Re: [spiers] Price Quote for Export
Hi Heather:
I work in a freight forwarder and every day I see exporters dealing in the last
minute with the delivery responsabilities. You can loose a client if the terms
are not clear from the beginning.
As John says all depends...but you could quote the product including the
delivery... the most commom incoters are EXW- ex factory- means the delivery to
the freight forwarder of to the port is not included in the quote.
FOB -freight on board- means that you will pay for delivery to the port or
airport...or to the freight forwarder.
Good luck....
Gloria
----- Original Message -----
From: Heather Zavaleta
Date: Wed, 7 May 2003 11:15:49 -0700 (PDT)
To: spiers@yahoogroups.com
Subject: [spiers] Price Quote for Export
> Hi All, Quick question: When exporting a product, what do I include in my
price quote to my importer overseas? Should I include freight, insurance, etc.
or not? Thanks for your input. Heather
>
Saturday, May 10, 2003
Price Quote for Export
Wednesday, May 7, 2003
Price Quote for Export
I agree with John wholeheartedly. "It depends" truly is the answer.
Whether you are exporting OR importing you should consider referring to the
latest edition of INCOTERMS from the International Chamber of Commerce (you
can order it online).
INCOTERMS spells out specifically which party pays for those services
necessary for delivery at a certain point, and, most importantly, who bears
the risks associated with each aspect of the delivery. Say for example you
wanted to deliver goods to your foreign buyer FOB. You would look up "FOB"
in INCOTERMS to determine which party is responsible for which part of the
delivery process. If you choose delivery FOB (or any other mode of
delivery), your agreement with your buyer should specify the INCOTERMS
definition of FOB, for example, "Delivery FOB (INCOTERMS [X])" where "X" is
the year of the INCOTERMS publication from which you took your definition.
That's a whole lot easier than setting forth in your agreement which party is
responsible for what (e.g., customs clearance, import duties, in-country
ground transportation, et cetera).
INCOTERMS is the international standard for delivery terms, and sets forth
more means and methods for delivery than any single normal person could ever
devise. I don't have my book handy, but I recall there is some term like
"DAF" -- delivered at frontier. I imagine the driver for a freight forwarder
stopping his truck at one of those "metal-hut one-guard" border crossings in
sub-Sahara Africa, off-loading the goods, and tossing the shipment box-by-box
across the border.
Specifying INCOTERMS is not an academic exercise. Every state in the US
other than Louisiana (which uses Civil Law) has enacted some version of the
Uniform Commercial Code ("UCC"). The UCC sets forth the rights and
responsibilities of each party to a commercial transactions. Article 2 of
the UCC sets forth the rights and responsibilities of the parties with
respect to the sale of goods, and the UCC definition of FOB differs greatly
from that set forth in INCOTERMS. If you and your buyer get into some
dispute over your agreement, if INCOTERMS is not specified the adjudicating
Court will most likely use the definition of FOB set forth in the law that
governs the transaction. [Note: I am probably one of 10 attorneys in the US
who doesn't think litigation resolves issues. Better to have a simple,
well-defined sales agreement upfront than try to argue out details later.]
The International Chamber of Commerce publishes a large number of very useful
books and booklets. Just visiting their website is informative and
entertaining.
Time for my legal butt-covering. The foregoing is general knowledge
applicable to parties involved in the international sales of goods. It does
not take into account the specifics of any particular transaction, any
particular party, or any individual law, rule, regulation, statute or
practice with respect thereto. This email is not intended to, and does not,
provide legal advice. Check with your lawyer before signing any contract.
Good luck!
Celeste
Price Quote for Export
Re: [spiers] Price Quote for Export
Yikes... this cannot be a quick question, cuz the answer is "it all depends".
On page 310 of the book "how small business trades worldwide" there is an
explanation of how to build an export quote, and a few pages earlier a
decision tree graph on whether an exoprt deal is worth pursuing...
If you dont have the book handy email me back and I can cut and paste at
least that section for you in reply...
John
In a message dated 5/7/03 11:21:43 AM, hzavaleta1@yahoo.com writes:
<price quote to my importer overseas? Should I include freight, insurance,
etc. or not? Thanks for your input. Heather>>
Price Quote for Export
Hi All, Quick question: When exporting a product, what do I include in my price
quote to my importer overseas? Should I include freight, insurance, etc. or
not? Thanks for your input. Heather
Tuesday, May 6, 2003
Payment Terms
Re: [spiers] Payment Terms
Carol,
Finance is A problem..but not THE problem. THE problem in biz is the
customer. Finance is a remarkably easy problem to solve... find out what
your suppliers minimum production run is, then see if you can get enough
orders iin a workable amount of time to cover that (profitably, of course).
Once you have that, see what you MUST finance, and then let's discuss the
options.
