X5MB. Lectura Grupo 5
A freight forwarder is a person who takes care of the important steps of shipping the merchandise.
This person quotes shipping rates, provides routing information, and books
cargo space.
Freight forwarders prepare documentation, contract shipping insurance,
route cargo with the lowest customs charges, and arrange storage. They are
valuable to you as an import/export agent, and they are important in handling
the steps from factory to final destination.
They can be found by looking in the yellow pages or by personal referrals.
Find someone who can do a good job for you. You'll need someone who you can
work with, since this may become a long-term business relationship
You'll need the help of a freight forwarder when you make up the total
price quotation to the distributor. Not only do you include the manufacturer's
price and your commission - usually added together, but you need to include
dock and cartage fees, the forwarder's fees, ocean freight costs, marine
insurance, duty charges, and any consular invoice fees, packing charges, or
other hidden costs.
Be especially careful when you prepare this quotation. It certainly isn't
professional to come back to the distributor with a higher quote including fees
you forgot. You might go over the price quotation with your freight forwarder
to be sure nothing is overlooked.
Usually the quotation is itemized into three main categories of cost of
goods, which includes your commission; freight charges from destination to
destination; and insurance fees.
Give a date the quotation is valid to, which should be the same as the date
given on your quotes. You may also include information about the products,
including any new sales literature.
A formal letter that accompanies the price quotation should push for the
sale. You can inform the distributor of the shipping date as soon as the order
is received and confirmed by a letter of credit. Send the letter and price
quotation by registered mail to be certain of its delivery.
A letter of credit eliminates financial risks for you, the manufacturer,
and the distributor. When your distributor confirms the order, a letter of
credit is drawn from that company's bank to a branch in the United States or to
your bank.
This letter of credit confirms that funds are available from the
distributor to cover the same costs you quoted. An irrevocable letter of credit
assures you the order will not be cancelled at any time. When that letter of
credit is likewise confirmed by your bank to deliver the goods, the distributor
is assured of delivery. Once the letter of credit is confirmed by the bank, the
currency exchange is also confirmed, so you don't have to worry about the
fluctuation in currency.
Basically, the bank holds the money until all shipping documents are
presented. The letter of credit states the terms and conditions to make it
legal and negotiable into money, usually holding for proof of shipment of the
goods. Your freight forwarder helps you attain all those documents. When you
hand them to the banker, the letter of credit is turned into liquid assets for
you to then pay the manufacturer and all other invoices from the transaction.
Never work on promises. Not only do you take a gigantic risk, but you
create bad risks for everyone you are involved with. A letter of credit is the
only sure way to transfer these payments.
There are many combinations of people and methods that you can use to
deliver the goods that were ordered. When you produced a price quotation for
the goods, you had to go through all the steps the merchandise will follow.
Now, before you proceed, check again.
Do you have a confirmed order signed by the authorized representatives of
the distributing company? Has your banker approved the letter of credit from
the company?
Compare the amount of the letter of credit to the amount quoted for the
goods. Be sure they match exactly. Or, if the distributor chose a certain
quantity of several offers, check the prices again and confirm the quantity.
Confirm the quotation and sale with the manufacturer, and do the same with
the freight forwarder and any marine insurance agents you are working with.
Then follow through.
In order to assure the quality of merchandise, some manufacturers prefer to
handle freight to the loading docks, which makes it easier for you. If you
handle overland shipping, follow through to be sure the merchandise is picked
up and arrives safely at its destination.
Be informed of the date the goods are loaded onto the ship. The factory
should have them freighted in time to avoid costly dock storage charges.
Since all conditions of the sale must be met to comply with the terms of
the letter of credit, you need all the signed documents. Have your freight forwarder
or other contacts get authorized bills of lading for the merchandise each step
of the way - from destination to destination.
Once you have all the signed documents, present them to your banker. If all
the terms are met, the funds will be released. Since your commission is part of
the quoted price of the merchandise, you'll usually collect your fees from the
manufacturer.
When it is totally complete, you collect your money - and make a sizeable
profit for simply making connections. Consider the commissions when you have
dozens of orders coming and going.
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