorly defined clauses lead to delays, extra costs or even cancellation of the transaction.



Below are the key issues you should be aware of in exports:
Does your future buyer have an appropriate credit standing?

Is an export license required?

Which costs and risks might arise?

What is the legal situation in the country of importer?

Does the country of import impose import restrictions?

Is it possible to insure against economic and political credit risks?
Obtain your buyer’s legally binding identity.
Make sure the billing and delivery address really exists.

Is the potential customer authorized to close the deal?
Be sure to itemize your products and list the exact quantities.

Make sure that all factors determining the price are listed correctly.

Payment conditions need to be clearly stated. These should include due date for payment and method of payment (i.e. providing exact specifications of the LC).

Are Incoterms offered and are they based on the latest version?

Are place and time of delivery exactly specified?

Clarify which national laws apply to the contract (the place of jurisdiction is important).

The legal effectiveness of retention of title differs from country to country. Contact specialist lawyers or chambers of commerce for details. Make sure that the relevant clause is formulated correctly and complies with the legal regulations of the country of import. As soon as the merchandise has crossed the border, the laws of the country of import will apply.

Arrange credit insurance, if the importer’s creditworthiness is not impeccable.

Agreeing on arbitration is a sensible step, if legal proceedings would take too long to settle in front of an ordinary court.

Agree on one common negotiation and contract language. This is fundamental, if the contract requires interpretation in the case of disputes.

Exporting isn't always an easy option. Starting to export poses a whole new set of challenges, from identifying promising markets and customers to ensuring that you can fulfil your export contracts. It takes time and money to expand abroad.


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