Are you selling goods or services to companies in other countries? Although expanding your company beyond your national borders is very exciting and profitable, it will also subject you to the payment habits of your foreign customers. Many times, customers can take as long as 60 days to pay for their goods. Although large export companies can wait that long to get paid, most small and medium sized businesses can’t. This creates a cash flow problem. Of course, you can always ask your customers to pay you immediately by bank wire as soon as the invoice is presented. However, few customers will abide by that request and you risk loosing business to the competition.
Going to the bank to get a business loan or bridge financing may help, if your business is established, can provide three years of financial statements and if your personal credit is stellar. But, what if you don’t meet banking criteria? Or are a startup? Then you should consider trade finance.
Trade financing enables you to finance your local and foreign sales and can provide the working capital that your company needs. Accounts receivable factoring, a popular trade finance tool among exporters, allows you get paid for your export invoices in as little as two days. It eliminates the 60 day payment wait and enables you to get your paid immediately. This provides you with working capital to pay suppliers and employees. Export factoring is relatively simple to use and integrates well with most companies. It works as follows:
1. You deliver the goods or services to your foreign client and send an invoice 2. You send a copy of the invoice to the factoring company 3. The factoring company advances you up to 85% of your invoice as a first installment 4. One your invoice is paid, the factoring company will rebate you the remaining 15% as a second installment, less their fee
But before you step forward into a new area of business, you need to be aware of some of the dangers lurking out there, ready to derail your business. With an Export-Import Argentina business, use caution and beware of these five hazards that can end things before they get started.
Working with the wrong vendors: One of the most important factors to the success of your Argentina export and import business is whom you choose to work with. The Internet has opened up the marketplace, and unfortunately, that’s allowed some disreputable vendors to slip through the cracks. You want to choose someone who will live up to what they promise. Someone who offers quality merchandise at reasonable prices.
Choosing poorly performing products: Even the best vendors may not be enough if you have a misguided business sense. You need to choose products that you know will sell. Look in to competitive products and companies. See what they’re charging, and see what customers are buying for. Only then can you avoid this potentially disastrous hazard for your Export-Import Argentina business.
Selecting the wrong forms of payment: Paypal is a good source for payment when dealing with international businesses, but it still doesn’t offer you the protection and peace of mind that a letter of credit from a reputable financial institution can give you. A letter of credit is an agreement between you and the vendor as overseen by the financial institute to ensure the transfer of payment and product. With letters of credit, there are never any questions that one or both parties fulfilled their obligations under the agreement.
Researching in the wrong places: Start with your country’s Embassy in Argentina. There, you will have an official government source that you can trust. This source will keep record of all the reputable suppliers as well as what products are in demand for import, and what products are popular for export. It’s a one-stop shop for all your Export-Import Argentina business needs.
Aside from the fact that this endeavor boosts up economy, it is also a way of promoting the country. Some of the most successful economies in the world can be attributed to a successful trading venture, covering both exports and imports. However, being in an import and export business takes a lot of skills and qualities that are essentially important for the success of the business.
Yes, there may be a lot of potential products for export, but knowing this is not enough. For trading to be optimum, it is advisable to involve in import as well. Although starting an export import business may not be that easy, there are a number of tips that could help you in getting started.
One of the first things that need to be done in setting up an import export business is to check industry directories from foreign countries for possible import export activities. Usually, consulates and embassies have a list of manufacturers and industries of all kinds and types. Thus, these are good places to start.
In importing goods, you need to communicate with the particular country’s consulate in your own country to establish the products that you want from their country. If you are not yet certain of the particular products that you would want to import from a specific country, you can always ask for a list of their products to help you in deciding which ones to choose.
After identifying the products that you want to import, you should consult your country’s taxation department about acquiring a registration number and complying with other requirements that are necessary of an import export business in your country. Requirements may vary from country to country, as well as with the rules, that is why it is advisable to seek the advice of your local taxation department for these. Moreover, a license might be needed for certain products that you are planning to import or export. Thus, it is also important to inquire about licensing requirements.
In the early nineteen eighties, one of the most popular things in Soviet Russia was American made blue jeans. Exporters made money hand over fist selling American made products to the East. Now, twenty years later, we have seen the fall of communism in many cold war countries. This has opened the door to the import export business owners to make handsome profits by moving goods from one continent to another.
Blue jeans in the former Soviet Union sell as good now as they did twenty years ago. But now it is not only blue jeans. American cars, computer and electronic devices, even beauty products are becoming a big business all over the eastern continents.
China has shown automobile sales in the last two years that rival the United States. Western culture, a mythical and mystical thing to many eastern countries, is being shipped in everyday. Trade embargoes are loosening and the profit margins are now being recognized all over the world.
Even the European nations are seeing an increase in their exports to the East. There are world economics at play now that were not even dreamed of twenty years ago. Imports and exports are being moved everyday, and you could play a profitable role in it all with your import export business.
Not only is there still the crave for Western Culture in the East, there is the need for lower cost goods here in the West. Importing goods from these same places can be as profitable as exporting to them. Imported products can be sold in a variety of ways from online stores and auctions to a storefront in your hometown.
There are also companies set up online that do importing and exporting and will contract you as a reseller. This can become extremely profitable. Most of the time you are not even required to keep an inventory. There is also a market for buying the imports these companies bring in and reselling them on auction sites and in retail outlets.