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Definition: An import export business is an international business that facilitates transactions of commodities and goods between foreign and domestic businesses. Simply put, it is a business which buys products internationally and then ships them back to domestic sales for domestic sales and vice versa. The ultimate aim of such a business is to earn a profit by using the commodity in another country and re-export it back to the same country. The practice of buying low and selling high at low prices has made it a lucrative business. However, before you start exporting products overseas, you must have some knowledge about the system.
Understanding the mechanics of how the business works is very important. If you want to successfully engage in an import export business, you must be aware of certain basic concepts of this business. A typical import export involves a seller buying a product from a domestic seller at a low price and then selling it abroad to a foreign buyer. This act results in the loss of profits to the domestic seller and the buyer in the form of customs duty and licensing fees. Thus, if you want to successfully engage in the process of export of goods, you should have complete knowledge about the processes involved in the export and import of commodities and goods.
If you are looking to make money through an import export business, one of the most important things that you should have knowledge about is the purchasing and selling of goods on the domestic market. First, you should know what the different terms mean in the field of import export. Basically, all goods that are imported or exported are referred to as importable goods. Goods that can be imported from a foreign country are: textiles, petroleum, iron ore, aluminum oxide, rubber products, electrical and optical equipment, petroleum derivatives, foods, seeds, plants and animals. On the other hand, goods that can be exported from a foreign country are: manufactured goods, machinery and equipment, manufactured food, manufactured gasoline, manufactured rubber and tires and other merchandise.
Before you can engage in import export, you should obtain a document called a “Proforma Invoice”. This document is used for clearing the payment and clearing the export of the goods. However, one important thing that you should keep in mind while preparing a Proforma invoice is that the invoice should not contain a return address. The purpose of this document is to keep an accurate account of the goods that are being transported from one country to another. If you are not familiar with the format of the invoice, you can seek help from a bank officer or a certified public accountant. If you are exporting goods that will be delivered to a foreign customer, you should also obtain a copy of the person’s credit agreement.
After preparing a correct and detailed invoice, the next step in the process of engaging in an import-export business is to find a shipper. A shipper is a person, company or organization that will ship your goods to another country. While some of the organizations may offer to ship your goods free of cost, you should consider the risk of paying such a high price. It is advisable to get quotes from various shippers so as to choose a person, firm or company that offers a competitive price. One advantage of hiring a third party to ship your goods is that they will take care of all the customs brokering.
Once you have decided on the shipper, the next step is to set up an account with the Payment Information Bureau of the bank or the institution that you are using for the international trade. You should provide all the required information so that the payment can be made. You should not use cheques as this will not ensure that the goods are received at the right place. Most importantly, you should keep track of the shipment details so that in case of any dispute, you can access them easily. For faster clearance of the goods after payment, you can opt for express services from the shipper.
