practical advice to minimise the stress and maximise the...

Practical advice to minimise the stress and maximise the returns of exporting

ESSENTIAL SME EXPORT GUIDE

The recent explosion in global internet connectivity and the popularity of online shopping – for business and pleasure - means that opportunities to sell their goods overseas are increasing all the time for European SMEs.

Having an online presence means that physical location is no longer a barrier to doing business internationally. There are plenty of examples of SMEs finding entirely new markets for their goods, with little more than a vision and a website.

Yet despite the new opportunities for global trade, many European SMEs are reluctant to start exporting – research* has shown that only 38% currently export to other countries, including those also located within the European Union.

THE WORLD ON OUR DOORSTEP

62% of SMEs are currently not exporting despite 78% recognising the potential of international markets and customers.


And there is a clear link between business growth and exporting - fast-growing European SMEs are almost twice as likely to export as those in decline or with static growth, highlighting the significance of exports for a successful business.

So why are European SMEs missing out on additional revenue and growth potential?

REAPING THE REWARDS

The potential returns associated with doing business beyond domestic borders are clear. European SMEs who export frequently can generate up to €603.600 annually within the EU, with those extending their reach internationally racking up €646.800 in additional annual revenues, according to research published recently*.


This reluctance to trade internationally stems from concerns over the complexities of the process; things like tax and duty implications and the myriad of customs regulations and export control that can differ enormously between countries and regions. But many smaller businesses are also unclear where to start with shipping goods safely and reliably worldwide, how to ensure they arrive in one piece and how to deal with the problems that may arise if they don’t.

European SMEs often don’t feel they have enough support to trade internationally with ease, with the majority who are interested in exporting reporting they would like more advice and support to help them optimise their export potential. Half of non-exporters report never having received any advice, so it’s hardly surprising they don’t feel confident in taking the first steps.

FedEx Express services more than 220 countries and territories.

Our global network provides time-sensitive, airground express service through 375 airports worldwide, so it’s safe to say we know about exporting.

We have customers of all sizes and covering a wide variety of industries, so we know that being a small business does not always mean you are a small shipper or that you have small challenges.

In addition to our dedicated online Small Business Centre, this handy guide covers the practical aspects of exporting successfully, whether it’s wine from the Bordeaux region of France, industrial components from Germany, artisan produce from Spain or high fashion from the catwalks of Milan, Italy. Our guide helps you get the basics covered.

WHERE TO START

Go to fedex.com/gb/small-business/index.html .


Ask potential transportation and logistics providers for information not only about service and reliability levels but ensure they have recovery and contingency plans, and they provide regular customer communications and emergency contact information. You need to be sure that your product will be properly taken care of no matter what happens, and that you will be able to find out where it is in the event of a problem.

Making direct comparisons between providers can be tricky because of the different ways they all deliver their quotations, but persevere – don’t be afraid to keep asking questions until you have the right information. For more information and tips, check out our online Small Business Centre.

Logistics is about more than simply transporting goods from A to B. It’s a solution for getting the right thing to the right place at the right time, in the right condition. It’s about access; to a solid integrated supply chain, to new markets anywhere in the world and to new revenue streams… Getting it right maximises your business’ potential, particularly when beginning to export, and an experienced transportation provider can advise you based on what has worked for many hundreds or even thousands of customers.

In selecting their logistics partners SMEs have most likely considered tactical issues such as prices, terms & conditions and transit times, but may have not considered how they could leverage the logistics provider’s knowledge and expertise to help grow their own business.

OF COURSE COSTS AND SERVICE OFFERINGS ARE IMPORTANT, HOWEVER WHEN EVALUATING POTENTIAL INTERNATIONAL TRANSPORTATION PARTNERS YOU SHOULD SEEK OUT WHERE THEY CAN ADD VALUE TO YOUR BUSINESS, BY ASKING WIDER QUESTIONS SUCH AS:

STEP 1. SELECTING YOUR TRANSPORTATION PARTNER

How can you support my business objectives?

How can you help me be successful launching

in new markets?

Can you provide me with previous examples

of how you’ve helped other businesses achieve this?

Go to fedex.com/gb/small-business/index.html .


When beginning exporting, it’s important to design your order process to ensure the correct information is collected and/or specified at point of order to reduce the chances of complications and confusion.

Before trading internationally, you should get contract documentation reviewed by a suitably qualified professional who is familiar with International Commercial terms (Incoterms).

If you will be trading with customers who require paperwork in a different local language on a regular basis, it is worthwhile investing in getting standard documentation translated, but beware of setting an expectation of service that you cannot speak (i.e. if your staff do not speak that language).

