Price-cutting is one of the significant factors that help businesses remain competitive in the global marketplace. International trade has exponentially increased in the past years.
According to the Organization for Economic Co-operation and Development, the international trade for G20 merchandise reached a record high in Q1 of 2022. The imports and exports have increased by 5.8% and 3.6%, respectively, compared to the last quarter of 2021.
Given the increase in global trade, it gets crucial for businesses to work on their price-cutting strategies. The methods should help them cut costs but also grow their business in the international market. In this article, we will examine the tips from trade experts to help run a cost-effective import-export business.
Understand The Customs System
Each country has a diverse set of customs regulations. The import and export duties vary from region to region. There are various categories in the customs department; each type has separate charges, document requirements, and benefits for the company.
Therefore, it is vital to understand their terms clearly. The imports and exports duties are calculated based on categories, place of origin, place of arrival, size, weight, and the freight method. It is possible only when you hire business advisors to help you comprehend your company’s best plan of action.
Review Your Trade Transactions
Many companies overpay their taxes and duties due to a lack of knowledge. Therefore, you should team up with professionals to help you review your trade transactions. The service providers review and audit your accounts to help you recover the overpayment using various methods.
These methods include tax rebates, duty drawback, promotions, and more. In a rush to provide the best services, business owners may overlook their accounts. However, experts suggest auditing is one of the best ways to recover payments as per the latest schemes by your country of operation.
Work On Your Payment Methods
Get in touch with your bank and financial institutions to help you guide through competitive pricing options. Comprehend the deals for credit cards and loans to get the best one for your business.
It would help you to choose the correct payment method for yourself and your customers. Offering your clients easy, reliable, and compatible payment methods will help you retain them for the long-term.
Run A Market Research Every Few Months
Import-export export businesses connect with customs brokers, freight forwarders, shipping companies, and more. They offer different services to help the company grow and expand globally.
No matter how long you’ve been working together, it is a good idea to run market research for the latest prices and costs of all the services you use. Businesses often lose a high percentage of their money because they never change or question their service providers because of the trust.
For instance, if you are working with a single freight forwarder, experts recommend checking the latest prices and matching their costs with your service provider. It will send a message to everyone working with you that you are active in the market. You can further use the research to change the service providers charging more and cut the unnecessary cost for your business.
Study The Region Of Operation
Since you are in the import-export business, you’d be operating in multiple regions. So, it would help cut prices and save unnecessary expenses by conducting thorough research of the area. It would help to understand their working culture, tax rules, documentation, and service regulations.
For instance, a country may be charging more for direct imports. You may be able to save more by sending the product through a different route in that country. It is possible only when you hire business advisors to help you comprehend the best plan of action for your company.
Learn About Licenses, Free-Trade Agreements, And Fines
Most import-export businesses tend to lose money on fines. It is because of the lack of knowledge about licenses, free-trade agreements, and penalties. You can not import and export every product. Countries have a list of ‘restricted’ products; you must check them before putting up the products for import or export.
For instance, if you send a restricted product to the company, you will have to pay heavy fines. In addition, you need to have a valid license for international trading of products and services. Moreover, free-trade agreement products help you save on duty charges. It helps in hefty savings in the long run.
Understand The Best Freight Method
The general perception is that air freight charges are higher than the sea. However, it is not valid. The freight charges are calculated depending on the consignment’s volume, weight, and value. So, it is suggested to check the costs for sea and air every time you prepare a consignment.
For instance, if the weight of the shipment is 500Kgs with considerably low volume, it’ll be better to airlift it than send it via the water route. Not only will it be economical and delivered fast, but it will also minimize the chances of breakage.
Hire A Customs Broker
You may think that hiring a professional service provider is comparatively costlier. However, it will help you save money in the long term. Customs brokers are professionals who are equipped with the proper knowledge to help you process your imports and exports. Simply put, they are a bridge between you and the government’s customs department. They are updated with:
- Latest document requirements
- Fees
- Product legality and more.
Working with a customs broker can help you delay late deliveries and save on unnecessary penalties by being one step ahead in preparing the shipment. Most importers and exports lose money in paying hefty fines due to incomplete documents. So, save yourself from the hassle and hire the best local broker.
Conclusion
Avoiding unnecessary expenses and investing in the right place is the key to increasing your business profits. You’ve got to stay vigilant about the different schemes and promotions that can help you recover your money, such as tax benefits. Check your trade accounts to claim any overpayment of your taxes, duties, or customs fees.
