Exporting Mistakes Your company Might Be Doing
A global business is highly lucrative and may escalate the growth prospects of a country to new heights. However, when it comes to international trade, companies exporting on their own without the help of a 3PL company may make a few mistakes. Let us check them out:
- No Insurance Cover: Traders handling their exports on their own might overlook the importance of getting an insurance cover. However, one should note that international is trade is far higher in contingencies, and cargo insurance shouldn’t be considered as optional. 3PL companies are well versed with the tiniest details of insurance contracts and make sure you’re covered if anything goes wrong.
- Undervaluation for Cost Reduction: Deliberate undervaluation of export products to reduce customs clearance charges or insurance premiums is a common practice by seasoned traders. However, this action can lead to repercussions like cargo investigations, legal action, reputation damage etc.
- No Protection for Currency Fluctuations: Changes in currency directly impact international trade and it is wise to minimise such foreign exchange risk by hedging it. New traders often make the mistake of leaving their foreign exchange receipts uncovered and unhedged.
- Payment Agreement Terms: Many traders make the mistake of agreeing to sketch payment terms which are either dubious or informal. This move might result in unnecessary loss and maybe even fraud. To protect foreign currency receipts, one must opt for a Letter of Credit issued by a bank, which offers a level of assurance of payments.
- Market Regulations: A trader has to be aware of the standards of packaging, labelling, product quality and language of the particular country where they are exporting. They need to conform to market regulations and obtain unique documentation from relevant authorities. Unsuccessful in complying with these regulations may lead to a failure in global trade.
To prevent your company from making these kind of mistakes, it is always advisable to use a 3pl company for exporting goods.