Posts Tagged ‘international payment’
Avoid Being Taken When Selling Internationally
Tuesday, February 19th, 2008
When you make your living off retail sales, you don’t want to turn away anyone who is poised to give you their money for your products. But there is one selling arena that can be little tricky - international sales.
Unfortunately, any number of seemingly perfect international sales opportunities could very well be scams in disguise. As you consider selling internationally, there are some precautions you need to take to make sure you don’t end up the next victim.
Where Do You Want To Sell?
While you may want to think the whole world is your oyster, there are some parts of the world that may not be the pearl you hope they will be. Some countries are more common locations for fraudulent buyers than others. For example, many areas of Eastern Europe are seemingly havens of fraud.
As you expand your business activities around the world, start with areas you are comfortable selling to - such as the UK, Australia, or Canada.
Eventually, as you learn the ropes of international selling and how to spot a scam, consider adding other countries to your list of places to do business.
What Payments Will You Accept?
It’s best if you take payments that are international, such as PayPal. The PayPal website will allow you to accept payments from people with accounts in any country. It will also take care of all the monetary conversions. If you use a credit card service, you can run any credit cards through your system.
Be leery of someone who wants to pay you through a wire service or by some sort of odd check. Many alleged “wire payments” are really scams that can make you believe you have money waiting so you will ship a package, but in reality, there is no money when you go to claim it at the wire transfer office.
Also, international checks can take much longer to clear than domestic ones. They may well be bad checks that you won’t know about until you have already shipped the item to the fraudulent buyer.
If you plan on accepting international checks, at least wait until the check clears before shipping the item. But the best advice we can give you is to not accept international checks at all, especially from buyers in high-risk countries.
Shipping
International shipping is not like US shipping. Prices can vary substantially for the same package depending on the destination. Make sure to weigh your complete package and use an online shipping calculator to find the proper weight and shipping price before you send the buyer the cost.
International shipping requires extra forms to be filled out as well. Some customers from other countries will ask you to lie on the customs forms you fill out to say the items are a gift, not a purchase. They’re trying to avoid duties charged by their country. If you’re caught in the lie, you can get in trouble - so don’t do it.
One big problem with international shipping is being able to prove the package made it to the destination. You should purchase insurance and tracking (and charge the buyer for these services); although when shipping out of the country, being able to keep track of a package is spotty at best.
If you don’t take these precautions, you may well find that fraudulent buyers will claim they never got the package and ask for their money back, even if they did receive your items.
Legalities
While some things are legal to sell in the US, they are not always okay to sell in other countries. Before you ship your items, make sure the things you are selling are legal to ship into the destination country - or you could be considered someone trying to ship in illegal contraband.
While it sounds like more of a nightmare than it’s worth, doing business internationally can be a very profitable venture and a rewarding experience. You open your business to multitudes of new sellers who may not be able to get the items you offer in their countries.
The important thing to remember is to balance the possible profits with caution and research to know what you are getting into.
Tags: Doing Business Internationally, global business, international payment, International shipping, Leeia Ladipoh, scams
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Extending Credit to Foreign Buyers
Thursday, February 14th, 2008
With exporting, negotiations on financing terms can be just as arduous as those on pricing. With competitive products pouring in from companies all around the globe, the financing terms you offer can often times be the deciding factor on whether or not a buyer will make their purchase from you.
Of course, as an exporter you’ll want to get paid as quickly as possible; however, when dealing with foreign markets you’ll most likely have to extend your credit terms if you want to make a sale. If your products are shipping via container ship, there will be a 20-30 day shipping time that needs to be considered. Most overseas importers are unwilling to pay an invoice before they even receive the goods. If you are used to getting net 30 terms for domestic sales, you will need to seriously rethink your export financing terms.
