Understanding Export Documentation
For the small business exporter, managing the required documentation can seem daunting. But having the correct information for your documents and knowing where, when, and to whom to send them speeds up the processing of individual transactions and inspires the confidence of your customers. Indeed, where letters of credit are involved, correct documentation is essential for you to receive payment.
Documentation is used to keep shipment and delivery on schedule, to describe cargo, for customs clearance, to indicate the ownership of goods for collection purposes or in the event of dispute, and to obtain payment.
Incoterms are standard, internationally recognized trade terms used in sales contracts to help traders in different countries understand one another. Export documentation requirements often depend on the Incoterms used.
Export documentation is subject to frequent change and amendment, and requirements vary from country to country. For accurate, up to date information, you can contact the International Chamber of Commerce, International Trade Association, Trade Information Center, Export Assistance Centers, or an embassy or consulate of the country to which you're exporting goods.
Freight forwarders usually offer assistance with packing and documentation along with their services for physical transportation of goods. You may also wish to consult a professional export counselor.
The following documents are commonly used in exporting, but which of them are necessary in a particular transaction depends on the product being shipped as well as the requirements of the U.S. government and the government of the importing country. Always check with the U.S. Government Export Portal or other reliable sources to determine which documents you need.
- Bill of Lading. A contract between the owner of the goods and the carrier (as with domestic shipments). For vessels, there are two types: a straight bill of lading, which is non-negotiable, and a negotiable or shipper's order bill of lading, which can be bought, sold, or traded while the goods are in transit. The customer usually needs an original bill of lading as proof of ownership to take possession of the goods.
- Air (or Ocean) Waybill. Issued by an airline (or ocean shipper) when goods are received for transport; the waybill travels with the cargo. It is similar to a bill of lading, but cannot serve as a document of title.
- Shipper's Export Declaration. Available from the U.S. Government Printing Office and commercial outlets.
- Commercial Invoice. A bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoice to control imports will often specify its form, content, number of copies, language to be used, and other requirements.
- Certificate of Origin. Required by some countries. In many cases, a statement of origin printed on company letterhead will suffice. Special certificates are needed for countries with which the U.S. has special trade agreements, such as Mexico, Canada, and Israel. For example, a NAFTA Certificate of Origin is needed for shipments to Mexico and Canada.
- CE Mark. Designates goods that have met the requirements to be marketed throughout the European Union (EU). Once a manufacturer has earned a CE mark for its product, it may affix the mark to the product, and then the product may be marketed throughout the EU without having to undergo further procedures in each EU member country.
- Insurance Certificate. Assures the consignee that insurance will cover the loss of or damage to the cargo during transit. This certificate can be obtained from the freight forwarder.
- Export Packing List. Itemizes the material in each individual package and indicates the type of package, such as a box, crate, drum, or carton. Both commercial stationers and freight forwarders carry packing list forms.
- Import License. Must be obtained by the importer. Including a copy with the rest of your export documentation, however, can sometimes prevent problems with customs in the destination country.
- Consular Invoice. Required in some countries. It describes the shipment of goods and shows information such as the consignor, consignee, and value of the shipment. Forms may be obtained from the destination country's embassy or consulate in the U.S.
- Inspection Certification. Required by some purchasers and countries to attest to the specifications of the goods shipped. Inspection is usually performed by a third party, often an independent testing organization.
- Dock Receipt and Warehouse Receipt. Used to transfer accountability when the export item is moved by the domestic carrier to the port of embarkation and left with the shipping line for export.
- Destination Control Statement. Appears on the invoice and waybill to notify the carrier and all foreign parties that the item can be exported only to certain destinations.
- Export License. Required by the U.S. government for dual use exports (commercial items that could have military applications) or exports to embargoed countries. Most export transactions do not require specific approval from the U.S. Government. Before shipping your product, make sure you understand the concept of dual use and how U.S. export regulations may affect your business.
Electronic Data Interchange is increasingly important to the international exchange of commercial information, replacing much paperwork transfer. EDI greatly reduces the time required for document exchange and increases accuracy by eliminating transcription errors. EDI systems use international conventions and standards of formatting for data, so that documents such as invoices and orders can be exchanged between trading partners in different countries.
EDI requires a computer with a modem and communications software (to provide data translation) at either end of a telephone line.
The Internet can also be used to send documentation. Benefits include speed, accuracy, and the ability to send to a large number of recipients using one system. Disadvantages include the challenge of adequately securing data and the potential risk of dealing with unknown parties placing orders.
Make sure your documentation is correct and complete before you submit it the first time. If you submit incomplete or incorrect documents, you may experience shipping delays affecting your cash flow, as well as penalty payments.
Before you begin your documentation, get as much information as possible from government agencies, freight forwarders, or other experienced parties, professional export counselors, and others, to make sure you have all the information you need.
Cook, Thomas A., Rennie Alston, and Kelly Raia.
Nelson, Carl A.
Reynolds, Frank.
International Chamber of Commerce: www.iccwbo.org
National Customs Brokers and Forwarders Association of America: www.ncbfaa.org
Office of the U.S. Trade Representative: www.ustr.gov
U.S. Department of Commerce: www.commerce.gov
U.S. Government Export Portal: www.export.gov
U.S. International Trade Administration: www.ita.doc.gov