Documentation in export trade is an interesting area which can be learned by anyone. Like any industry, if you are already in to export trade, you will learn documentation procedures very fast. ‘Necessity is the mother of Invention’ – Am I right?
Why documentation required for exports?
This is a simple question – Why documentation for exports?
As I have mentioned, you (seller) are situated at one part of a country and the overseas buyer is in another part of another country. Your goods are moved out of physical boundary of your country. For many reasons, documentary proof is required because; there should be an evidencing proof for all the transactions you make.
I suggest you to develop a habit of writing, rather than speaking in international trade. I can understand, at different circumstances, you may have to talk to your overseas buyer, as you need to get reply immediately on many clarifications. I know, talking over telephone makes both, a close relationship rather than writing. However, there should be record for all communication, which I mean. I strongly suggest you to keep a written record on the matters you have spoken over telephone.
During my career, I used to communicate with the foreign buyer and after finishing talk, I used to email him about the contents of our talk each other. I used to write - “Please refer to our tele-convesation about …… (or), “Nice to have a conversation with you” I would like to point out the contents of telephonic talk in brief below….1,2,3,…
“ Further to our telephonic conversation, the contents given below. 1,2,3,..”
Importance of maintaining record of telephonic conversation.
Why telephonic conversations to be recorded?
If both buyer and seller proceed with business transactions after oral conversation, there are chances of oversight, lack of understanding etc. can be occurred. If any dispute arises with your overseas buyer, this written information helps in resolving such dispute by overcoming misunderstanding and oversight each other.
Due to frequent update and changes of Socio-economic and political policies of exporting and importing countries can effect business transactions time to time. So proper documentation helps you and your overseas buyer in handling your transactions in all means including time management, payment protection, claim on loss etc.
I will explain you major 03 perspectives on importance of documentation.
a). Commercial purpose of documentation under International trade:
Once after completion of necessary communication on product, delivery, payment terms and other terms and conditions, the contract of sales is signed by both buyer and seller. All related documents like invoice, packing list, certificate of origin, insurance, bills of exchange etc. are prepared on the basis of written sale contract signed by both importer and exporter.
b) Legal perspectives of documentation for imports and exports:
In each country, there will be government regulatory authority to control the import and export of the said country’s trade. The government of each country has their own instructions to have export documentation legally must be filed.
Each country has their own foreign exchange management Act regulated by government of each country. In India, all import export trade activities are effected legally as per the guidelines of Foreign Exchange Management Act (FEMA). So such government agency of each country insists to follow their legal procedures and formalities of import and export. In order to follow these government regulations, certain legal documentation must be completed before moving out of goods from his country to another country.
c) Importance of documentation for Import and Export to claim incentives:
As your are aware, many government agencies of each country provides different benefits for exports and imports through different agencies under different schemes. For the purpose of claiming such benefits, you need to submit related documents advising by such agencies time to time.
You can not claim any government assistance, support unless you have a proper documentation on your exports. There are many financial assistance and supports given government of each country to support exporters and earn foreign exchange which is the indication of wealth of the respective nation. Based on the above, it is clear that proper documentation plays a very important role in an export business.
I hope, I could clarify about the importance documentation in imports and exports.
Do you have different thoughts on importance of documentation in international trade?
Write below your comments on documentation under import and export.