Gill NadelAdv
The international trade transaction necessarily involves unique dangers due to the geographical and cultural divide between the sides to the transaction. The current economic crisis requires special precautions, as well as re-examining the accompanying costs. Adv. Gill Nadel gives some essential tips:
1. Today, it is more important than ever to insist on an organized contractual agreement, that orders the rights and duties of the sides. An international trade transaction naturally involves a degree of uncertainty, given that the sides are in different places, with different legal systems, and different business behaviors and a detailed contract can remove part of the uncertainty that exists. A tight and orderly contract can help the sides enforce their rights and can serve as a disincentive against potential infringements. It is a good idea to deal with situations such as late supplying, products not meeting the agreement, return and repair policy, etc. In addition, there are international treaties that establish arrangements as defaults that apply to a significant number of contracts for international sale of goods. If you want to change these arrangements- we need to establish this explicitly.
2. Inthe crisis situation, in which the stability of the suppliers is being shaken, it is best to avoid paying ahead of time as much as is possible, to avoid a situation in which the supplier takes the money and doesn’t supply the goods. It’s better to move to a system of payment against documents (CAD) as far as is possible. Even if you need to work with letters of credit (LC), it’s best to negotiate with the banks over the surcharges for opening the letters of credit. There is some maneuvering room within the surcharges. Similarly, it’s a good idea to insist that payment of the letters of credit will not be at sight, but to insert an element of supplier credit, to give yourself enough time to deal with cases of fraud by getting an injunction ordering the bank not to pay the letter of credit. A carefully examination of mismatches between the letters of credit and the sales account and the accompanying documents can prevent unpleasant situations of being supplied with unsuitable merchandise.
3. Inspecting the goods before shipment: It is advisable, now more than ever, to avail yourself of the services of goods inspection before the goods are containerized and sent to Israel, to prevent the shipment of unsuitable merchandise. This cost is marginal in comparison to the damages caused by receiving unsuitable merchandise the accompanying legal costs.
4. Insurance: the negligible cost of insurance can provide a good solution to cases of physical damage. It is best to purchase a complementary insurance policy even when you buy merchandise under CIF conditions, since you cannot always rely on the policy that the supplier buys for you. It is important to carefully check the extent of the insurance coverage. Sometimes extra coverage costs only negligible sums. It is also advisable to detach the application of the policy from the conditions of the sale, so that the policy will really apply from the warehouse of the exporter to the warehouse of the importer.
5. Transport and shipping: sometimes there are significant shipping gaps. It is advisable to get price suggestions and compare them. At the same time, the cheapest is not always the best. In any case, this is a good time to refresh the arrangements with shipping and transport suppliers
6. As the price of merchandise goes down, you can negotiate with suppliers over the payments made for past shipments that are in transit whose prices have fallen. While it’s fair to assume that the supplier will not give you a monetary credit, he may give you pricing benefits or other favorable conditions on future shipments.
7. Customs payments: in an age of cost-saving, it’s advisable to check the customs payments at the time of import. It’s possible that overpayments are being made as a result of misclassification, including extra costs in the value for tax purposes, failing to take advantage of trade agreements, etc. Arranging a meeting with advisers in the field wouldn’t hurt.
8. Hazard/ foreign trade insurance: exporters are advised to insure export shipments with hazard insurance. The insurance is proved by private insurance companies as well as by the governmental company “Ashra”.
9. Business intelligence: various databases provide a lot of information about companies in financial difficulties. Getting information like this can help minimize dangers.
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