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Processing the export order
The export cycle
1. Setting
up the deal
Once you have established your sales
contract, by either being in possession
of an international purchase order
or a documentary credit stating
you as the beneficiary, you are
now in a position to process the
order. There are a few steps you
should go through when processing
an export order. However, you must
first wait until the deal has been
properly established before committing
your resources to the order.
Case Study:
As you can see, John Motsa has
received an international purchase
order from Bill Jones and has
been advised by his bank of the
documentary credit made available
to him by Bill's bank in London.
John has checked the documentary
credit (L/C) according to the
checklist and has accepted the
credit without amendment.
2. Shipping
the goods
Once the deal has been set up,
you should take the following
steps:
-
Read the purchase
order/documentary credit very
carefully and take note of the
requirements of the buyer. If
there are any pre-shipment actions
that must occur, these activities
must take place before you book
the freight and load the container.
Pre-shipment activities could
include pre-shipment inspections,
health inspections or product
analyses, all of which must
be carried out before the goods
have been packed for shipping.
If any of these inspections
are required, make arrangements
with the appropriate service
providers and obtain the necessary
certification before shipping
the goods.
-
You are now
in a position to complete your
F178 and have it attested with
the bank. As an F178 declaration
is a commitment by you to the
Reserve Bank that funds will
be brought into the country
in exchange for goods, you should
not make this declaration until
you are sure the deal is going
to happen.
-
You are now
ready to pack and label the
goods. At this point, you can
contact your freight forwarder
to make a booking on the next
available carrier, or on the
carrier offering the service
you require. You will furnish
your forwarder with a freight
forwarders instruction and an
attested F178, and request him
to arrange for customs clearance
and transport. He can also arrange
for marine insurance if required.
You will, at this point, arrange
for him to collect the goods
or deliver the goods to his
warehouse yourself.
-
Your freight
forwarder will deliver the goods
to the carrier and obtain a
transport document as proof
of receipt. He is now in a position
to arrange for customs clearance,
which will require the submission
of a customs bill of entry DA
550, an attested F178 and a
transport document (in the case
of air, road and rail exports).
He will then hand over the transport
and insurance documents to you.
-
You are now
in a position to issue your
commercial documents, namely,
the commercial invoice and packing
list and can assemble you export
documentation. This will include
your commercial documents, transport
document, insurance document,
as well asthe verification documents
issued by third parties.
Case
Study:
Based on the L/C, John completed
his F178 and had it attested at
his bank. He then applied to the
Directorate: Plant Protection and
Quality Control for the issue of
a phytosanitary certificate. Based
on his declaration, the certificate
was issued. He then went to the
Johannesburg Chamber of Commerce
and arranged for the issue and authentication
of a certificate of origin. John
was now in a position to ship the
goods. He contacted his forwarder,
made a booking on the next available
flight to London and sent the forwarder
a freight forwarder's instruction,
along with his original attested
F 178. At the same time, he arranged
for his assistant to deliver the
honey to the forwarder's premises
at Johannesburg International Airport.
The forwarder handed the cargo over
to South African Airways and was
issued an Air waybill. A DA 550
was completed and submitted, along
with the F178 and Air waybill to
Johannesburg International Airport
Customs. Customs clearance was obtained
and the forwarder issued an insurance
certificate according to the information
in the freight forwarder's instruction.
The forwarder then handed over the
Air waybill, insurance certificate,
F 178 and DA 550 to John. John was
now in a position to issue his packing
list and commercial invoice. He
now had all the documents required
by the L/C.
3.
Getting Paid
Once all documents are ready and
completed in accordance with the
documentary credit, (or if not using
a documentary credit, in accordance
with the purchase order), you are
now in a position to present the
documents for payment. In the case
of documentary credits, you will
submit the documents to the negotiating
bank, (usually your bank), which
will check the documents, ensuring
that they are in accordance with
the L/C, and make payment to you.
Of course, if selling on an acceptance
L/C, the bank will accept your drafts,
and you will receive payment at
maturity of the draft.
Case
Study:
John carefully checked all his documents
against the L/C and was satisfied
that everything was in order. He
noted that he only had two days
after shipment within which to present
his documents to the bank. He went
to the bank and presented his documents
to a bank official, who checked
them against the L/C. Everything
was in order and the documents were
accepted. John then signed a Form
E, which cancelled his F178 obligation,
and allowed the bank to buy his
US dollars. The bank deposited the
rands into his account two days
later. John had just completed his
first export order.
The bank sent the
documents to the issuing bank in
London, which in turn has handed
them over to Bill Jones. Bill, in
the meantime, has taken receipt
of the honey, based on an airway
release issued by his bank, as the
documents have taken longer than
the goods to get to London. Bill
now has the honey in his warehouse
and John has been paid.
4. Follow-up
and service: The key to future success
The most important part of your
export market development process
has now arrived. It is sometimes
more difficult to secure a follow-up
order than it is to achieve the
first order. It is vital, at this
point, to get feedback from the
buyer as to whether you have met
his needs. It might be necessary,
to plan a follow-up visit to secure
your position with the buyer and
check to see whether his needs have
changed. The chances are that one
of your competitors has taken action
against your entrance by possibly
offering the buyer better terms
of payment. It is vital that you
develop your market intelligence
in order to take whatever action
is necessary to keep your market
and increase your market share.
Case Study:
John has received enquiries from
Germany which look promising and
has just arranged another visit
to Europe. He has made arrangements
with Bill Jones to attend the launch
of his honey at one of the main
retailers in London.
The following set of documentation
will assist you with completing
the required documents for processing
your export order:
- Exchange control declaration
- Phytosanitary certificate
- Certificate of origin
- Forwarder's instruction
- Air waybill
- Certificate of Insurance
- Bill of entry/export
- Commercial invoice
- Packing list
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