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5. International trade documentation and payments
The right paperwork plays an important part in making and receiving payment. Documentary collections and documentary credits are payment methods often used in international trade. By using special paperwork, the risk of the customer failing to pay or the supplier failing to deliver is reduced.

With a documentary collection: The exporter prepares a bill of exchange stating how much is to be paid and when. Once the customer accepts this bill of exchange, the customer is legally liable for payment. Only then does the exporter, usually through the bank in the overseas country, allow the customer to have the transport documents needed to take possession of the goods.

With a documentary credit: The customer arranges a letter of credit from their bank. The bank agrees to pay the exporter once all the right documentation—such as transport documents showing that the right goods have been dispatched—is received. The exporter must provide the required paperwork within the agreed time limit and with no discrepancies.

If you are using one of these payment methods, it’s important to understand what documentation is required and ensure it is accurate. Payments under letter of credit can be particularly problematic, as the exporter must provide exactly the right documentation to get paid.

Regardless of what payment method you agree, you should have a clear written contract stating what amount is due, in what currency, and when. The contract should also make it clear who is responsible for any bank charges.

6. Special cases/products
In some cases international trade requires special documentation.

• If you are importing goods, you may need proof of which country the goods come from.
• Similarly, if you are exporting, your customer may require a certificate of origin from you. Chambers of commerce are authorised to issue these.
• There are special requirements for some controlled goods, such as firearms, medicines, plants and animal products. For example, a licence may be required.
• If you are exporting, you should check whether any special documentation is required overseas to satisfy local regulations. For example, you might need documentary proof that your goods meet local product standards.
• Dangerous goods must be accompanied by appropriate special paperwork.
• There are simplified processes for temporary exports, for example if you are taking samples to an overseas exhibition.

If you have any doubts about the documentation you need, you should take advice. Many businesses get help from freight forwarders or import agents.

—Dianne Tipping is the managing director of Excon International and a director at the Australian Institute of Export (www.aiex.com.au)

Don’t risk it!

Develop a framework for integrating risk management in documentation with the following:

1. Create an awareness of trade in the organisation.
2. Draw up a checklist of rules to observe.
3. Implement control and procedures.
4. Involve the right people.
5. Educate and teach staff involved in the trade transaction at all levels.

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