Hello EarnBasers, I do like to thank the Lord for how far we have gone in this subject of exportation. We have dealt with mini exportation and are also done with major exportation (Exportation is containers). As a matter of fact; this piece is one of the posts in major exportation series.
I want to encourage you to join the moving train of exportation if you have not; this is because the train is moving at a light speed, and very soon – that is not far again – it will be very difficult to join the exportation train. The information here is enough to get any serious minded person started. So, if you are not doing anything; you are the one delaying yourself for in-action.
People have being asking me to try and tell them how exportation transaction actually took place. What are the steps involved in major exportation? What are the documents that are exchanged in exportation? How and where should I start major exportation? These and many more questions shall be answered in this post.
Today, I will try and explain a standard guide for the major exportation business. When I say STANDARD; I mean something that is not far to what is generally acceptable in the exportation business. This does not mean you must always follow this steps or your exportation transaction must always follow these steps. This is just a guide; maybe standard was not the right word anyway. Sometimes, your own exportation transaction might require more documentation than this while in another case; it may require less documentation. However, this is not a stereotype that must be follow to letter but a guide. Do I need to repeat; this is just a guide that explains common exportation transactions? lol
Remember in my last post (click here if you miss it) I told you that you can make huge money by being an export agent, and I told you what are expected of you as an export agent. I told you that you will need foreign customers to buy your products (Click here if you miss how to find foreign contacts using ALIBABA) and I also told you about the contacts of major exporters in Nigeria (Click here if you need yours). After you have gotten the above mention documents; you are ready to stat making money as an export agent in Nigeria.
This post is going to guide you through your work as an export agent; even if there will be differences in the transactions – it won’t be too far from what we have here.
Here are the steps involved:
- The Seller contacts the Buyer
- The Buyer requests for Price List and Quotation
- The Seller sends the Price List and the Quotation to the Buyer
- The Buyer send Purchase Order (PO)
- The Seller acknowledge and accepts the PO
- The Seller sends the Pro Forma Invoice
- The Seller sends the Commercial Invoice
- The Seller ships the products
Maybe I should start by explaining each of the above forms. If you probably don’t know each of those things you saw above are forms and they make up your sales agreement; let that be another discussion for another day.
This is a list of price quoted for a particular product or group of products. Sometimes a seller will send a price list to a prospective buyer as its first communication.
Requests for Quotations
This is the case where the buyer will request a quotation from the seller. It can be through mail (text) or in document form depending on the buyer. I personally have not received a request for quotation in form but have received it in mail (text). Anyway, it does no harm if we know how it look like:
So, what is quotation? A quotation is a formal statement of promise (submitted usually in response to a request for quotation) by potential supplier to supply the goods or services required by a buyer, at specified prices, and within a specified period. A quotation may also contain terms of sale and payment, and warranties. It is advisable that the seller does his or her costing very well before sending out quotation because this is going to be an agreement bidding both the seller and the buyer. This is where some people loose the contract; your quotation must not be too cheap or too expensive. That is why you should know the international price of the commodity you are quoting (check here if you don’t know how) before quoting a price for any specific quantity or any shipment date, it is extremely important that the seller accurately calculate its additional costs relating to an export sale and shipment before providing the quotation.
Purchase Order (PO):
Purchase Order Acknowledgments, Acceptances, and Sales Confirmations:
When a purchase order is received, some sellers prepare a purchase order acknowledgment form. A purchase order acknowledgment may state that the seller has received the purchase order from the buyer and is in the process of evaluating it.
Sales confirmations usually perform the same role as purchase order acceptances. The seller will normally include its detailed terms and conditions of sale in its purchase order acknowledgment or purchase order acceptance.
Pro Forma Invoices:
A pro–forma invoice is a preliminary bill of sale sent to buyers in advance of a shipment or delivery of goods. Typically, it gives a description of the purchased items, notes the cost, as well as other important information like shipping weight and transport charges.
If the buyer is in a country that has foreign exchange controls, he may need to receive a pro forma invoice from the seller in order to get government approval to make payment, and the seller may want to receive such approval before commencing production. This is an invoice that the buyer will submit to the central bank to obtain permission and clearance to convert foreign currency into U.S. dollars in order to make payment to the seller. The seller should exert some care in preparing this invoice, because it may be extremely difficult to change the price in the final invoice due to changes in costs or specifications. Sometimes, a pro forma invoice is used as the first document sent by the seller in response to a buyer’s request for quotation.
A commercial invoice is a document used in foreign trade. It is used as a customs declaration provided by the person or corporation that is exporting an item across international borders.
Later, when manufacture is complete and the product is ready for shipment, ordinarily the seller will prepare a commercial invoice, which is the formal statement for payment to be sent directly to the buyer or submitted through banking channels for payment by the buyer. Such invoices may also contain the detailed terms or conditions of sale on the front or back of the form.
This is the process by which the seller ship the products or goods to the buyer.
I hope you have an idea of how this exportation transactions now take place now. In case of any questions please drop your comments below.