Questions about Incoterms,
selling price and international invoicing?
The global economy has given businesses greater access than ever to markets around the world. Goods are sold in a multitude of countries. With the volume and complexity of global sales comes the possibility of misunderstandings and costly disputes.
It is therefore important that your international invoices be well written. They must include all the necessary information. The same goes for the choice of Incoterms when selling. They determine your responsibilities and those of the customer when the goods are delivered.
International invoicing also means selling price. When it comes to invoicing your foreign customers, in addition to the price of the product, you must also consider all costs and fees associated with shipping, freight and customs. These charges will have an impact on your cost price.
Setting your selling price and issuing a proper international invoice are among the steps to be planned in an international marketing strategy.
An export costing grid allows the exporter to detail the costs involved in selling products to a foreign customer and set a price that covers all transaction expenses, including transportation, commissions, fees, customs and profit margin. By taking all into account, the exporter will be able to set a viable selling price. This process can help him/her figure out where costs are coming from and what expenses can be eliminated or reduced.
As for international invoicing, making sure that it includes all the information required by each of the parties using it can avoid many complications. HS codes, exporter number, transaction currency are all among the items that must be included.
Upstream of the international invoice, the choice of Incoterms at the time of the sale can also help preventing many problems since they clearly define the seller’s and buyer’s respective obligations and responsibilities, especially regarding the transport and reception of goods. Incoterms rules provide a clearer framework for the conduct of world trade. Referring to an Incoterms rule in an export sales contract reduces the risk of legal complications.
At CQI, we have qualified experts who can help you choose your Incoterms, set your selling price and review your international invoicing. We have developed simple tools that we will be happy to share with you for this purpose.
We will start by analyzing the costs associated with your export process and with the transportation of your products to a given market. We will make an inventory of your prices and documents to ensure that all aspects have been considered in determining your selling price and in preparing your international invoices. We will research and update customs rates, applicable taxes and other costs associated with shipping your products. The goal is to ensure that you ultimately make a profit on the sale while remaining competitive in your industry.
Our experts will provide you with information on the 11 Incoterms® that can be used and will work with you to select the appropriate ones. We will also discuss the differentiation between Incoterms versus UCC (U.S. FOB) for those exporting to the United States.
Based on the market, the desired profit margin and the Incoterm selected, we will determine your product’s selling price. We will provide you with a grid including every element you need to consider when figuring out your selling price.
There is specific information that needs to be included in your invoice. We will check everything with you and help you find the missing information if required. An international invoice should include the following items:
Other than your customer, you will have to give a copy of the invoice to your forwarder or to customs, hence the importance that each one finds the information they need on the invoice.
By calling on CQI, you take advantage of the support provided by our international marketing and customs experts to guide you in the choice of your Incoterms, set a realistic selling price based on your actual expenses and ensure that your international invoicing meets export criteria. We are always available to guide you in your expansion projects outside Quebec, particularly with our Horizon 360TM Export Coaching Program. Just give us a call and we’ll be happy to assist you!