One of the main differences between selling domestically and exporting is the export documentation required. Providing proper documentation with exporters shipments is essential. Although the paperwork involved in exporting may be more burdensome and costly than that required for domestic sales, it should not deter the local Exporter.
Export documentation identifies the goods and the terms of sale. It provides title to the goods and evidence of insurance coverage, and certifies that the goods are of a certain quality or standard. Several documents are required for overseas shipping and fall into two categories.
Shipping documents are prepared by the Exporter or his freight forwarder. They allow the shipment to pass through Customs, to be loaded onto a carrier, and be transported to the export destination. Key shipping documents include,
- Commercial Invoice
- Special Packing or Marking List
- Certificate of Origin
- Bill of Lading
- Certificate of Insurance
An ocean Bill of Lading is a negotiable instrument and as such can actually be bought and sold among parties. Whoever possesses the ocean Bill of Lading owns the goods. The other bills of lading, including the Air Waybill, are not negotiable. They are contracts of carriage whereby the carrier identifies terms, conditions and responsibilities to deliver the goods to the consignee without implications for ownership of the shipment.
Probably the most important collection document is the Commercial Invoice, which describes the goods in detail and lists the amount owing by the foreign buyer. This form is also used for Customs records and must include,
- The Date of Issue
- The Names and Addresses of the Buyer and Seller
- The Contract or Invoice Number
- A Description of the Goods and The Unit Price
- The Total Weight and Number of Packages
- Shipping Marks and Numbers
- The Terms of Delivery and Payment
- Certificates of Inspection, used to Ensure That Goods Are Free from Defect.
- Import and Export Licenses as Required
Documents Requiring Preparation Prior to Shipment
The documents listed below need to be fully prepared by the Exporter before the goods are shipped from the factory.
Commercial Invoice / Consular Invoice
After the Pro-Forma Invoice is accepted, the Exporter must prepare a Commercial Invoice. This is necessary for both the Exporter and the importer. The Exporter needs the Commercial Invoice to prove ownership and secure payment. The description of the goods on the Commercial Invoice must correspond exactly with the description in the Letter of Credit or another agreed method of payment. There can be no exceptions. The importer needs the Commercial Invoice since it is often used by Customs Authorities to assess duties. For this reason, it is common practice to prepare a Commercial Invoice in both English and in the language of the country of destination. The freight forwarder can advise the Exporter when a translated copy is necessary.
Learn More : How to Get Ready to Start an Export Business?
Similar to a Commercial Invoice, a Consular Invoice is required by certain countries. The Consular Invoice must be prepared in the language of the country where the goods are destined and can be obtained from the country’s Consulate, and often must be Consularised. In some countries, the Commercial Invoice must be prepared on a special form known as a Customs Invoice. The exporting company’s importer may request this from the company.
Export Packing List
An Export Packing List is considerably more detailed and informative than a standard domestic packing list. It itemizes the contents of each individual package and indicates the type of package, such as a box, crate, drum or carton. It also shows the individual net, legal, tare and gross weights and measurements for each package in the metric systems. Package markings should be shown along with the shippers and buyers references. The List is used by the shipper or forwarding agent to determine the total shipment weight and volume, and whether the correct cargo is being shipped.
Certificate of Origin
A Certificate of Origin is a specific form which identifies the goods being exported, in which the authority or body empowered to issue it certifies expressly that the goods to which the certificate relates, originate in a specifically named country. This Certificate may also include a declaration by the manufacturer, producer, supplier, Exporter or other competent person. Its a important export document, required by certain foreign countries for tariff purposes. Which certifies the country of origin of specified goods sold internationally. Subject to a country’s regulations, the document sometimes requires the signature of the Consul of the country to which it is destined to verify its authenticity. Certificates of Origin are frequently required by importers.
Insurance Certificate for Transportation
An Insurance Certificate is used to assure the consignee that insurance will cover the loss or damage to the cargo during transit. Typically, marine insurance coverage equal to 110% of the Commercial Invoice amount must be obtained for export shipments. Infrequent Exporters may be able to buy insurance through their freight forwarder. Cargo insurance is more important in international transportation than in domestic transportation. International carriers assume only limited liability for goods when shipping by air or sea. Terms of sale often make the seller responsible for the goods up to the point of delivery to the foreign buyer. For this reason, it is absolutely necessary for the exporting company to have transportation insurance.
The Inspection Certificates are often required by foreign customs or businesses for certain regulated products, typically related to agriculture, health or the environment. Inspection Certificate also may be required to ensure that vessels or crates are free of contaminants before entering certain ports. Else, that those products met the specifications outlined in a contract or purchase order. Depending on the product exported, Certificates may be issued by various agencies, including third party inspection companies.
Export Documentation must be precise because slight discrepancies or omissions may prevent merchandise from being exported. Therefore, resulting in non-payment or even resulting in the seizure of the Exporter’s goods by the importing governments Customs officials. An important point to remember is that collection documents are always subject to precise time limits and may not be honored by a bank if the time limit has expired.
Documents Used During the Movement of Goods
As an Exporter, the company is responsible for providing its freight forwarder with the necessary information regarding its shipment. The more details that are provided by the Exporter, the greater the chances that the company’s goods will move free of problems. The company’s freight forwarder can provide it with a commonly used form for noting instructions.
Inland Bill of Lading
The Inland Bills of Lading documents the transportation of goods between inland points and the port from where the export of goods would commence its export journey. As a note, rail shipments use waybills on Rail, while Pro-Forma Bills of Lading are used in trucking.
This document is prepared by the freight forwarder giving instructions to the trucking or railway company, where the goods for export are to be delivered.
This document transfers shipping obligations from the domestic to the international carrier as the shipment reaches the terminal.
Bill of Lading / Air Waybill
Marine Bills of Lading, but not Air Waybills, provide evidence to title of the goods. However, both set forth the international carrier’s responsibility to transport the goods to their named destination. There are two types of ocean Bills of Lading used in transfer ownership,
- Straight (non-negotiable), which provides for delivery of goods to the person/organization named in the Bill of Lading and must be marked non-negotiable
- Shippers Order (negotiable), which provides for delivery of goods to the person named in the Bill of Lading or anyone designated.
The Shippers Order is used with Draft or Letter of Credit shipments. It enables the bank involved in the export transaction to take title of the goods if the buyer defaults. The bank will not release title of the goods to the buyer until payment is received and will not release funds to the Exporter until conditions of sale have been satisfied. When using air freight, Air Waybills take the place of Bills of Lading. Air Waybills are only issued in non-negotiable form, therefore, the Exporter and the bank lose title to the goods once the shipment commences. Most Air Waybills also contain a customs declaration form.
Also Learn : 4 Key Factors to Succeed at Exports
Most documentation is routine for freight forwarders and customs brokers, but the Exporter is ultimately responsible for the accuracy of its documents. The number and kind of documents the Exporter must deal with varies depending on the destination of the shipment. Since each country has different import regulations, the Exporter must be careful to provide all proper documentation.
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