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Quoting ….Shipping ….Getting paid

Quoting ….Shipping ….Getting paid. Presented By: Kathy Edwards Global Business Solutions 800-499-6065. What is a Proforma Quotation. An offer to sell Exporter’s recommended Price Payment terms Delivery Method and terms of shipment. How is a Proforma Quotation used?.

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Quoting ….Shipping ….Getting paid

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  1. Quoting ….Shipping ….Getting paid Presented By: Kathy Edwards Global Business Solutions 800-499-6065

  2. What is a Proforma Quotation • An offer to sell • Exporter’s recommended • Price • Payment terms • Delivery • Method and terms of shipment

  3. How is a Proforma Quotation used? • To communicate to your buyer • To obtain import license • To open letter of credit • To arrange for foreign currency

  4. PRO FORMA INVOICE/ QUOTATION No. 3856MI InvoiceDate: 3/30/2009 Global Business Solutions 2721Merry Oaks Trail Winston Salem, NC 27103 USA Ph 336-794-3930 Bill to: Ship to: USA Imports Please Advise PO Box 000 Istanbul Turkey Payment: WHAT PAYMENT TERMS DO WE QUOTE? Estimated Delivery: Quantity Description Approx. Carton Total Amount cartons USD USD 6000 Board Feet Red Lumber $.1800 $ 10800.00 3000 Board Feet White Lumber $ .1800 $ 5400.00 3000 Board Feet Blue Lumber $.1800 $ 5400.00

  5. Option 1Cash In Advance • Exporter has payment • Exporter has product • Importer must trust that shipment will be made • Requiring this method may cost you the sale The Exporter

  6. Option 2Letter of Credit • What IS letter of credit? • Who benefits from a letter of credit? • Do l/c’s guarantee payment? • How does an l/c benefit the importer? • Can exporters determine the cost of an l/c in advance? Importers Bank

  7. What is a Letter of Credit? Pro Forma Quotation The Importer The Exporter Advise L/C Exporters Bank Importers Bank

  8. Who benefits from a Letter of Credit? Every time a banker touches a letter of credit this song plays • Examination fee • Wire transfer fee • Courier fee • Because I said so Fee • Advising fee • Confirmation fee • Amendment fee • Discrepancy Fee

  9. Exporters can NOT determine the cost of a Letter of Credit in advance. It is not possible to know the cost of a letter of credit in advance due to: • Number of Banks • Number of Amendments • Number of Discrepancies • Bank charges

  10. Letter’s of Credit do NOT Guarantee Payment to the Exporter • Almost 80% or l/c’s have discrepancies • L/C’s are CONDITIONAL documents • ONE discrepancy can void the L/C • Payment only when all conditions of the letter of credit have been met • L/C’s require expertise in document preparation • Even exporters with skilled documentation staff loose control of l/c documents due to freight forwarder errors • Letters of Credit protect banks, not exporters • In current economic conditions, even banks are not comfortable with many issuing banks.

  11. Does a Letter of Credit benefit Importer? • For the importer, a letter of credit is the same as cash in advance plus bank fees because: • The importer must provide funds to their bank when the L/C is issues either in the form of cash, frozen credit facility, or a bond • The only advantage to the importer is the assurance that the exporter will ship something. • Because banks deal in documents, there is no guarantee of what is shipped.

  12. What happens when an l/c has discrepancies? • The issuing bank must ask the importer for permission to pay • What is the term used when a bank asks the importer for permission to pay? • Documentary Collection • Documents sent on approval • Cash against documents

  13. Option 3: Collection (Sight draft, Cash against documents) Goods Documents Exporters Bank Importers Bank

  14. Option 4 – Export Credit Insurance • Ship on open account terms with payment insured • Be more competitive by offering open account terms rather than CIA or L/C • Market to riskier areas • Obtain loans based on insured foreign a/r • Protection against commercial and political risks

  15. Benefits of Credit Insurance • Financing • Banks will loan against insured receivables • Competitiveness • Don’t walk away from a sale • Reduce or eliminate write off’s • Typical cost of insurance is fraction of write off • Secure your 2nd most fluid asset after cash

  16. Types of Credit Insurance • Private sector coverage • Minimum premium • Insure domestic as well as export • No restrictions for non us products, sale to military, etc. • Government backed • US content requirement • Does not support sales to military • Backed by full faith and credit of US government • Approval of your buyers in advance • Single buyer coverage • Medium term coverage for payment terms beyond one year • Loans to foreign buyers • Letter of credit coverage

  17. ExIm Bank Rates

  18. Credit Insurance Insurance for insomniacs…….. insurance that lets you sleep

  19. ProForma Quotation – Part 2International Commercial TermsInCo Terms • What are InCo Terms? • What shipping terms do we quote?

  20. Shipping TermsINCO TermsInternational Commercial Termshttp://www.iccwbo.org/index_incoterms.aspwww.iccbooks.com

  21. Estimated Delivery: Ten (10) weeks after receipt of signed order and deposit Recommended method of shipment: Oceanfreight Quantity Description Approx. Carton Total Amount cartons USD USD 6000 Board Feet Red Lumber $.1800 $ 10,800.00 3000 Board Feet White Lumber $.1800 $ 5400.00 3000 Board Feet Blue Lumber $.1800 $ 5400.00. Total Ex Works $21,600.00 Inland Freignt & Forwarding (FOB) $ 200.00 Ocean Freight (CFR)and Insurance (CIF) $ 5,559.86 $27,359.86 $ 820.80 Total CIF Istanbul, Turkey Finance charge for 60 day terms The above offering is based on current prices $28,177.66 Buyer must notify exporter of any product distpute within 10 days of receipt of lumber. After 10 days importer accepts product as delivered. ProForma Quotation – Part 2 What shipping terms do we quote?

  22. What’s the deal with FOB?! • There are more terms than FREE ON BOARD

  23. EXW …Ex Works • Seller prepares goods and places them on the loading dock.

  24. FCA – Free Carrier At • Seller delivers goods, cleared for export to named place specified by the BUYER. (EXW + Loading+Customs paperwork) • Exporter not responsible for unloading at destination. • Delivery of goods into truck, rail, or container. • Freight placed in custody of transport driver.

  25. FOB – Free On Board • Exporter pays crating, containerization, transportation, loading, and port charges. Goods cleared for export by seller.

  26. CFR – Cost & Freight • Seller pays all cost and freight to get cargo to port of import. • CFR (Named port of import)

  27. CIF – Cost Insurance & Freight • Exporter pays all costs, freight, and insurance to point of import.

  28. CIP –Carriage & Insurance Paid To • Seller pays freight and insurance to designated point which has been specified by the SELLER. • CIP Charlotte Airport, CIP Spartanburg, CIP London Airport.

  29. DAF – Delivered At Frontier Seller delivers freight, cleared for export to named port of import. (DAF Buffalo, NY)

  30. DDP – Delivered Duty Paid • Seller delivers to buyers door with all freight, all inland transportation,all taxes, fees and DUTY paid. Buyer unloads freight

  31. The MOST Important Term… C O M M U N I C A T I O N

  32. Global Business Solutionswww.gbsus.com1-800-499-6065kathy@eximsolutions.com

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