How to Negotiate Export Documents Properly?

One thing you have to know regarding export management that banks deal only with documents. Without proper documents, payment will not be done. So, you need to know the detailed procedure of documents. By this content, we will learn about the basic of export negotiation and the process of negotiating export documents. Let’s discuss here.

When the seller (you) has shipped the cargo to the buyer’s country, he will prepare and consolidate all documents that are called for under the Letter of Credit (LC). Once this is done, seller will present the documents to a bank. The process whereby the bank examines the documents and claims proceeds and the willingness to give value, i.e. advance or discount the transaction to and on behalf of the seller, is known as Export Negotiation.

Export Documents Negotiation Process

Once your goods moved out of your factory, the Customs House Agents appointed by your complete customs formalities on behalf of you and delivers you necessary export shipping documents. Then, customs formalities completed and obtained ‘let export order’ shipping bill, you hand over cargo to the shipping line to carry you to the final destination at the buyer’s place. Once after handing over cargo to the shipping line, the Bill of Lading is issued.

While negotiating documents, you submit all required documents as per the letter of credit terms and conditions to bank to send to your overseas buyer though LC opening bank. When the shipment is under Letter of Credit, documentation is a crucial part as the opening bank debits you against any discrepancy found on documents. So, once you received a Letter of Credit, make a copy of the same and read carefully twice. Mark each and every point where ever necessary.

Whether any international inspection required, clean on-board bill of lading, factory inspection certificate, certificate of origin, legalized documents, consulate attestation, SGS, BVQI inspection, Phytosanitary certificate, chemical analysis certificate, shipped on board certificate, freight certificate, etc. List out the documents required to submit while negotiating bills. Go through each document minimum twice, whether each document is as per LC requirements. Make sure, all documents are there as per LC terms and not found any discrepancy in each of document. This is very important while submitting documents with the bank to send to the overseas buyers through the buyer’s bank.

Process Related Facts

Once the bank is satisfied with all the export documents, payment is done to the sellers account. Whether this process will be tough or easy that depends on the following facts:

Seller’s experience:

How well all the documents will be prepared and submitted depending on the experience of the exporter.

Relationship with buyers:

Export negotiations also largely depend on the relationship between the buyer and the importer. They also depend on credibility or mutual respect.

Relationship with the bank:

It is important for the exporter to have a good relationship with the bank. If there is any mistake in the document, you have to go to this bank to correct it.

Selection of forwarding agent:

In other words, one has to be sure about the party in charge of transporting goods.

Submission of Documents

When you are an exporter, you need to submit several documents to the bank. You need to submit the following documents:

  • Completed bank-supplied application form;
  • Bill of Exchange (signed by account holder);
  • Properly signed commercial invoice;
  • The original BL or FCR or HWB (according to the original export LC);
  • Packing list;
  • Inspection certificate;
  • Beneficiary Statement
  • Certificate of Origin or Country of Origin issued by any Chamber;
  • Visa / License / Certificate of Origin / GSP
  • MCD (must be signed properly);
  • EXP. (approved by the Customs Authority);
  • Insurance policy
  • Besides, any other document mentioned in LC.

After submitting the above-mentioned document bank, bank will check documents according to LC term and negotiate on behalf of exporters. However, if there is a mistake in the export documents, it should be corrected with the help of bank.

In addition to the two separate parties for export and import, the Bank is responsible for negotiations on both sides. Therefore, in order to run this complex legal and business process through the bank, special attention has to be paid to the export documents. Any inconsistencies or errors can delay and damage commercial operations.

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