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To import successfully, you need to follow through a carefully thought-out plan of development and action.
This guide looks at the steps you need to take to help make your venture a success.
Avoiding the pitfalls
International trade may carry more risk than trading with a UK-based company, where it’s easier to look into creditworthiness and quality of goods. You’ll need to take a number of issues into consideration if you want to import successfully…
Suppliers
The reliability of your supplier is crucial. Find out as much as you can via business contacts and consider asking for references from their bank or an international credit reference agency. And, of course, there is no substitute for visiting the company in person.
Product liability
You may be held liable, under the principles of product liability, for harm caused by goods you have imported. If you are subject to liability you may wish to investigate insurance cover.
Agreeing the total cost
Consider carefully the terms and conditions of the contract. It is essential to check that the price includes everything you agreed, from packaging, insurance and delivery costs.
Exchange rates
Fluctuating exchange rates can affect the price of the product and your profitability. A forward exchange contract is one way to protect yourself. This is a binding obligation to buy or sell a certain amount of foreign currency at a pre-agreed rate of exchange, on or before a certain date. This enables you to budget at a guaranteed rate of exchange.
Payment options
How you choose to pay your supplier depends on a number of factors, not least the level of trust between you.
Open Account
Orders placed with organisations may be dealt with on an open account basis. The supplier trusts your ability to pay them against their invoice within, say, 30 days. Clearing banks offer fast money electronic transfer systems for such transactions. Or you could open a euro currency account allowing you to trade with countries in the Eurozone using just one account.
Letters of credit
These offer both buyer and seller security and are honoured through the banking system. The conditions are stated on the letter of credit, including the amount to be paid, a description of the goods and what documents the exporter must present to receive payment. The importer’s bank guarantees the exporter that payment will be made if those conditions are met.
Documentary collections
Documents relating to the goods imported are sent by the supplier via their own bank to your bank. Your bank receives all the shipping documents and the invoices, which state the methods of payment. The bank will notify you when it has all the documents. The advantage of this system is that you, as the importer, don’t have to make payment for your goods until you have accepted the documents relating to them from your bank.
Paperwork and legal considerations
Import licences and quotas
Many countries aim to limit the quantity of certain goods being exported from their country. If the quota is exhausted, you won’t be able to import that product. This process is normally regulated by the issue of import and export licences.
Duty
Member countries of the EU allow unrestricted movement of the majority of goods between them, although you may still need an import licence. For goods imported from outside the EU, the rate of duty is decided by how the goods are classified. For help with Tariff Classification, call the Tariff Classification helpline on 01702 366077.
Import VAT
Import VAT is levied at the standard rate of VAT on the value of the goods, plus related costs including duty, freight and insurance. Companies importing regularly may be advised to obtain a deferment account. Local HM Revenue & Customs advice centres can offer further help.
Product safety and marking
Under UK law, you are obliged to make sure that any products you import are safe and comply with the relevant product standards. This may involve them being tested in an accredited laboratory. Your local trading standards officers are the people to speak to about marking and standards of safety for particular products.
Transporting the products
Terms of delivery and means of transport
Although some suppliers may want to quote for their goods including the transport or freight charges, you wish to take responsibility for your goods early in the supply chain. This allows you to choose the carrier, routing and point of entry into the UK. Always inspect your goods as soon as you receive them.
Cargo insurance
Arranging this cover yourself allows you to choose the level and extent of insurance. The exporter, for example, might only cover the goods until they reach a UK port. You might prefer the goods to be covered as far as the warehouse gates. It also means you are dealing with a UK-based company that speaks your language if there’s a problem. You can get more information from a specialist cargo insurance broker.
This guide looks at the steps you need to take to help make your venture a success.
Avoiding the pitfalls
International trade may carry more risk than trading with a UK-based company, where it’s easier to look into creditworthiness and quality of goods. You’ll need to take a number of issues into consideration if you want to import successfully…
Suppliers
The reliability of your supplier is crucial. Find out as much as you can via business contacts and consider asking for references from their bank or an international credit reference agency. And, of course, there is no substitute for visiting the company in person.
Product liability
You may be held liable, under the principles of product liability, for harm caused by goods you have imported. If you are subject to liability you may wish to investigate insurance cover.
Agreeing the total cost
Consider carefully the terms and conditions of the contract. It is essential to check that the price includes everything you agreed, from packaging, insurance and delivery costs.
Exchange rates
Fluctuating exchange rates can affect the price of the product and your profitability. A forward exchange contract is one way to protect yourself. This is a binding obligation to buy or sell a certain amount of foreign currency at a pre-agreed rate of exchange, on or before a certain date. This enables you to budget at a guaranteed rate of exchange.
Payment options
How you choose to pay your supplier depends on a number of factors, not least the level of trust between you.
Open Account
Orders placed with organisations may be dealt with on an open account basis. The supplier trusts your ability to pay them against their invoice within, say, 30 days. Clearing banks offer fast money electronic transfer systems for such transactions. Or you could open a euro currency account allowing you to trade with countries in the Eurozone using just one account.
Letters of credit
These offer both buyer and seller security and are honoured through the banking system. The conditions are stated on the letter of credit, including the amount to be paid, a description of the goods and what documents the exporter must present to receive payment. The importer’s bank guarantees the exporter that payment will be made if those conditions are met.
Documentary collections
Documents relating to the goods imported are sent by the supplier via their own bank to your bank. Your bank receives all the shipping documents and the invoices, which state the methods of payment. The bank will notify you when it has all the documents. The advantage of this system is that you, as the importer, don’t have to make payment for your goods until you have accepted the documents relating to them from your bank.
Paperwork and legal considerations
Import licences and quotas
Many countries aim to limit the quantity of certain goods being exported from their country. If the quota is exhausted, you won’t be able to import that product. This process is normally regulated by the issue of import and export licences.
Duty
Member countries of the EU allow unrestricted movement of the majority of goods between them, although you may still need an import licence. For goods imported from outside the EU, the rate of duty is decided by how the goods are classified. For help with Tariff Classification, call the Tariff Classification helpline on 01702 366077.
Import VAT
Import VAT is levied at the standard rate of VAT on the value of the goods, plus related costs including duty, freight and insurance. Companies importing regularly may be advised to obtain a deferment account. Local HM Revenue & Customs advice centres can offer further help.
Product safety and marking
Under UK law, you are obliged to make sure that any products you import are safe and comply with the relevant product standards. This may involve them being tested in an accredited laboratory. Your local trading standards officers are the people to speak to about marking and standards of safety for particular products.
Transporting the products
Terms of delivery and means of transport
Although some suppliers may want to quote for their goods including the transport or freight charges, you wish to take responsibility for your goods early in the supply chain. This allows you to choose the carrier, routing and point of entry into the UK. Always inspect your goods as soon as you receive them.
Cargo insurance
Arranging this cover yourself allows you to choose the level and extent of insurance. The exporter, for example, might only cover the goods until they reach a UK port. You might prefer the goods to be covered as far as the warehouse gates. It also means you are dealing with a UK-based company that speaks your language if there’s a problem. You can get more information from a specialist cargo insurance broker.
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