Eight Tips for New Importers
A checklist for doing the import right
Once you have crafted a plan for what type of product you want to import, the following tips will serve as a guide in the import process.
Like and trust your supplier
You’ll have numerous touch points with your supplier (in person, via email, telephone, fax, and Skype) so look for someone you like and trust and where you have good chemistry (you can usually tell right away!). It’s also preferable that you have this relationship with all of the supplier’s top management as well. This helps ensure a companywide commitment to the import program and an enjoyable relationship.
Determine if you need a license
I hope you’ve established a good, trusting relationship with your supplier because it is the shipper's responsibility to comply with current government regulations and applicable laws in each country. That means you should ask your supplier at the beginning of your negotiations whether you need an import permit for the country where you intend to import and sell your product and how the company can help you obtain one.
You may also need a license from local or state authorities to do business. Customs Border Patrol (CBP) people may ask you for your importer number, which can either be your IRS FEIN or if you don’t have a business, your social security number. As an alternative, you may request Customs Form 5106 to be assigned a number. Forms can be found on the CBP site.
Compute the weights and measurements of the merchandise
To calculate all costs involved to import your products, you must know the weight and measure of your product cartons.
Make sure the merchandise can freely enter the United States
There are some prohibited and restricted items, which cannot be imported. Be sure to check the list and double-check with CBP. To protect citizens, unsafe items are not allowed to enter the United States. CBP officers are “always at ports of entry and assume the responsibility of protecting America from all threats,” according to the CBP website.
Find a transport company that can help you with customs clearance, too
Keep it simple. You can hire a transport company, UPS Trade Management Services Inc., for example, and it can take care of the transport, prepare appropriate documentation, collect payment on your behalf and oversee the customs clearance for a flat fee. Many people think they need to hire a customs broker in addition to using a company such as UPS. You don’t. However, if you do elect to use a smaller, more specialized transport company and need an independent customs broker, review the Automated Broker Interface (ABI) vendor list for assistance.
Calculate all costs to import the product, including transport, taxes, customs duty, the transportation company’s fee and insurance (if needed).
Calculating all costs helps you determine your landed costs and anticipated profitability of the products after markup. According to CBP, a “customs duty is a tax imposed on goods when transported across international borders. The purpose of it is to protect a country's economy by controlling the flow of goods, especially restrictive and prohibited goods, into and out of the country.”
Work out a payment plan that suits you
An experienced international banker can help you finance an import sale, guide you in structuring competitive payment terms or even advise you on risk factors before you transact business from a new overseas market. The bottom line is you want a payment plan that works for your cash flow. I find that cash advance (e.g., 1/3 down, 1/3 in a process and 1/3 final payment), sight or time drafts or a letter of credit work well. For small imports (say, less than $5,000) paying through PaypPal can work well, provided the customer can access PayPal in his country (caution: there’s a 2.9 percent per transaction fee).
On larger shipments, however, start a conversation with your banker on the most economical way to structure the payment.
Contact the Customs Border Patrol office at the port of entry in the United States where your merchandise will enter
Why not? Let the CBP know your goods are coming and who will be overseeing the transport of the shipment. This measure ensures a streamlined process and minimal hiccups along the way.