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MONEYSMART<br />
MONEYSMART<br />
Financing Trade<br />
What to look out for<br />
before venturing into<br />
that domestic or trade<br />
transaction<br />
Engaging in domestic or international<br />
trade is one area small and medium<br />
enterprises (SMEs) partake in to<br />
expand and grow their businesses.<br />
At the most basic level, an exporter<br />
will want an importer to prepay for<br />
the goods that are shipped, and<br />
the importer will naturally want to<br />
reduce risk by getting the exporter<br />
to document the shipped items.<br />
Although it may seem relatively<br />
simple and straightforward, there is a<br />
whole spectrum of tools and utilities<br />
to assist with the trade transaction,<br />
and banks can provide assistance<br />
to the trade through various forms of<br />
support.<br />
Before the Trade<br />
Before beginning a domestic or<br />
international trade transaction,<br />
SMEs must bear in mind the<br />
following points:<br />
1Be familiar with local laws<br />
and regulations, and conduct<br />
checks on parties which you<br />
are dealing with. For example,<br />
remember to check on the type of<br />
documents required for customs<br />
clearance when the goods are<br />
delivered to the port of discharge,<br />
how established is the supplier or<br />
buyer and so on.<br />
2Be clear on the terms of trade<br />
(such as payment and contract<br />
terms and details). Take for<br />
instance, the SME has to be aware<br />
of the terms of payment stated in the<br />
sales agreement - whether payment<br />
is based on Letter of Credit, open<br />
account, collection bills and so forth.<br />
36<br />
JAN FEB 2014<br />
ENTREPRENEURS’ DIGEST
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