ICom Notes Class XI Principles of Commerce Export

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Discuss the Procedure of Export The procedure of export trade is as follows:

1. RECEIVING THE ORDER

The first stage in the export trade is the receipt of an order from a foreign merchant. the order directs the exporter to forward certain goods. The order should give the necessary instructions, such as marks, number, mode of forwarding, insurance, quantity, quality, size etc and also the prices which the importer is ready to pay for the commodities.

2. EXPORT LICENSE

It is required to be taken by the exporter from the Chief Controller of exports and imports. Export license is a permission from the government for the export of certain goods. The export license helps the government in regulating and controlling the exports of a country.

3. WRITING TO THE IMPORTER FOR THE LETTER OF CREDIT

Before the exporter arranges for the shipment of goods, he asks the importer to open L/C in his favour with the bank. L/C is a security given by the issuing banker that the exporter will be paid for the goods exported by him. It authorizes the exporter to draw bills of exchange on the banker for receiving payment and the bank permits their honour.

4. ASSEMBLING THE GOODS

When L/C has been opened, the exporter will proceed to collect the goods. He will send the order to his warehouse for the goods for packing. If the goods are not in stock, he will purchase them from the local markets. The goods must be according to the order and all conditions should be duty followed.

5.PACKING AND MARKING THE GOODS

Packing is an important part of the export procedure and should receive due attention. Any instruction given by the importer bust be strictly observed. The measurements should be marked on the outside. In some cases gross weights are also indicated on the package.

6. APPOINTMENT OF A FORWARDING AGENT

The services of a forwarding agent can be taken for forwarding the goods. The forwarding agents are paid a certain commission and they undertake all the custom formalities on behalf of the exporter.

7. OBTAINING SHIPPING ORDERS

Shipping order is received from a shipping company by an application. In the application, the full particulars of commodities with the port of destination are given. The shipping company, carry the goods to the port of destination at a certain shipping order.

8. CUSTOM FORMALITIES

In export trade the following custom formalities are undertaken:

A) SHIPPING BILL

The shipping bill is a form containing the detailed description of goods such as marks, numbers, quantity, quality, country of destination and the name of the ship. It is available from the custom office and is filled up by the agent for paying the export duty. This form enables the custom officials to calculate the amount of duty.

B) DOCK DUES FORM

It is available from the lending and shipping office. It is filled up by the exporter or his agent by the payment because back authorities render some services regarding the export of the commodity.

9. LOADING THE GOODS AND GETTING MATE RECEIPT

After paying custom duty and dock charges, the exporter makes arrangement for loading them on the ship. The packages as they are received on the ship are counted and their packing is carefully examined. The captain at the ship then issues the receipt for the goods received and this receipt is called a mate receipt. A mate receipt is said to be claim, when it contains low, adverse remarks, regarding the goods. It is said to be dirty when it contains certain remarks regarding their defective packing.

10. BILL OF LADING

The exporter, after receiving the mate receipt presents it to the shipping company and obtains in exchange a document called Bill of Lading. The Bill of Lading can be transferred freely and it performs three functions:

1. It is an official receipt of the goods, placed on board the ship.
2. It is a contract to carry goods to the port of destination.
3. Its holder is entitled to take delivery of goods by presenting it on the port of destination.

11. MARINE INSURANCE POLICY

Certain goods are required to be insured before they are dispatched to a foreign country. Goods are insured with a marine insurance company and the policy is sent by the exporter to the importer.

12. CERTIFICATE OF ORIGIN

This is the certificate which shows the origin of the commodities being exported. That shows the origin of the country in which they were manufactured. Due to special trade agreements between certain countries goods sent from one country to another generally receives preferential treatment in respect of the import duties. Certificate of origin is obtained by the exporter for being sent to the importer, so that he must be able to get advantage of preference in import duty.

13. PREPARATION OF INVOICE

The exporter having shipped and having gone through all the formalities is now in a position to prepare the invoices. the invoice contains a detailed description of the goods shipped and the charges incurred.

14. RECEIVING PAYMENTS

The exporter generally receives payments by drawing a bill of exchange upon the bank where the importer has opened a letter of credit. He also attaches with it the necessary documents such as Invoice, Bill of Lading, Marine Insurance Policy, Certificate of Origin etc. When all these documents are sent with the Bill of Exchange, it is called documentary of Bill Exchange.