Do you know how to carry out trade administration tasks?
Paccloa highly recommends that you master trade administration, and establish an administrative routine of overseas sales, accounting, and distribution, so that you can confidently bet your odds on direct export.
Introduction
One difficulty with doing business internationally is collection of payment.
There wouldn’t be a problem if the payment conditions were always full payment via advance bank deposit, however that may not be possible due to the power relationship between you and your customer.
However, at the bare minimum, if you are able to start off presenting correct quotations with reduced risk and engage in appropriate business correspondence,
then you should be able to greatly reduce the risk of hardships such as mistaken orders, insufficient freight packaging, additional warehouse/inspection costs, rejected customs duty payments, and possibly even returns/exchanges from the customer.
Unlike domestic business, making a slight mistake when conducting overseas business could be cumbersome (costly).
For example, even if you state on the shipping mark (where it says “Made in Japan,” etc. on the side of the cardboard) that there is one box either more or less than there actually is creating an inconsistency with the associated documents, the time you have to correct this at no cost is limited.
You would not have enough time to make this correction if you are all ready to put the product on a plane or ship, so the shipment would be cancelled for the scheduled transportation. As such, you would need to change the schedule, re-attach or correct the mark, correct the shipping documentation, and so forth, which would incur handling fees (labor fees).
If you don’t meet the delivery deadline, the customer may reject the product or request a discount.
If your trade framework is incomplete, you will be forced to spend more money and effort due to unforeseen oversights and claims, which is likely to lead to a situation where you don’t earn as much profit from exports as you initially anticipated.
In order to stabilize the profit earned through exports, it is important that you learn the entire process; from receiving overseas inquiries to delivering your product, as well as the “unforeseen” situations that can arise in overseas trade.
How can I learn about trade administration?
When preparing a quotation or invoice to submit to a foreign company for the first time, if you do not have someone in the company with such experience or templates readily on hand, try doing an online search using the words “Quotation” or “Invoice” combined with the word “Template.”
By comparing several templates found through such a search, you can grasp the items that need to be included on each document. Then, by entering words and numbers in the blank fields, you will gain a sense of what the document should look like.
Feel free to see here for more reference material.
→ Paccloa Tips Helpful English Documents Quotations
Every time you encounter an issue you don’t understand in relation to trade administration, search for answers online. These days there are more and more sites with useful information on trade administration and it is possible to get a general idea of the problem. Also, this method can be considered the most efficient way to study this topic.
If you search online and you still can’t find the answer, one alternative may be directly contacting your bank’s foreign exchange section, an international freight forwarder, export packaging company, marine insurance company, third-party certifier, chamber of commerce, or the relevant authority. Even if the question is not in any of these parties’ jurisdictions, they can probably point you in the right direction.
If you would prefer to avoid such a challenge and instead gain a thorough understanding of trade administration in advance, we recommend the below books.
Taking classes on trade administration or reading through thick books on the subject are better left until you reach a level where you can teach the basics to your juniors, as opposed to when you yourself are still a beginner.
This is because, by the stage you can teach others, you will be able to fully savor the moment when all the points of knowledge you’ve accumulated up until this stage connect together in one seamless line through structured learning.
You will gain a great sense of clarity when you gain a fresh perspective on the tasks you do every day. Also, this next part is extremely important…
By pursuing further learning in the form of classes or specialized books, you may come to learn that the teaching materials contain a lot of knowledge on trade administration that you, despite several years of experience engaging in actual trade administration tasks, had never once seen or heard of, or been required to do. Therefore, if you attempt to take on such a level of learning from the get-go, you may get the wrong impression that trade administration is extremely difficult, or that you still have so much to learn.
Most elements of trade administration can be learnt instantly online. Even those things that can’t be learnt online can be understood to a degree by directly asking a partner involved in trade administration.
Being able to put that partial understanding together in your head and make a road forward is active progression, and will help you greatly with international expansion itself.
We truly encourage you to continue flexible learning about things you don’t understand in your day-to-day work.
What is difficult about trade administration?
The difficult aspect of trade administration is that when something irregular occurs, even if there is no clear answer, someone (in many cases, you) will have to take a risk and implement action of some sort in order to proceed.
For example, even though you fully prepared the necessary documents to distribute your product in the target country, the relevant authority in that country suddenly demands you submit a separate document issued by another institution.
Even though the said institution has never issued such a document, you resign to the demand, thinking “There’s no help for it, I’ll request the institution issue the required document while continuing to negotiate with the local authority.”
For example, even though the overseas company establishes a letter of credit (L/C), the Japanese bank requires you to agree in writing beforehand that it will be unable to pay should the credit not be available by the negotiating bank. This is because the target country has high credit risk.
Even though you’ve paid the necessary handling fees and are trading via an L/C because it provides guarantee of payment;
You’ll have to sign as per the bank’s requirement if you have no other option due to the power relationship between the company and the bank.
Another difficulty (or reason for motivation, depending on your mindset) of trade administration is deciding upon the best solution based on your experience in the field in situations that demand instant response, such as when your product is already in mid-production or has been transported to the warehouse. In such instances, you must also consider who will take on what degree of risk and who can afford to.
What is the real joy of trade administration?
You will enjoy the real joy of trade administration when a problem is solved, or when you get through a situation with no loss to your company. However…
…perhaps, above all, the completion of the entire process, from start to finish, of receiving an expression of interest from an overseas company, sending them a quote, securing an order, collecting payment, delivering them the product, having that product used in the customer’s country, and receiving high praise such as “This product is just as wonderful as I’d hoped. I want to buy it again!” ? this may be the ultimate real sense of joy.
If different people are in charge of overseas sales and trade administration, it is not uncommon that the person in charge of trade administration has done business with an overseas company via correspondence only and never actually met the company personnel in person.
Although a customer makes the extra effort to import and purchase products from Japan based largely on the fact that the Japanese company is trustworthy and the product (or service) is outstanding,
another key factor swaying the customer’s decision and adding value to your company is accurate, proactive, and sincere correspondence on behalf of the person in charge of trade administration at your company. Although their work does not really stand out, they truly do play a significant role in your company’s overall performance.
Suddenly I am so motivated to try my hand at trade administration!
It’s a truly special experience to receive an order from a client in English to a quotation you have presented.
But I’m not very good at English…
Good!
That means you have lots of room to grow and will be all the more amazed at yourself when you do become able to communicate in English.
Next, let’s learn about business English.
>02-2 Can you communicate in business English?