Your transportation provider will be able to guide you in terms of what information you may need to collect to populate transit and Customs documentation, and may offer guides that will help you. Visit our online Small Business Centre for more helpful advice on starting to export.

AS A MINIMUM, YOU’LL NEED TO COVER THE FOLLOWING:

1 Details of exactly where goods will be delivered (individual or business making purchase, full address, contact details)

2 Who is responsible for arranging (and paying for) transportation for every stage of the journey (don’t forget about returns)

3 Who is responsible for customs clearance

4 Who is responsible for arranging (and paying for) insurance

5 How much will be paid, in what currency, when payment is due and what payment method will be used.

STEP 2. INTERNATIO-NALIZING YOUR ORDER PROCESS


EDIBLE INSECTS ARE TRENDING – but imports of such insects are not yet allowed in all EU countries due to variations in food safety rules. Belgium approved ten insects for human consumption in 2014, and in November the first insect meat offers were available in supermarkets and restaurants.

Customs have an important role to play in today’s world, protecting the health and safety of a country, its citizens and its economy as a whole. They collect duties and taxes and of course protect the borders against potential security threats and against counterfeit goods. However, Customs procedures are in constant flux and each product/commodity has different rules associated with it. The European Commission’s market access database is a good starting point where you can get a good overview of the differences between countries: madb.europa.eu/madb/indexPubli.htm .

Regardless of the system you are faced with, the efficiency of the process depends in large part on having accurate information. Always try to provide full details with each

shipment, including certificates, licenses, etc. The customs officer on duty will not know you or your business and the documents you provide will help them do their job.

Be as descriptive as possible when filling in the commercial invoice as this document is probably the most important paperwork for international shipping – it’s effectively the passport for your shipment. And if you’re dealing with Customs paperwork for the first time, remember much of it can now be completed online, even when you are engaging a transportation company to carry out the international shipping for you, streamlining the process. FedEx Electronic Trade Documents allows you to submit your customs documentation electronically so you no longer need to print multiple copies.

For more information and tips, check out our online Small Business Centre .

Your transportation provider should be able to guide you through the process, making sure that the initial preparation is thorough and done correctly, so that each individual transaction or shipment will pass through customs with the fewest possible delays.

STEP 3. TACKLING CUSTOMS COMPLEXITY


To avoid delays, everything contained in your documentation must be correct and consistent.

Here is a useful run-down of some of the keywords you need to understand in order to fill out the commercial invoice correctly.

“Consignee” The recipient, the person to whom a shipment is being sent. If the goods are sent to someone other than the person they are sold to, you need to state this clearly.

“Sold to” The person who will pay for the goods if he/she is not the recipient. This person usually becomes the “Importer of Record” in the destination country. In addition to the usual contact details, such as name, address and telephone number and e-mail address, the VAT or tax number and the Customs registration number (EORI) for the importer, are frequently required.

“Shipper” The sender, the person with whom the shipment originates.

“Value” The value to be declared for customs purposes is the price paid or payable for the goods by the buyer to the seller of the goods. Genuine samples are not subject to duties, if they fall below a certain value – depending on destination country. The commercial invoice and air waybill must state “Sample supplied free of cost,” and contents need to be marked as samples.

“Description of the Contents”

Must always accurately describe what the product is, so think carefully about the words you use. You need to include:• What material it is made of • Schedule B or HTS code (these are recognized around the world)• If you provide the first 6 to 8 digits of a tariff number this will help in addition to correctly classify your products

with customs in the destination country• Intended use• Country of manufacture• Parts or serial numbers (if applicable)• Quantity and unit of measure• Value, per unit and in total

“Country of Origin”

The country from which the products originate. Make sure the necessary documentation is added when you want to claim duty advantages due to origin.

CUSTOMS KEYWORDS


Ensure your precious product isn’t damaged in transit when delivering to your customers is hard enough when you’re dealing with domestic sales, let alone when you need to ship them abroad. The more fragile or irregularly shaped the goods are, the harder it is to ensure they arrive in the same condition you packed them, and very high value or perishable goods present a whole load of other challenges in making sure optimum ambient conditions are maintained throughout the journey – essential for food or pharmaceutical items and where a hefty insurance premium is involved.

This is an area where working closely with your transportation provider can pay dividends. Ask their advice on the most appropriate and economical way to transport your goods, taking into account factors such as the mode of transport and the length of time the package will need to protect its contents, along with any required labelling indicating warnings such as ‘this way up’ or ‘fragile’.

