How to Maximize Your import/ Export Profits
One of the most lucrative opportunities for anyone with business acumen to get into is an international business. Unfortunately, we don’t see many people wanting to be a part of the import-export business. Most entrepreneurs would rather do business within the confines of their country as they see more risk than benefits when trading beyond the borders. Import duty rates by country, high processing fees, all the documentation and processes involved may scare people away from entering this segment. However, there are numerous benefits of cross-border trade. Once you know how to maximize your profits, securing your company against risks becomes much easier.
Through certain structural changes and bringing down cross-border costs – both operational and financial, transactional margins can improve. Hence, international business can be a field that is rewarding for any entrepreneur. In this article, we will focus on the cross-border payment tactics that can influence your profitability.
Choose reliable payment methods such as Escrow Services
Choose an Escrow Services provider such as Tazapay. Then, regardless of whether you are the importer or exporter, your money transfer will be secure. Escrow service providers hold the money from the buyer and transfer it to the seller only once they fulfilled the terms of the agreement. Funds are released by Tazapay once there is proof that services have been rendered. This financial B2B portal for import-export protects the importer against any cancelled shipments as money is not released in advance. Furthermore, it protects the seller as the entire payment is secured in the Escrow portal guaranteeing that the buyer can make the payment.
Be aware of bank charges and hidden processing fees
One of the highest costs to a company lies in hidden charges, processing fees, and bank charges. Before you choose a payment provider, ensure you know what hidden charges are levied. For instance, Tazapay only levies 1.8% of the transaction value, capped at $250. Bank charges are by default levied to the person in the processing bank’s home country. If you are aware of these charges, you can shift the responsibility or split the charges and agree on that in the contract.
Complete understanding of Incoterms
Depending on the incoterm chosen, there are multiple incoterm scenarios. It can affect the extent of the responsibilities and obligations of the buyer and seller. Be sure you know the incoterms because they indicate whether the buyer or seller is responsible for goods damaged, transportation costs, port handling charges, etc.
Get an appropriate insurance coverage
Each scenario will have a certain amount of risk involved. Depending on the level of risk, you should take an appropriate insurance coverage which should be reasonable (lower premium) but be suitable for your needs at the same time. For example, sometimes, one receives advance payments and may not require exhaustive insurance. However, suppose the entire responsibility of goods until the last mile delivery lies with you. In that case, it is helpful to have extensive insurance coverage.
Have a clear-cut currency strategy
A good way to lessen your risk is through a Forex forward contract. If your buyer needs to pay in a different currency, the local currency that you get could be lower at times due to the foreign exchange involved. Similarly, a lower exchange rate would mean you need to pay more if you are making the payment. Suppose you have a forex forward contract in place. In that case, the exchange rate can be locked at an agreed-on price for future transactions for a particular period.
When one chooses to do business in multiple regions, it is important to know all the countries' rules and regulations. Areas of interests are not limited to just data privacy laws, taxation laws, and payment processing laws. Knowing these aspects can prevent you from being fined or incurring any default costs. Although it may seem overwhelming, an easy way to be compliant is to partner with a trusted cross-border payments partner such as Tazapay.
Apart from these cross-border financial considerations, there are other areas that one can look into. It includes choosing a niche product to export/import, which frees you from following the competitor pricing strategy and lets you decide your rates. Building a good relationship with the partners you are in business with can help you win their loyalty, promising a steady source of income. If you are well-prepped structurally and operationally, borderless trade is no different and has lots to offer.
How to Maximize Your import/ Export Profits
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One of the most lucrative opportunities for anyone with business acumen to get into is an international business. Unfortunately, we don’t see many people wanting to be a part of the import-export business. Most entrepreneurs would rather do business within the confines of their country as they see more risk than benefits when trading beyond the borders. Import duty rates by country [https://tazapay.com/blog/tips-to-maximise-international-payment-flexibility-as-an-exporter/] , high processing fee