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5 important steps on the journey to international trade success

POSTED: 20th June 2016
IN: Guides
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Getting to know your overseas suppliers can be daunting, with a number of potential barriers to overcome on your journey to success.

When dealing with international trade partners, you could be faced with issues to do with language, understanding certain local customs, or even just checking the quality of goods. However, while you may be faced with these issues, there are a number of simple steps you can take to assess potential trading partners and set yourself up for success.

1)   Build up a profile of them as a business

When you’re thinking of going into business with a new supplier, a face to face visit should always be your first port of call. Ask if you can see their assembly line or production facility so you can see if they have the capacity and equipment needed to fulfil your order. It’s also worth checking the Government’s website for information about sanctions and embargoes.

You should want to find out as much as possible about your potential partner, so don’t be afraid to ask lots of questions. Who have they done business with before, and for how long? What kind of goods have they supplied in the past? How long have they been in business for? Try to speak to people you haven’t been introduced to, like a receptionist, as they are more likely to give you an honest assessment of the business.

2)   Understand their financial background

Financial stability is key to trade success, so make sure you find out as much as you can about the financial strength of your supplier. There are a number of ways you can do this.

First, perform your own research into your supplier – something as simple as a quick Google search can tell you if a business has a questionable financial history. You can also check Alibaba to start building up a picture of your supplier.

Undertake international credit checks to establish how long your supplier has been in business and whether they have a good financial standing, and check the different user forums written by buyers such as Supplier Blacklist, as these can provide intelligence on particular suppliers.

Finally, you can check the authenticity of trade certifications by obtaining searches on ISO accreditations, and check that the VAT number of European suppliers is genuine on the European Commission website.

If, after all of this, you’re still unsure, you could ask for copies of their financials on larger transactions, and get your accountant to look through the figures. You could also ask for trade references from the supplier.

3)   Start quality control early

Ask for samples as early as possible, so you can get a look and feel for their quality and finish. Ask yourself if they’ll meet your customers’ expectations. Even if you think they will, it’s still worth passing on samples for your customers to approve. They want to be reassured that you’ll be providing quality products.

Also, make sure your supplier has the relevant rights and permissions to sell and distribute any branded items they are offering.

4)   Check the specifics

Make sure you understand your supplier’s lead times, and check if they line up with your customer’s expectations. If they don’t you may need to renegotiate with your supplier or customer.

Make sure you keep a written record of all negotiations and final delivery times. That way, if things go wrong, you’ll have a clear, auditable trail to refer back to.

As for contracts, you should always check the small print, especially for when and how your supplier expects payment. Knowing these expectations can sometimes help you when negotiating on price, especially if you can exceed their terms. Similarly, be aware of any late payment penalties, so you don’t get any unwanted surprises that could impact your cashflow.

It’s also worth seeking expert advice to ensure you’re aware of any legal clauses or issues that could crop up. For example, make sure you’re aware of any ‘retention of title’ clauses, which state that the seller retains legal ownership of the goods until you fulfil certain obligations.

Finally, ask for clarification on phrases that are open to interpretation, such as ‘as soon as possible’. Agreeing on clear definitions now can help you avoid potential issues in the future.

5)   Use a translator or agent to make sure everyone understands each other

Not many importers are fluent in their suppliers’ languages and customs on day 1. Bringing an agent or translator with you can help avoid confusion and make sure everyone is clear on the finer details. Even a small misunderstanding could cause big issues further down the line, so it’s not worth taking the risk.

Download your free guide for tips on how to make your imports more profitable.

 

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