Indent or order: first of all, an exporter is to receive an indent or order from the foreign importer. Indent means a buying order to an agent or an order placed directly on foreign seller to supply certain goods. It may be ‘open’ or ‘closed’. When details in respect of goods and prices to be paid are not mentioned it is an ‘open indent’. An order usually contains quantity, value, description of goods, method of payment, instruction for shipment etc.
Securing license: after receiving the order the exporter is required to get license from the controller of export and import. If the goods are under O.G.L it is not necessary to secure any license.
Arrangement for the letter of credit: if the exporter does not know the foreign importer or if he has no confidence about the credit worthiness of the foreign importer, he requests the importer to arrange for the letter of credit from a bank. A letter of credit is an advice issued for undertaking given by a bank that bills drawn on the banker by the exporter, according to the terms of letter of credit, will be honored. All importers usually request the bank to issue a letter of credit in favor of the exporter.
Procuring goods: after receiving the orders the exporter arranges for the procurement of goods from different sources. If he is a manufacturer, the question of procuring goods does not arise.
Packing and marketing: packing and marketing of goods are very important for foreign trade. Goods are packed properly for ensuring safety and marked with the name of the exporter or the importer and the port of destination.
Shipping order: after this the exporter arranges for the reservation of ship’s space and contacts a shipping company for this purpose. If the shipping company agrees, the company issues a ‘shipping order’ to the exporter. Shipping order signifies an order to the captain of the ship directing him to receive exporter’s goods on board of the ship.
Forwarding of goods and booking of exchange: goods are then forwarding to the port directly by the exporter or may be arrange for forwarding of goods by a forwarding of goods by a forwarding agent who undertakes all responsibilities in the respect on behalf of the exporters. Besides these, an exporter is to book in advance the exchange rate to guard against unfavorable fluctuations in times of payment.
Customs Requirements: exporter is to prepare many copies of shipping bill or customs challan mentioning there in quantity, quality, weight, measure, price of the goods, the ports of destination, the name of the ship etc. then the exporter is to fill in export application forms and these are submitted to the shipping office. The office collects shipping charges and returns the copies of the shipping bill and application forms. After this exporter is to observe some other customs formalities. He is to submit to the customer’s authority shipping bill, export application forms export license and the other documents, if any.
Shipping procedure: packed goods are then forwarded to the dock and a dock’s receipt is obtained. When goods are delivered to the ship, the captain of the ship issues a certificate known as Mate’s Receipt. After this the exporter places the mate’s receipt to the shipping company and gets a bill of landing. This bill is given to the exporter on payment of freight charges. The bill of landing may also be marked with ‘Freight Forward’ which means that the freight will be paid by the importer. A shipping company also charges Prim age or supervision charges for supervising loading of goods.
Marine Insurance: the exporter then contacts a marine insurance company to insure the goods against all risks of sea transport. The company undertakes to pay compensation to exporter for less or damage of goods in transit.
Preparing invoice: the next task of the exporter is to prepare several copies of the invoice to be sent to the importer through the bank. The invoice contains the prices to be paid, quantity and quality of goods etc. several copies of the invoice are sent to the importer both directly and through bank along with other documents, namely, bill of lading, marine insurance policy, consular invoice, certificate of origin etc.
Receiving payment: After the goods are dispatched, the exporter is to receive the amount of the goods. For this, he draws bill of exchange in sets of three and sends all these bill to an exchange bank having branch or agent at the importing country along with other documents, namely, bill of lading, trade invoice, consular invoice, certificate of origin, insurance policy etc. This bill may again be D/A (document against acceptance) or D/P (document against payment) bill. In case of D/A bill documents are handed over to the importer on his acceptance of the bill. In that case the exporter must wait till maturity of the bill for securing payment. For this, the banker demands from the exporter a ‘letter of Hypothecation’ which empowers the bank to sell the goods in case the importer dishonors the bill. In the case of D/P bill the documents are given to the importer when the payment is made.
Closing the transaction: when the importer is satisfied as to the quantity, quality etc. of the goods delivered to him, the transaction is closed. On the other hand, if the goods are not up to the standard and the importer is dissatisfied, the transaction is closed after further negotiation.
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