PurposeThis scenario describes the processes involved in exporting goods from your country to an independent country (third country) where no trade agreement exists between your country and the importer. In this case, you are responsible for compliance with the export laws of your own country.
Reasons for Exporting GoodsThree primary reasons for exporting goods include
- Increase profit
- Consistency in sales profits
- Extension of the product cycle
Consistency in SalesPeaks and valleys in the business cycle are inevitable. When the economy of one country is on an economic downturn, the economy in other nations may be in a relatively prosperous phase. If you have customers in countries other than your own, your business profits tend to become more consistent from year to year.
Product Cycle ExtensionWhen you export your product, the end of the product cycle is postponed. When the market in your own country is saturated, exporting allows you to introduce your product into other countries.
LicensingSince most goods require no licensing, you can export them freely. If your goods are not on the Commerce Control List (CCL) and there are no other restrictions, such as embargoes or your customer being listed on a sanctioned party list, you can generally trade freely without any government licensing required. Generally speaking, the only merchandise that requires a license includes
- High-technology products that might be used against your government
- Goods in short supply in your own country
Delivery QuantityLarge quantities may require international sales agreements, special packaging and handling procedures or a particular method of payment. Additionally, special export limitations and quotas may also affect export procedures, documentation and manufacturing decisions.
Partial Deliveries to the USAA special consideration for exporting to the USA concerns partial deliveries. A billing document for partial delivery can only be accepted if
- a contract for the entire shipment is available,
- the partial delivery is sent from the same shipper to the same consignee, and
- the import is completed within 10 days at the same customs entry point.
The ProductThe product that you plan to export may also affect the documentation and procedures necessary to comply with government requirements. For example, are you shipping raw materials or a finished product? Will it be used as a component in a manufacturing process? Does it need to be modified to be sold in a foreign market?
Required InformationIn addition to the data normally required for shipment, the following information must be properly documented when you export goods:
- Country of origin
- The port of entry
- Detailed description of each item of goods shipped
- Number of pieces packed and packaging type
- Value of each item of merchandise in the shipment
- (In some cases) Total cost of shipping the goods from the exporter’s place of business to the port of entry in the country of import.
Export ProcessThe export process illustrated and described below answers the following questions:
- What must the exporter do?
- What must the importer do?
- The importer first requests a quotation for the desired merchandise.
- You (the exporter) provide a quotation for the merchandise to the importer including costs based on the terms of sale requested by the importer (usually, EXW or CIF).
- The importer sends you a purchase order based on your offer.
- You issue a sales order based on the purchase order and send it to the importer.
- (Optional) You may also send an advanced shipping notification to inform the importer of the exact date and quantities of merchandise to be delivered.
- You ship the merchandise to the customer.
- Bills of lading
- Commercial Invoice
- Export packing list
- Shipper’s Export Declaration (SED) (Required in the USA for formal entry valued at $2501 or more)
- Shipper’s Letter of Instructions (SLI) (applies only to the USA)
- Single Administrative Document (SAD) (applies only to the EU)
- Certificate of Origin
- Insurance certificates
- Licenses (when necessary)
NoteWith the exception of the insurance certificates, you can create the above documents using the SAP Foreign Trade (FT) application.
- The importer transfers funds directly to your company or your bank in accordance with your agreement.
- The importer receives the merchandise, files a declaration and pays customs duties due to the responsible authorities.
- You file a customs declaration for the exported goods.