For more hints and tips on packagingfor exporting, visit our Small Business Centre .

Some international transportation providers will provide their own packaging, sometimes free of charge, as a valueadded service, removing the margin for error. And if tracking is important to you, check that your transportation provider can do this down to individual package level, giving you and your customers the comfort of knowing exactly where their order is, and when it will arrive. FedEx, for example, offer tracking solutions that provide proactive tracking information.

STEP 4. PACKAGING FOR THE LONG HAUL


Although many business to consumer purchases are paid for upfront using credit cards, some business to consumer and a high percentage of business to business orders are still carried out under ‘payment on delivery’ terms. Ensuring payment for goods received is always a critical area of risk for businesses, but this is amplified where goods are shipped abroad with the resulting time delay and complexity of foreign jurisdiction.

Having the appropriate, correctly completed documentation, to ensure that goods are delivered and payments received, is one of the most complex and potentially problematic areas for businesses new to exporting.

The European Community Certificate of Origin is a commercial or customs clearance requirement in some countries to evidence the origin of goods, and are widely used by importers in Asia, the Middle East and Africa, as proof that goods have been manufactured in the EU.

Letters of Credit ensure that payment terms and conditions are agreed in advance, and with differing payment terms and languages to deal with, organising them can be challenging. For example, some exporters may expect to receive payment on goods leaving a production facility, whereas the importer may only pay for goods on arrival. A Letter of Credit that agrees terms in advance helps businesses to manage their cash flow more effectively.

Another area of exporting abroad that frequently causes concern is the undertaking of currency transactions and ensuring that margins are not eroded by currency movements. Consulting a Specialist Currency Broker at an early stage can help to reduce some of these risks.

Your transportation provider should be able to provide you with reporting that confirms goods have arrived, which can act as a helpful trigger for payment collection, or track returns in real-time. Visit our online Small Business Centre for more helpful advice.

STEP 5. COVERING THE FINANCIALS


Has Bean imports raw green coffee beans from all over the world, roasts them to order and sells them on to independent coffee shops as an online business-tobusiness wholesaler. The company also markets a wide range of brewing equipment such as brewers and grinders.

Shipping 2-3 tonnes of beans every week, its customer base is worldwide and even includes a customer based in Brazil, the biggest coffee-producing country in the world, although 95% of its sales are delivered in the UK.

Failure to pick up deliveries on time, the inability to handle big and small orders with equal ease, deliveries taking three or four days and poor IT support led Has Bean to describe their earlier arrangements with other courier companies as ‘simply chaotic’. But it was a lack of accountability whenever things went wrong that was the deciding factor in making FedEx Express Has Bean’s courier of choice over four years ago.

Has Bean will have 150–200 items prepared for delivery every day by the 4.30pm pick-up deadline agreed with FedEx Express. At busy times of the year, e.g. in the run-up to Christmas, the deadline becomes increasingly challenging. But in the same way that events like traffic hold-ups can delay FedEx through no fault of the courier, a shared approach to working prevails when not all orders are completed by the deadline.

CASE STUDY

“We feel like our business is genuinely valued and that we’re a company that FedEx wants to work with, which is really supportive”.

Read the full case study on the FedEx Small Business Centre here .


FASTefficient, shipping

solutions

SPECIALdiscounts and rewards

based on how much and how often you ship

TIME-SAVINGtools and helpful advice adapted to your needs

ACCESSto a dedicated team who’s on hand to work with you

You work hard to keep your customers happy, while keeping an eye on your bottom line. So you need a shipping partner who can take the pressure off and free up your time and budget with:

Research notes: *Harris Interactive, on behalf of FedEx, carried out 2005 online interviews with senior executives in SMEs in four EU markets: France, Germany, Italy & Spain from March 8-27th 2015. Interviews were split equally by country with a mix of company sizes: micro (1-9 FTEs) 1020, small (10-49) 574 and medium (50-249) 411

This document and its content is copyright of FedEx © FedEx 2015. All rights reserved.

TAKE YOUR BUSINESS FURTHER, FASTER WITH FEDEX EXPRESS

Visit our online Small Business Centre to contact your local team. fedex.com/gb/small-business/index.html .

Get in touch with our team today for the advice and support you need to grow your business internationally. We’re ready to help you take advantage of the world of opportunities in front of you. Speak to our experts who are here to help you - our team has a long history of supporting small businesses trading internationally, and they are here for you.


To find out more, go to fedex.com/pl or call 801 002 800**charged at local rate, varies according to operator