John
In a message dated 5/6/03 3:43:26 PM, carolfreire@earthlink.net writes:
<
I am avoiding Net 30 for the simple reason that I have to pay 50% in advance
to the suppliers and I don't have cash to finance my clients. I am just
starting the business, so that I don't have enough cash available...I might
offer Net 30 when I grow bigger...but I prefer not to offer this option
right now.
Carol>>
Payment Terms
Re: [spiers] Payment Terms
Hi John,
I am avoiding Net 30 for the simple reason that I have to pay 50% in advance
to the suppliers and I don't have cash to finance my clients. I am just
starting the business, so that I don't have enough cash available...I might
offer Net 30 when I grow bigger...but I prefer not to offer this option
right now.
Carol
----- Original Message -----
From:
To:
Sent: Monday, May 05, 2003 5:36 PM
Subject: Re: [spiers] Payment Terms
>
> In a message dated 5/5/03 2:04:47 PM, carolfreire@earthlink.net writes:
>
> <>
> ***
>
>
> First orders: C.O.D or prepay
>
> Reorders: credit cards or Net 30 days upon credit approval.
>
>
> Few competitors offer the option 60% onto Order and 40% onto Delivery.
Some
>
> give discount (3%) if invoice is paid after 10 days.
>
>
> My suppliers ask for 50% in advance and 50% on delivery, but some retail
>
> stores I talked to (potential clients) told me they won't be willing to do
>
> that. They prefer to pay by credit card, Net 30 or onto delivery.
>
> ***My advice would be First order credit card or prepay 50%... never
offer
> 3/10 net 30 becuase they will pay in 30 and take the 3% anyway, and you'll
> never get it back. As for COD, I will go to my grave arguing against
that,
> except in the instance where after haggling on the phone about payment,
the
> retailer says "I have the check here at teh store next to the cash
register"
> and I can make a note to the truck fdriver to that effect on the bill of
> lading.***
>
>
> I am thinking of accepting credit cards, 50% - 50% or prepaid. Will I be
>
> losing sales from the few potential clients who want the benefit of Net 30
>
> days?
>
>
> ***Yes, but we don't worry about losing a few sales at start... we worry
> about thriving on what biz there is... but let me ask, is there some
reason
> you are avoiding net 30 terms for your customers? ***
>
> John
Monday, May 5, 2003
Design and China
A few comments on product knock-offs made in PRC.
1. You can't stop it and the Central Gov't doesn't want to. There is too
much money to be made. If you go to the Silk Market (sells everything from
silk lingerie to cashmere sweaters to handmade rugs to indigenous crafts to
alleged Beanie Babies) on Jian Guo Men Dajie in Beijing (that's the silk
market for Westerners, the silk market for Russia and former Soviet states is
across the street from Behai Park -- the difference between the two is
whether your vendor may speak a little English/Russian AND the quality of the
goods, those in the Western market being of higher grade), you'll see
hundreds, if not thousands, of items that sport brand name labels and look
like the real thing. They're not. It doesn't matter what the vendor tells
you, every single item is a copy, and the person (at law, the definition of
"person" includes a corporation) who actually owns the design, trademarks,
and other intellectual property is being ripped off. Same goes for software,
DVDs, CDs, and the like.
2. Notwithstanding the foregoing, with respect to artwork it is a
centuries-old practice in China to copy the work of artists of previous
generations. Doing so is considered a way of paying homage to the original
artist AND improving the skills of the artist doing the copying. The Chinese
consider this an honest and valuable reproduction. This practice runs the
entire range of artistic media, from porcelain to scrolls to cloisonné to
cinnabar to embroideries to jade carvings. The Chinese also have perfected
ways to simulate the aging process on their honest reproductions. Caveat
Emptor with respect to Chinese "antiques."
3. While there may be a legal way to enforce intellectual property rights
(e.g., copyright, trademark) in PRC, there is no practical way to do so.
While they have some codified intellectual property law, it is rarely
enforced, and the outcome of any legal proceeding is predictable only to the
extent that the Chinese party to the action will prevail.
4. Western art is only starting to gain some respect in PRC -- remember
under Communist rule they were almost entirely closed off from other
countries for decades, and before that under several dynasties China did not
have open borders. They called themselves the "Middle Kingdom" because they
believed their country was the center of the civilized world. (To some
extent, they were right -- when Europe was eating food off of wood planks
using their fingers and maybe a knife, the Chinese were daintily using
chopsticks to eat off of porcelain dishes.) The non-Chinese art that is
given respect in PRC is classical Western art, ballet, opera, Old Master
paintings. Yet, Chinese youth are eager to embrace the latest Western trends
(for example, it is chic to smoke Western cigarettes, even though a pack may
cost a week's salary). If you can produce something that appeals to the
enormous Chinese youth market you should be able to make some money before
the Chinese themselves start copying your products.
