CHAPTER-6

Export Procedure and Documentation

Step 1: Receive an Inquiry

The first step in the shipping documentation process is when someone inquires
about buying your products. When a potential buyer expresses interest, they
will send a letter of inquiry outlining the terms of their interest along with a
request for an informal or formal quote.

Step 2: Screen the Potential Buyer and Country

After you receive an inquiry from a buyer, you first need to make sure you can
do business with them. That means screening them on the denied and
restricted party list. You can manually screen their name, their company
name, and their address by checking each of the hundreds of lists published by
the U.S. government, or you can automate that process by using software like
Shipping Solutions, which automatically checks against the latest version of all
the lists.

If your buyer shows up on any of the lists, you cannot do business with them. If
they do not show up, proceed with caution.

The screening step also includes making sure you can ship your goods to the
buyer’s country. In some cases you can ship only if you apply for an export
license. It’s best to complete the licensing process as early as you can to avoid
causing delays in your timeline.

Step 3: Provide a Proforma Invoice

 After screening your buyer and their country, you may need to provide the
buyer with a proforma invoice for the transaction. The proforma invoice is the
first impression you will make on your buyers, so make sure you do it right. It
acts like a quote and looks like a commercial invoice, and it can be used to
arrange financing for the purchase.

If the proforma invoice results in an order, the final commercial invoice will
closely resemble the proforma invoice. That means all of the costs included in
the quotation are firm and may not be varied beyond the terms outlined in the
letter of credit.

Certain countries may require a proforma invoice if they tightly control their
currency, require an import permit, or protect local industry by placing import
quotas on certain types of goods. For a deep dive into the benefits and
features of a proforma, check out How Does the Proforma Invoice Fit in the
Sales Process?

Step 4: Finalize the Sale

After you send the proforma, the buyer will either reject or accept your
proposal. As part of the acceptance process, they will most likely want to
negotiate the terms of the sale. This will result in a verbal or written contract.

Not only should these negotiations include a discussion of the price to be paid,
but they should also include a discussion of:

 The payment terms you'll be using, whether it's cash in advance, open
account, or something in between.
 The term of sale you’ll be using, which is typically one of the 11 Incoterms
2020.
 How your goods will be shipped.

 Who’s responsible for shipping the goods.

 Who’s responsible for hiring the freight forwarder or carrier.

 Who’s responsible for filing the electronic export information through AES.

 How the transaction will be paid. If you’re using a letter of credit, you need
to make sure you have the necessary documents to satisfy its requirements.

 What documents need to be provided by which party. As the exporter, you’ll

need to meet whatever regulations your buyer may have in their own
country as well as the documentation and regulation requirements of the
U.S.

By taking care of all these important details before you ship any goods, you’ll
save a lot of time and avoid potential headaches—especially if you have
specific deadlines to meet.

Once you've reached agreement on these points and any others you or your
buyer wants to discuss, you'll receive the order, which may appear in the form
of a purchase order.

Step 5: Prepare the Goods and the Shipping Documents

Commercial Invoice

Once you have finalized your sale and prepared your goods for export, you
need to prepare the proper shipping documents. That typically includes three
copies of the commercial invoice with these important data elements.
Packing List

In addition, you would typically include a packing list, which provides the
freight forwarder, carrier, and ultimate consignee with information about your
shipment, the packing details, and the marks and numbers as noted on the
outside of the boxes.

A packing list is also a means by which customs authorities in the importing

country assess security and compliance. And it is a required document to file a
claim with the carrier or insurance company in the event of cargo damage or
loss.

Certificate of Origin

While some countries will accept a statement of origin on the commercial

invoice, the customs authorities of other countries may require a separate
document titled a certificate of origin. The certificate of origin is documentary
evidence that the goods originated in the country stated in the certificate,
commercial invoice, or packing list.

If the United States has negotiated a free trade trade agreement (FTA) with the
country to which you are exporting—and if your goods qualify for reduced
tariffs under the terms of the agreement—you may want to provide the
specific form for that trade agreement. You'll find free PDF samples of many of
these FTA certificates of origin on the Shipping Solutions website.

Shipper's Letter of Instruction

Based on the discussions you had with your buyer in step four about the type
of export and who is filing through AES, you may need to prepare a Shipper’s
Letter of Instruction (SLI). An SLI provides your company with a written record
of who received the shipping documents, who to contact for questions, who to
contact for proof of export, and who issued the export control information that
was used to support the decision to export the goods.

In a routed export transaction—unless you specifically negotiate for filing—the

forwarder/buyer will most likely file through AES. Otherwise, you can file
through AES yourself or your agent will file through AES for you. If your agent
files, you must provide an SLI as well as power of attorney to file on your
behalf.

Bills of Lading

You will need at least one—but you may need several—bills of lading to
accompany your export. For example, you may need an inland bill of lading to
move your goods to a port or airport. For moving goods out of the United
States you will need a separate bill of lading, which is usually filled out by your
freight forwarder. If necessary, you will also need to complete a dangerous
goods form at this point.

Step 6: Run a Restricted Party Screening (Again)

Right before the goods ship for export, run one last restricted party screening
to make sure nothing’s changed on any denied or restricted party. If you
use Shipping Solutions Restricted Party Screening Wizard to do this, your
screenings will automatically be documented in the software, providing a
paper trail evidence of your due diligence in the event of an audit.

Step 7: Miscellaneous Forms and Ship Your Goods

There may be other specific documents to prepare before you can export your
goods. These may be identified in the sales contract you negotiated with your
buyer, documents required under the terms of a letter of credit or other
payment options, or forms requested by the freight forwarder. These
additional documents may including a bank draft or, for a temporary export,
an ATA carnet.

Once all your documents are accurately completed and you fulfilled the other
steps of this export process, go ahead and ship your goods!

One Last Tip: Recordkeeping

Don't forget that not only must you prepare a variety of documents for your
export shipment, it is your responsibility to keep copies of all of your
documents, as well as all other correspondence throughout the sale, including
phone calls, emails, etc. After all, it is your job—not your buyer’s, your
forwarder's’, or anyone else’s— to document the whole process.