Buying or selling abroad is the everyday business for many companies, an activity with certain peculiarities and differences when compared to domestic trade.
The distance from the point of origin to the point of destination is usually greater and often requires means of transport not commonly used in domestic transactions, involving more complex logistics and greater risks.
It is often difficult to obtain accurate and sufficient information regarding the solvency and reliability of the buyer or seller. Transactions might be governed by different legal systems, sometimes astonishingly divergent from ours. Key factors such as customs requirements, the particularities of each country’s financial system, access to and operation of the courts of justice increase the risk of unexpected transaction failure. Commercial paperwork is extremely complex and the documents required are often unknown to those with local business knowledge only.
The use of different currencies is an almost exclusive feature of foreign trade. When the parties involved in the transaction do not share the same currency, they should take into account the risk arising from possible fluctuations in the exchange rate. It could require adapting products, how they are presented or distributed, for purely commercial or cultural reasons as well as for legal requirements (non-tariff barriers).
Non-commercial risks must also be considered, whether they are extraordinary or catastrophic risks or, mainly, the so-called country risk. They may hinder payment or goods delivery for reasons beyond the control of the customer or supplier.
Consequently, international trade payment methods are either the usual methods but with a number of particularities to be taken into account, or other methods not common in domestic trade.
Another consequence of the above is that the financing mechanisms also have specific features and operate differently when it comes to foreign trade transactions. Then, the parties are sometimes obliged to communicate in a language other than their mother tongue, and varying business customs and cultural habits must also be taken into account. So all this may lead to unnecessary misconceptions and disagreements.
Do not forget to check the target market access conditions for your products. Customs authorities sometimes require compliance with special procedures regarding certifications, controls, trademarks, labelling and packaging, among many others.
These controls are often designed to hinder market access and protect domestic production. This type of access restriction is known as non-tariff barriers.
Please refer to the EU Market Access Database to find out which restrictions may affect your exports.
You can find out further information on restrictions and tariff rates at the customs authorities of the country concerned through the World Customs Organisation.