10 things every importer should know
The opportunity to cut costs, or add value, then turn a bigger profit than would be possible by trading in the UK alone, makes importing a hugely tempting option for many UK businesses. “Thousands of UK businesses import goods successfully every day and two out of three exporters also import,” says Ed Murphy, International Trade and Training Director of East Lancashire Chamber of Commerce.
So why not take advantage of the opportunities that importing affords? The following handy checklist will help you on your way.
1. Find the right overseas suppliers
Researching products and meeting potential suppliers face-to-face will take you time and money – but there’s no better way to find a source overseas.
So contact your relevant trade organisation for upcoming events you can attend, or plug the expression ‘online trade show directory’ into a search engine, follow the links and dig around for an event that meets your requirements. Talk to the bodies that represent UK businesses that trade with your target country.
And don’t forget to talk to your local UK Trade & Investment team, Chambers of Commerce and Barclays Business Manager for information and advice.
Want to know more right now? Business Link has helpful information on choosing and using suppliers overseas.
2. Choose the payment terms
Will you pay for everything in advance, when the goods leave the foreign warehouse, when they are on the water, or when they arrive in UK customs? Our article on international payment options will help you decide. It’s written from the perspective of an exporter, but the payment options it describes apply to importers too. Just remember that the riskiest option for an exporter is the safest option for an importer, and vice versa.
3. Guard against foreign exchange exposure
Even slight fluctuations in the exchange rate can have a huge impact on the price you pay for goods abroad. Our interactive Exchange Rate Risk tool will help you understand the level of risk you’re dealing with and the potential impact on your business. You might also want to read our guide How to deal with exchange rate risk.
4. Sort out the logistics
Depending on the scale and complexity of your transport needs you must decide whether it’s more cost-effective to handle logistics in-house or to outsource the job to a freight forwarders. Make an initial assessment by reading the Business Link guide to using brokers and forwarders.
While you’re thinking about logistics, ask yourself whether it’s decisively and bindingly clear who pays for which extra costs during the importing process? Incoterms – a set of international trading terms drawn up by the International Chamber of Commerce – deal with buyer and seller responsibilities in detail. Find out more.
5. Don’t risk running out of cash
As you know, without cash, even if you’re profitable on paper, your venture is headed for intensive care. And given that the length of time between paying your suppliers and getting money back from customers will probably increase when you import, forecasting cash flow is more important than ever when you trade overseas. Read our article ‘Keep the cash flowing when you trade overseas’. It describes a few clever ways to keep your business’ cash levels as high as possible when importing and exporting.
6. Get a handle on the paperwork
HMRC offers help on all aspects of customs tariff codes, duties, taxes, and documentation in its downloadable Guide to Importing and Exporting: Breaking down the Barriers. If you hire a freight forwarder much of the paperwork will be done for you.
7. Check the rules on import duties
The European Community has trade agreements with many countries so that there’s less duty to pay on the goods that come from them. Business Link explains more about how the rules work.
8. Will the goods meet EU/UK standards?
Bear in mind that goods produced outside the EU may not meet the health and safety requirements that apply in the UK (and which are often more stringent). If you’re concerned, read Business Link’s advice on product liability rules and the benefits of product testing.
9. Find out whether there are any import restrictions
You may need a licence to import some goods while others are subject to quotas and surveillance. The Import Licensing Branch (ILB) of the Department for Business Innovation and Skills has advice and guidance if you’re not sure whether these rules apply to you.
10. Do your sums
Now is the time to decide if your idea adds up to a profitable plan. Done the right way, importing can be a big bonus for most businesses. For some firms using overseas suppliers is a key part of keeping costs down; for others it’s a way of bringing in unique goods that can be re-sold at a profit.
The new Incoterms ® 2010 rules. © International Chamber of Commerce 2012. Source: www.iccwbo.org
Barclays can help you import successfully
Barclays Business Abroad is a package of discounts and banking tools that can give you a great start in the world of international trade. The package includes all the following:
- Introduction to international trading workshop – an immersive workshop that’ll equip you with the knowledge and capabilities you need to better deal with the pressures of international trade
- Free currency accounts
- 25% discount on all outgoing and incoming international payments
- 25% discount on export document preparation – helps you to ensure your products have the correct documentation they need to successfully reach their destination
- 40% discount on international business reports – helps you control your business’ exposure to international risk by giving you accurate information on new overseas customers and suppliers
- Free exchange rate iAlert – keeping you up to date with any rate fluctuations that could affect your trading