What is an export?
This article comes from an interview we ran with Jeff Lewis, trainer at the Institute of Export & International Trade and Managing Director of Resultz Ltd. We also discussed tariff codes and Incoterms.
How would you define an export?
An export can currently be described as something that is sent outside the EU. There are a lot of differences between shipping to Europe and shipping outside of it.
People tend to, from an organisational perspective, set their business up with an export department. An export department then will cover shipments to the EU as well as the Rest of the World but at the moment there are different requirements for sending products out of the EU. You have to deal with proof of export for goods that have gone outside the EU as an export.
Once we leave the EU, all of the goods we send to the EU will all of a sudden become exports by this definition?
Yes everything will become an export and will have to go through customs declaration. At the moment, if you ship something to France it doesn’t need this, if you ship something to America it does.
There is a difference in cost and the shipping process as well because freight forwarders will handle things like the customs declaration for you.
There are also more requirements for you to classify your products when they’re going out of the EU as an export because outside of Europe duties apply – they don’t apply in Europe at the moment, though this is liable to change now.
How does an export differ from a domestic sale in terms of what’s involved from the business?
The major difference is the requirements for a declaration to customs in the UK.
The other major difference is if you just did a normal sale in the UK, if you’re VAT-registered, you’ll charge VAT. If you send goods outside the EU you don’t charge VAT.
As an exporter you have to then prove that your goods have been exported. If you get audited by HMRC they will ask you to provide evidence, such as shipping documentation, proof of declaration that your goods have gone outside the UK and got to their destination, and so on.
How do first-time exporters go about completing that documentation? Are there templates of that documentation they can use?
The main thing to do when exporting is to provide what is known as a commercial invoice. If you’re a first-time exporter then you’re going to rely on the freight forwarder doing the customs declaration part for you, but for the freight forwarder to do that, they’ll need information on the commercial invoice such as the classification of the good, the value of the good, the invoice signing, and any requirements from their customers such as proof of origin. For a domestic UK sale, these things aren’t required.
In what other ways does a business have to change its offering for export?
The big thing is obviously the culture of the market they are selling to, bringing in translation elements and communication too. This is especially the case from an ecommerce perspective because we tend to assume that you only need a website in English, because so many people can read English, but that’s not the case. Even though a lot of people do read English, they generally prefer to read websites in their own language.
When you bear in mind that the majority of companies are online these days, they need to ensure they can communicate with their customers. If they are doing translation of their business, they should also ensure that they get it right and don’t say anything offensive. If you lose face in a place that has a strong culture then you can lose business.