Introduction: Are You Ready to Export Goods?
Now is the time to take your business to a global level! The rate of trade and e-commerce growth is rising exponentially at every corner of the world; you can’t pass up this international shipping opportunity. A U.S. exporter can’t possibly ignore the fact that 95% of the world’s consumers live outside the U.S. With an expanded customer base, companies gain more profit overall, especially when a global e-commerce strategy can smooth over seasonal slowdowns. Considering that companies are 17% more profitable with a global trade and e-commerce strategy, your company must plan for expanding your market to the rest of the world.
So, how can you ensure your company stays competitive against others in the international shipping domain? Compliance is the name of the game, and the key to winning it lies in the preparation. Companies with intelligent enterprises or supply chain solutions, like SAP products, can speed up this preparation process with automation. By being completely prepared, you can tap into the global market with confidence!
First Step: Do Your Export Homework!
When successful international shipping relies on accurate information, it’s important that you know exactly what you’re dealing with. From the international shipping process to navigating SAP outbound processing, there’s a lot of information to comb through in order to succeed in international shipping.
Because compliance plays the largest role in international shipping, export knowledge is your best friend. The potential for growth is endless when you set your sights on exporting, so thorough preparation will get you there. Success on the global level is just around the corner for your business!
Understand the international shipping process
The very first piece of information you should know is how the international shipping process works, specifically how customs work. Customs authorities can make or break your ability to provide a positive customer experience. It’s up to you to make sure that customs easily and quickly process your exports!
To start, let’s understand the export/customs process:
- The customs agent verifies the export shipment and its relevant documents
- The customs agent verifies the price of exports
- Duties and tariffs will be applied and charged if the value of the package is above the minimum tax threshold
- If the shipment is shipped DDP (Delivered Duty Paid), then customs will release the shipment. If it’s shipped DDU (Delivered Duty Unpaid), payment from the receiver must be submitted before the export is released from customs.
Know the international shipping restrictions
Foreign policies and trade agreements determine the rules and restrictions you must follow when it comes to exports. Of course, each country has its own set of rules, so it’s best to double-check on the website of the destination’s customs authorities. The best way to avoid violations and penalties is for you and your team to understand what you may and may not do in international shipping.
The following three categories encompass most of the export restrictions:
- Foreign Destinations/Countries: Some countries are completely restricted from exports or have some regulations placed upon specific goods to the destination country
- Export/Good Classification: Various categories of goods are restricted or entirely prohibited depending on the country of origin and/or destination country
- Individuals/Organizations: Selling certain exported goods to specific individuals or organizations can be prohibited by the government
Ensure a smooth customs clearance
Of course, every exporter wants to guarantee that the shipments go through customs without any delays on its way to its final foreign destination. To avoid careless mistakes, it’s imperative that you understand the consequences of delayed exports:
- Delayed products accrue interest due to storage which result in higher shipping costs
- Your production is potentially delayed
- Food and health products may deteriorate over time in storage
- Long customs periods risk customers returning seasonal products
- Slow fulfillment periods lead to dissatisfied customers, which is not retainable
Navigate the Foreign Trade Outbound Processing in SAP
If you’re using an ERP system like SAP, you’re off to a great start when it comes to international shipping! The SAP system integrates the necessary checks and balances to ensure that your supply chain complies with regulations. For example, SAP automatically checks your export details for accuracy and compliance with the destination country and instantly calculates your duties.
According to SAP, here’s how you navigate the foreign trade outbound process:
- Create a sales order based on the customer’s information in the purchase order
- Details of all existing sales orders are maintained in the delivery and invoice headers
- Input transportation details (i.e. transportation mode, delivery date, and time) in the outbound delivery
- Automate the required export documents, which are based on the invoice data that’s sent to the customer
Throughout the process listed above, the SAP system will automatically check to ensure that the necessary foreign trade data is inputted correctly on the correct export documents. Even though SAP will automatically generate export documentation, it’s critical to understand the information and purpose of each one.