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Negotiate the Right Import Deal

Negotiate the Right Import DealIf you have a good understanding of your own strengths and weaknesses, and what your supplier’s priorities are, it will help you negotiate the best deal. If you have a good cash position, for example, you could offer to pay more promptly in return for a good price.

Splitting responsibility for delivery and customs clearance depends on your skills and what third parties you use. It can be more profitable for you, or your agent, to handle Customs clearance and onwards delivery to your premises. Make sure you can handle everything that is involved before you finalize the contract.

Planning ahead is good advice. Try to determine what could go wrong and figure out how you could deal with it. If your supplier is responsible for something, or even if you use an agent, you could still have problems that arise. Be prepared for things like what you could do if a shipment doesn’t arrive on time and you can’t supply your customers.

Making sure the contract is clear is extremely important whatever you negotiate. You will want a contract that sets out exactly what payment and delivery terms you have agreed upon. Make sure you use internationally agreed Incoterms—International Commercial Terms. This will help reduce the risk of misunderstandings or delivery problems. The contract should also cover what payment is required, when payment is due, what currency, and what payment method will be used. You may want to consult a lawyer with experience of international trade.

Before you do any type of negotiation, you want to be sure you are ready. You can ask these questions to help you decide whether you are ready to start importing or discover what else you need to do to prepare.

  • Are you truly committed to importing?
  • Have all the key people involved in your business agreed?
  • Do you have a well-defined import strategy?
  • How much time and money are you prepared to invest?
  • Do you know what suppliers you will consider and in which countries?
  • Do you understand your own strengths and weaknesses?
  • What will be your objectives in negotiating import contracts?
  • Have you planned how you will store, process and/or sell the imports?
  • Do you have the resources you need?

Deciding which product to import is important. You want to consider a few things when you make that decision:

  • Do the goods you plan to import need an import license?
  • Do the goods need to meet the standards or legal requirements?
  • What requirements are there for the goods to fit in with your production processes or customer demands?

Financing any new import business is, of course, important. You should make sure you consider the costs of importing, including transport, insurance and import duties and taxes. Also make sure you have enough working capital to finance imports or will you need to negotiate credit from suppliers or arrange a trade finance package with your bank.

You probably want to keep it simple at first, but you may want to increase the size and complexity of your importing business as you build experience and confidence. You can choose which skills you want to develop. One example of a skill you want to develop would be if your supplier offers a substantial discount for dealing in their currency. You might want to arrange training in managing foreign exchange, open a foreign currency bank account and invest in accounting software that can handle transactions in other currencies.

 

 
 
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