Foreign traders must know the six major risks of export business
- Author:Alvin
- Source:HKSG-GRUP
- Release Date:2018-09-13
Foreign traders must know the six major risks of export business
Under normal circumstances, the risk of export collection of foreign exchange mainly has the following six situations:
Shipment specifications, dates and contract specifications do not match the risk of foreign exchange collection
The exporter did not deliver the goods as specified in the contract or letter of credit.
First, the production plant lost work, resulting in late delivery;
The second is to replace the contracted products with products of similar specifications;
Third, the transaction price is low, and the price is shoddy.
The quality of the documents is poor and the risk of collecting foreign exchange
Although it is stipulated that the foreign exchange is settled by way of letter of credit and shipped on time and in good condition, after the shipment, the documents of the negotiating bank are not consistent and the documents are consistent, which makes the letter of credit promote the protection.
At this time, even if the buyer agreed to pay, it paid inadvertently for expensive international communication fees and discretionary deductions, and the time for collecting foreign exchange was greatly delayed. Especially for a small amount of contracts, there would be a loss after seven deductions.
Risk arising from the trap provisions of the letter of credit
Some letters of credit stipulate that the passenger certificate is one of the main documents for negotiation.
The buyer will seize the seller's eagerness to ship the goods, deliberately picky, but at the same time put forward various kinds of payment possibilities to induce the company to ship. Once the goods are delivered to the buyer, the buyer is likely to deliberately inspect the goods, delay payment, and even money and goods.
The letter of credit stipulates that the transport document expires abroad within 7 working days after the issuance of the transport document. Negotiators and beneficiaries of such terms cannot guarantee this and must be carefully examined. Once the trap clause occurs, it should be notified in time for revision. Do not be greedy and save trouble, and bury potential risks in the future.
No complete business management system
Export work involves all aspects, and both ends are prone to problems.
If the company does not have a complete business management approach, once a lawsuit occurs, it will result in a reasonable fight, especially for those companies that only focus on telephone contact.
Secondly, since the company's customers are expanding every year, in order to be targeted in the trade, it is necessary to establish a business file for each customer, including credit, trade volume, etc., screening annually to reduce business risks.
Risk associated with the operation of the agency system
For the export business, the real practice of the agency system is that the agent does not advance the funds to the entrusting party, the profit and loss is borne by the entrusting party, and the agent only charges a certain agency fee.
This is not the case in actual business operations. The first reason is that there are fewer customers, and the ability to collect foreign exchange is poor, and we must strive to complete the indicators. Second, we want to make more profits, and the agency fees are less.
Risks caused by D/P, D/A forward payment or consignment
The deferred payment method is a long-term commercial payment method. If the exporter accepts this method, it is equivalent to financing the importer.
Although the issuer voluntarily pays the deferred interest, it is only necessary for the exporter to make advances and loans. In essence, the customer waits for the goods to arrive at the port and check the quantity of the goods arrived. If the market changes are not smooth, the importer can apply for bank refusal.
Some companies release goods to classmates and friends who do business abroad. Thought it is a relationship customer, there is no problem of not receiving the sink. In the event of poor market sales or customer problems, not only will the money not be recovered, but the goods may not be returned.
Under normal circumstances, the risk of export collection of foreign exchange mainly has the following six situations:
Shipment specifications, dates and contract specifications do not match the risk of foreign exchange collection
The exporter did not deliver the goods as specified in the contract or letter of credit.
First, the production plant lost work, resulting in late delivery;
The second is to replace the contracted products with products of similar specifications;
Third, the transaction price is low, and the price is shoddy.
The quality of the documents is poor and the risk of collecting foreign exchange
Although it is stipulated that the foreign exchange is settled by way of letter of credit and shipped on time and in good condition, after the shipment, the documents of the negotiating bank are not consistent and the documents are consistent, which makes the letter of credit promote the protection.
At this time, even if the buyer agreed to pay, it paid inadvertently for expensive international communication fees and discretionary deductions, and the time for collecting foreign exchange was greatly delayed. Especially for a small amount of contracts, there would be a loss after seven deductions.
Risk arising from the trap provisions of the letter of credit
Some letters of credit stipulate that the passenger certificate is one of the main documents for negotiation.
The buyer will seize the seller's eagerness to ship the goods, deliberately picky, but at the same time put forward various kinds of payment possibilities to induce the company to ship. Once the goods are delivered to the buyer, the buyer is likely to deliberately inspect the goods, delay payment, and even money and goods.
The letter of credit stipulates that the transport document expires abroad within 7 working days after the issuance of the transport document. Negotiators and beneficiaries of such terms cannot guarantee this and must be carefully examined. Once the trap clause occurs, it should be notified in time for revision. Do not be greedy and save trouble, and bury potential risks in the future.
No complete business management system
Export work involves all aspects, and both ends are prone to problems.
If the company does not have a complete business management approach, once a lawsuit occurs, it will result in a reasonable fight, especially for those companies that only focus on telephone contact.
Secondly, since the company's customers are expanding every year, in order to be targeted in the trade, it is necessary to establish a business file for each customer, including credit, trade volume, etc., screening annually to reduce business risks.
Risk associated with the operation of the agency system
For the export business, the real practice of the agency system is that the agent does not advance the funds to the entrusting party, the profit and loss is borne by the entrusting party, and the agent only charges a certain agency fee.
This is not the case in actual business operations. The first reason is that there are fewer customers, and the ability to collect foreign exchange is poor, and we must strive to complete the indicators. Second, we want to make more profits, and the agency fees are less.
Risks caused by D/P, D/A forward payment or consignment
The deferred payment method is a long-term commercial payment method. If the exporter accepts this method, it is equivalent to financing the importer.
Although the issuer voluntarily pays the deferred interest, it is only necessary for the exporter to make advances and loans. In essence, the customer waits for the goods to arrive at the port and check the quantity of the goods arrived. If the market changes are not smooth, the importer can apply for bank refusal.
Some companies release goods to classmates and friends who do business abroad. Thought it is a relationship customer, there is no problem of not receiving the sink. In the event of poor market sales or customer problems, not only will the money not be recovered, but the goods may not be returned.