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How do I go about importing goods? I want to bypass the middle-person!
Importing and exporting require a great deal of expertise, knowledge, patience and love of details.
You’ll need:
A few areas that you’ll need to take into consideration are:
While most businesses first need to become in full control of their business on a domestic basis, there is still financing available for a new or growing business using imported finished goods.
‘Import Purchase Order Financing’ is the process for accomplishing this.
Because of the many ways that the process could run into ‘kinks’ it is considered somewhat complicated and risky. Thus, most banks and lenders are very careful about this type of financing.
What are the criteria for Purchase Order Financing?
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The products or good you are importing must be pre-sold and this sale must be confirmed by a purchase order
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The purchase order must be unconditional with no cancellation terms
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There can be no consignment or guaranteed sales clause
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The company issuing the purchase order must be substantial, and preferably publicly traded with some track record of purchases and a history of good credit and payment of debts
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Your company must demonstrate a history of profits
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Your company must have a history of selling the type of goods requested in the purchase order – this can’t be the first time you’ve sold something like this
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The supplier mush have a proven history of providing this type of goods and exporting it to the U.S.
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The supplier must have a proven product and a history of meeting customer terms and quality
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The product or item you are importing must be ‘finished goods,’ not parts or unfinished goods. It is unlikely you will get a lender to commit to a Letter of Credit or a loan on parts or pieces of products
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The purchase order must be for a product, not for a service
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The transaction or a contracted series of transactions must be valued at the lender’s minimum, which varies – so be sure you know what that is before you approach the lender for money.
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The transaction must be profitable for all parties concerned – supplier, importer, lender and customers issuing purchase orders for the product.
The high-risk nature of these transactions is a distinct disadvantage. However, there are advantages, too. One is that this provides 100% financing for drop-ship sales.
What about Exporting my products? What are the challenges?
A few of the many items involved in Exporting are:
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Tariffs
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Taxes
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Port handling Fees
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Various Customs Charges
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Licenses
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Export control regulations
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Product Certification
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Regulations, standards, and certification requirements imposed by U.S.
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Regulations, standards, and certification requirements imposed by foreign governments
Where can an entrepreneur find financing for exporting?
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Local Commercial Banks that have an International Business Department
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Government and World Bank Financing Programs
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Ex-Im Bank (The Export-Import Bank of the United States – an independent federal government agency, and the official export credit agency of the United States)
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Small Business Administration
The SBA provides information on many organizations that provide export financing and support
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The World Bank
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The Overseas Private Investment Corporation (OPIC)
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Export Finance Matchmaker (EFM)
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Export.gov
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Private Export Funding Company (PEFCO)
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The U.S. Department of Agriculture (Foreign Agricultural Service (FAS)
What is the best source of Import-Export Information so you don’t have to spend hours searching for more details?
A more detailed explanation of Financing International Trade – by either import or export -- is provided in the book,
The Entrepreneur’s Guide to Prosperity -- Financing Your Small
Business, by Morris Bocian.
If you think importing or exporting could enhance your Cash Flow, or if you feel there are other ways International Trade would benefit your business, e-mail us at
CashFlow@NowFinancing.com. |