Cheers --
Celeste
Payment Terms
Re: [spiers] Payment Terms
In a message dated 5/5/03 2:04:47 PM, carolfreire@earthlink.net writes:
<
***
First orders: C.O.D or prepay
Reorders: credit cards or Net 30 days upon credit approval.
Few competitors offer the option 60% onto Order and 40% onto Delivery. Some
give discount (3%) if invoice is paid after 10 days.
My suppliers ask for 50% in advance and 50% on delivery, but some retail
stores I talked to (potential clients) told me they won't be willing to do
that. They prefer to pay by credit card, Net 30 or onto delivery.
***My advice would be First order credit card or prepay 50%... never offer
3/10 net 30 becuase they will pay in 30 and take the 3% anyway, and you'll
never get it back. As for COD, I will go to my grave arguing against that,
except in the instance where after haggling on the phone about payment, the
retailer says "I have the check here at teh store next to the cash register"
and I can make a note to the truck fdriver to that effect on the bill of
lading.***
I am thinking of accepting credit cards, 50% - 50% or prepaid. Will I be
losing sales from the few potential clients who want the benefit of Net 30
days?
***Yes, but we don't worry about losing a few sales at start... we worry
about thriving on what biz there is... but let me ask, is there some reason
you are avoiding net 30 terms for your customers? ***
John
Payment Terms
Re: [spiers] Payment Terms
Hi, Carol,
I can give you our experience working as manufacturers reps in the gift and
souvenir industry in the Pacific Northwest (mostly Idaho, parts of Oregon,
Montana, Washington), if you want some comparisons and thoughts.
We represent about 50 lines of merchandise on a commission basis, 45 of
those lines are independent producers, one an importer of incense, and four
are distributors (e.g. souvenirs, books, specialty foods).
We sell to about 300 independent gift retailers, with a smattering of resort
shops, museums, C-stores, floral shops, RV parks, etc. Since we serve a very
rural area, most orders are small, and minimum orders are an important part
of the terms to consider.
Of those 50 lines:
48 accept Net 30 on first orders. However, about 15 of those 48 require a
trade credit application first. Stores with poor credit often choose to
offer prepayment or a credit card. For those lines that require a trade
credit app, Net 30 is not available until the app is on file, so prepayment
followed by Net 30 is not an option -- the credit app is still required.
Most companies who require apps do check out the references, while some just
keep it in the file in case there is a problem. Those companies which do not
require a credit application are usually smaller, and feel that the expense
and staff time associated with checking references are more costly than
occasionally getting stiffed. As the business develops, and accounts come
from further and further away, losses go up, and with increased sales
volume, it becomes more economical to start a trade credit system.
47 lines have merchant accounts to accept credit cards. Not taking Visa and
MC will lose an occasional sale. How it works: the order is put together,
and when it's ready to ship the card is processed. If the card does not go
through, a call is made to rectify the problem prior to shipping. This is a
good system, and most retailers now have this option available to pay, if
they choose to use their cards. Make sure that the paperwork with the
shipment shows the full amount of the charge, including shipping/handling.
A couple of our lines require prepayment on first orders. This loses some
sales, as Net 30 is the industry standard. Independent retailers with good
credit expect Net 30, and will provide an application.
Requiring 50% is a pain in the butt... for everyone. I recommend you not do
this. It requires two payments by the retailer, and some of them often won't
pay without an invoice for the half-down. Paperwork and bookkeeping
essentially doubles. While in some industries, it may be the norm, in our
part of the market the time we spend managing a system like this is not
worth the commissions.
CODs: These can be troublesome, but not for the reasons you might think.
Retailers who order on COD are generally poor business people. They are
paying extra for inventory when all they really need to do is send a check.
It's also a pain for the supplier who must fill out extra paperwork, pre-pay
the COD and shipping charges, and often travel to the shipping location to
get it done. COD charges generally just cover the extra expenses of the
shipping company or service, not for the extra time of paperwork and
handling by the supplier. But the worst thing you can do is give someone Net
30 when they request COD. We had some suppliers do this "to be nice and save
the retailer money", and it was always a collection problem. People who
order COD generally know they are lousy at paying the bills, usually a
personality thing. They know if they order COD, they must give a check when
the product arrives, that way they do not have to worry about it, or get
nasty phone calls later.
An occasional COD shipment does come back. Part of the business. An
impulsive person changes their mind, or a spouse gets into the decision,
after the order is sent, or someone is unexpectedly short of cash.
One recommendation is to develop some kind of standard shipping charge
system. This is a big factor in cash flow. Many retailers like to pre-pay
with a check. However, if they find out that they will get billed later for
shipping/handling charges, so they will have to write another check, they
will say "hell with it" and ask for Net 30. This happens a lot. And they
don't like to wait around for you to call the head office and get an actual
shipping quote.