Risk verses reward
Of course, with extending such generous finance terms comes risk. Risk that you will need that cash before the buyer pays you. However, if you decline to offer favorable payment terms, you very well may lose out on the sale completely. Here are some important factors to consider when deciding what payment terms to extend to a foreign buyer:
Uniqueness of your company’s products. If you are the sole manufacturer of a unique and specialized product that is in demand, then you may hold the upper hand in the negotiations and will be able to shy away from longer financing terms. However, if you are selling a product that is similar to others and has a lot of competition, then chances are you will need to offer longer payment terms in order to secure any overseas sales. With so much competition, if you’re not willing to budge on terms you can bet another company will.
Ability to obtain financing, if needed. Part of the risk that comes with extending payment terms is not knowing whether or not your company will need that cash before the buyer pays. If your company is small then your invoices for parts, labor and shipping will surely arrive before you get paid. In that case, will you be able to obtain temporary financing to keep your company afloat until you receive payment?
What you can offer instead of longer financing. If you are not able to offer payment terms as long as your competitors, then what else can you offer? Perhaps a lower cost, custom printing at no charge, or an added accessory? If you can’t compete on financing, then think of a way you can compete so that your company is not out of consideration.
Flexibility of the buyer. It’s possible that a foreign buyer will agree to payment by escrow, letter of credit (LC) or a partial payment upfront. If you are not able to give extended payment terms, then see if you are able to negotiate the terms with the buyer, so that they are less one-sided.
Whether or not extending financing to a foreign buyer is the right course of action, depends on a variety of factors. If there is a high demand and little competition for your products, then it’s safe to say you will not be forced into a corner over finance terms. However, if you are merely a fish in a sea of similar products, then you’ll have to compete with the best of them - and most times it’s the company with the best pricing and financing terms that "wins" the purchase order.
Tags: arranging credit, Carrie Hinkel, Doing Business Internationally, Finance, Finance and Accounting, foreign markets, international payment
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The Basics of Working With Chinese Companies
Friday, September 14th, 2007
If you have ever considered doing business with Chinese companies, it’s important to know a little bit about the country before you dive in headfirst. What are the business practices in China, and how does culture affect business interactions?
Doing Business
Most companies start doing business with China in order to source products at cheaper prices. Experts agree that this is the safest way to get started. Businesses from across the globe have saved billions of dollars in cheaper parts by taking advantage of what China has to offer. This has been going on since the mid 1990s, and continues as a trend today. The best way to start is to source parts for sale elsewhere, rather than attempt to own or co-own a factory in China. It’s not a good idea to get your feet wet by trying to create products for the local Chinese market.
However, it’s important to realize that doing business in China is not the same as in other countries. You have to be ready to face some challenges and headaches. China still lacks a good basic infrastructure, especially when it comes to legislation and banking. The laws differ depending on the region, and rules are not set in stone - they are always in flux and could change within a short period of time. A good way to start is to have local legal counsel and a good sales team in China to help you wade through all the issues that you’ll come up against.
Also keep in mind that doing business with China is slowly becoming less profitable. Labor costs are rising due to demand for services and products, so China may soon become less competitive when it comes to sourcing.
Culture
The cultural and political differences between China and North America add another layer of complexity to carrying out business in this country. Of course, the language barrier is one hurdle you may have to overcome, as well as bureaucratic issues; but it’s also important to understand the history and culture of China.
China is currently experiencing a rapid transition from an agricultural society to an urban one. Essentially, it’s transforming into a market economy. At the same time, the government plays a very big role in how business is run in China, so everything tends to be much more bureaucratic. Before you start doing business in China, you have to learn all about the monetary, regulatory, and legal issues you are sure to face.
It’s important to respect Chinese culture if you want to do well in China. Companies experienced in dealing with China have found they achieve much more success when they respect the culture and all that it represents. One cultural difference comes up during negotiations. Western businesses usually want to make a deal quickly, while the Chinese like to draw out the negotiations. Patience is key when doing business in China.
As long as you prepare for the challenges of doing business overseas, specifically in China, it should turn out to be a successful - and profitable - venture.
Tags: china, culture, Doing Business Internationally, International Market, international payment
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