Top Tips For Working With International Suppliers

This post is supplied by Jason Dirkham

Many companies are striving to improve their supply chain management, and many find that importing goods or raw materials is a potential path towards achieving this goal. There are many different advantages to be gained from importing from foreign markets. For example, you can find a varied quality of products as each country has its own specialities and strengths, and potential competitive advantage as the foreign markets often allow for cheaper prices. What should you consider when importing goods from an international supplier?

Due Diligence

You need a supplier who is reliable and has a high-quality product. Before you do business, it’s crucial that you do your homework on any potential supplier. When you’ve found a good match for your business, find out as much as you can about the supplier, how reliable they are, and what quality they can offer. You should also consider the integrity of your suppliers, as any negative press could cause real damage to your business too.

You should do your due diligence to make sure a supplier is legitimate and can deliver a quality product. Check the reliability of any sub-contractors that your supplier might outsource work to. An on-site inspection can help to address any concerns that you might have.

Appointing An Agent

Appointing an agent or a representative to act on your behalf in the foreign market can help to reduce any cultural or linguistic differences when you’re negotiating. The agent should have a good understanding of the local market and have a network of contacts. This helps as they can visit the supplier’s site when needed and physically inspect the goods you are importing. If you do appoint an agent, make sure the terms of that appointment are clear and agreed in writing. An agent can also help you find the best way to pay international suppliers in local currency.

Make Sure You Understand The Rules For Importing

You will also need to consider the requirements on things like customs duties, VAT and excise. It’s important to familiarise yourself with these laws that are relevant to your chosen market and get the right tax advice from local specialists.

Find out if you need to get commodity codes to classify the goods, pay duty or VAT, declare the goods, or acquire an import licence.

Keep Things Legal

When you deal with a supplier, whether domestic or international, you must have a written agreement between both parties that correctly reflects all aspects of trading. Leave nothing to chance.

Have the agreement prepared or reviewed by a solicitor, so that everything is clear and unambiguous. This agreement should specify:

What goods are being bought
Whether services, as well as goods, are being provided by the supplier
How much you will pay, in which currency, and at what exchange rate
When and how payment will be made
How the goods will be transported
Which party is responsible for getting import and export licenses and other consents
Who is responsible for shipping costs, duties and custom related formalities.
Which party bears the risk, including damage to the goods at each stage
When ownership of the goods is intended to pass
How long the agreement will last. Set out the rights of the parties to terminate that agreement, including for breaches of the agreement.
Where the proceedings would be heard if there is a dispute under the agreement, and which laws will apply

Build A Solid Relationship With The Supplier

You should work to closely monitor your new supplier relationship. This will make it a lot easier to identify areas where you could potentially improve things. Schedule progress reviews with your supplier on a regular basis to discuss how things are going. If there have been any problems, use these reviews to decide together how these issues can best be resolved.

If everything has been working smoothly and profitably, you might find that you want to extend the level of business that you are doing together. Use the review to negotiate better terms, and agree on other ways you may be able to work together.

It’s important to stay in regular contact with your international suppliers, not just assume that everything is fine and leave them to get on with it. This is where a local agent can be helpful, as they have boots on the ground and can identify any issues that might be arising much earlier than you can from a distance. The relationship with your supplier is key to successfully working together.