Another suggestion is to consider your minimum orders as part of your
incentive strategy. Orders too low are not worth the time for the producers.
Orders minimums too large, and some retailers are unwilling to give your
line a chance, as they are afraid they will get stuck with a slow moving
inventory.
Which brings up... first order incentives. While obstacles such as
pre-payment on the first order are not uncommon, most successful companies
have an incentive program to get the retailer to try the line. Remember the
fight is really for shelf space. For most producers, the real success is in
re-orders, and if you cannot even get the retailer to try the product, you
are not even in the game, much less have the chance for repeat business.
Common "first order" incentives include lower minimums, free shipping,
extended terms, 10% free items, etc. If you are doing one-shot products,
this is less important, and maybe even counter productive. Similar terms are
suggested to get pre-paid orders, or to take orders at wholesale trade
shows.
In terms of collections, the biggest red flags come with:
A) Expansion... owner thinks one store, is successful, two stores will be
better.
B) Partners splitting the sheets. One opens a new store, and must fill the
entire store (and will try to do so on Net 30... guaranteed disaster).
C) New stores or new owners. Entrepreneurs are compulsive optimists and take
advantage of Net 30 terms. Bad news.
D) Liars. Self-explanatory.
E) People on hard times. Most of these people are honest, and eventually
pay. Patience is of value for these folks, in most cases. But if they do not
follow through after making promises, take aggressive action ASAP. They are
from category D).
Returned merchandise is most likely when both a husband and wife are
decision makers in the business.
Make sure return policies are clearly stated on the shipping paperwork
and/or invoices. Also, on any paperwork the store signs to place the order.
Best wishes!
Malcolm & Sandy Dell
Lewis Clark Gifts & Souvenirs
Orofino, Idaho
Payment Terms
Re: [spiers] Payment Terms
Hi John,
I took your course and did the homework. I asked for the catalog and
pricelists of all major competitors and I got their terms of conditions for
sales.
So, let's go one step at a time. From what I researched, the standard terms
for the gift and home accessory industries (including handcrafted products)
are:
First orders: C.O.D or prepay
Reorders: credit cards or Net 30 days upon credit approval.
Few competitors offer the option 60% onto Order and 40% onto Delivery. Some
give discount (3%) if invoice is paid after 10 days.
My suppliers ask for 50% in advance and 50% on delivery, but some retail
stores I talked to (potential clients) told me they won't be willing to do
that. They prefer to pay by credit card, Net 30 or onto delivery.
I am thinking of accepting credit cards, 50% - 50% or prepaid. Will I be
losing sales from the few potential clients who want the benefit of Net 30
days?
Carolina
----- Original Message -----
From:
To:
Sent: Thursday, May 01, 2003 8:59 PM
Subject: Re: [spiers] Payment Terms
>
> In a message dated 5/1/03 11:13:24 AM, carolfreire@earthlink.net writes:
>
> <
> first order is C.O.D. or prepaid. But after the second order they get Net
30
> days upon credit approval.
>
> Recall How I say make sure you get the catalog and pricelists of all your
> "competitors"? Included in the catalog and price list is the "terms of
> conditions of sale." I gave an example of gift and housewares in the
book.
>
> The key thing here is to adopt the terms of condistionsof sale of your
> competitors as YOUR terms of conditions of sale. The process of buyiing
from
> you ought never be any different than buying from your competitors. The
idea
> that you can provide better quality or service as a competitive feature is
a
> pipe dream, the industry collectively sets a standard thru exp[erience
that
> is adopted by all... more service or quality and you are wasting money,
less
> and people wont deal with you. So learn what the terms and conditions a
> re for your industry, and make them yours.***
> Questions:
>
> 1) What is C.O.D.?
>
> ***Cash on delivery...sounds good but it rarely works in real life. I
would
> not use this, but again, what is standard for your industry? (If the
buyer
> refuses caSh on delivery, you end up eating freight out and back in.)***
>
> 2) My suppliers ask for 50% in advance and 50% on delivery. The
> suppliers are artisans and small cooperatives in South America, so that if
> they don't receive a percentage in advance they don't have the money to
buy
> the raw materials.
>
> ***These are attractive terms***
>
> I want to work according to my clients needs, but I don't want (and I
can't
> take the risk of financing them.) I know that we importers are
insignificant,
> so I am afraid of losing clients if I don't offer payment terms that match
> their needs. What should I do??>>
>
> ***You have to offer payment terms that match industry standards. You
dont
> have a choice. First find out what those are, then work up what it will
cost
> to handle minimum order deals. From there, you can determine just what
you
> are "Risking"...once you have this figure, you can spread the risk by
finding
> a financial backer. Now, keep it simple, one step at a time... if you
will,
> report back what the standard terms are for your industry. Then we can
take
> this one step at a time.***
>
> John