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Mitigating Risks in International Trade: Key Considerations for SMEs

Engaging in international trade opens up a world of opportunities for small and medium-sized enterprises (SMEs). However, it also exposes them to various risks that can impact their success and profitability. Mitigating these risks is essential for SMEs to navigate the complex landscape of international trade successfully. In this article, we will discuss key considerations for SMEs to effectively mitigate risks in international trade and ensure a smoother and more secure global business experience.

  • Conduct Thorough Due Diligence:

Before entering into any international trade transaction, SMEs must conduct comprehensive due diligence on potential partners, suppliers, and customers. Verify their credibility, reputation, financial stability, and track record. Utilize reliable business intelligence tools, engage professional services, and seek references to gain a thorough understanding of the parties involved. Thorough due diligence minimizes the risk of dealing with fraudulent or unreliable partners.

  • Utilize Trade Credit Insurance:

Trade credit insurance provides protection against the risk of non-payment or delayed payment by buyers. By insuring accounts receivable, SMEs can safeguard their cash flow and minimize the financial impact of potential default. Trade credit insurance also provides access to credit information on buyers, enabling SMEs to make informed decisions on credit limits and terms. Partner with reputable insurance providers experienced in international trade to obtain suitable coverage.

  • Implement Effective Contractual Agreements:

Clear and comprehensive contractual agreements are essential in mitigating risks in international trade. Clearly outline the terms and conditions, including payment terms, delivery obligations, quality standards, dispute resolution mechanisms, and intellectual property rights. Engage legal professionals experienced in international trade to draft contracts that comply with local laws and provide adequate protection for your business interests.

  • Opt for payment guarantee products:

Payment guarantee product like the Letters of credit (LCs) or the Tulyp’s platform offers a secure method of payment in international trade. By utilizing LCs or Tulyp, SMEs can ensure that payment will be made once specified conditions are met. This provides a level of guarantee and mitigates the risk of non-payment or payment disputes. Work closely with your financial partner and engage experienced trade finance professionals to set up the right guarantee that align with your business needs and protect your interests.

  • Stay Updated on Regulatory Compliance:

International trade is subject to various regulatory frameworks, including import/export regulations, customs duties, sanctions, and trade restrictions. Non-compliance with these regulations can lead to delays, penalties, and reputational damage. Stay updated on evolving regulations, engage experts or consultants to ensure compliance, and maintain accurate and up-to-date documentation. Adhering to regulatory requirements reduces the risk of legal complications and business disruptions.

  • Diversify and Manage Currency Risks:

Fluctuations in currency exchange rates can significantly impact international trade transactions. SMEs should consider diversifying their customer base across different countries to minimize the reliance on a single currency. Implement hedging strategies, such as forward contracts or currency options, to manage currency risks and stabilize cash flow. Regularly monitor exchange rates and consult with financial advisors to make informed decisions.

  • Invest in Cybersecurity:

As trade becomes increasingly digital, SMEs must prioritize cybersecurity to protect sensitive information and prevent data breaches. Implement robust cybersecurity measures, including firewalls, encryption, secure payment gateways, and employee training programs. Regularly update software and systems, conduct vulnerability assessments, and back up critical data to minimize the risk of cyberattacks that can disrupt operations and compromise sensitive business information.

To conclude mitigating risks in international trade is crucial for SMEs to protect their financial interests and ensure sustainable growth. By conducting thorough due diligence, utilizing trade credit insurance, implementing effective contractual agreements, utilizing letters of credit, staying updated on regulatory compliance, managing currency risks, and investing in cybersecurity, SMEs can navigate the complexities of international trade with greater confidence. Proactive risk mitigation strategies enable SMEs to seize global opportunities and build long-term success in the international marketplace.

Tulyp is a BtoB payment and financing solution that supports importers and exporters on a daily basis. As a FinTech specialized in Trade Finance, we support them in their payment guarantee, financing and liquidity issues. If you have any questions, please contact us. One of our experts will contact you within 24 hours.

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Navigating the Global Trade Landscape: Challenges Faced by SMEs.

In today’s interconnected world, small and medium-sized enterprises (SMEs) play a crucial role in driving economic growth and fostering international trade. However, despite their significance, SMEs face numerous challenges when venturing into the global trade arena. In this article, we will explore some of the key obstacles that SMEs encounter and discuss strategies to overcome them.

  1. Limited Resources and Financial Constraints

    One of the primary challenges faced by SMEs in global trade is their limited resources, including financial constraints. SMEs often struggle to compete with larger corporations that have substantial capital and economies of scale. Acquiring the necessary funds to expand operations, establish distribution networks, or invest in market research and product development can be an arduous task for SMEs.

    To address this challenge, SMEs can explore various avenues for financing, such as government-backed programs, microloans, angel investors, venture capitalists, or crowdfunding platforms. Additionally, forming partnerships or collaborations with other SMEs or leveraging the expertise of trade associations can provide access to resources and reduce financial burdens.

  2. Trade Barriers and Complex Regulations

    Global trade is governed by a complex web of regulations, tariffs, customs procedures, and technical standards. Navigating these trade barriers can be overwhelming for SMEs, particularly those lacking the necessary expertise or experience. Compliance costs, bureaucratic hurdles, and time-consuming processes can hinder SMEs’ ability to compete internationally.

    SMEs can overcome these challenges by seeking assistance from trade promotion agencies, chambers of commerce, or industry-specific organizations. These entities can provide guidance on trade regulations, help with paperwork, offer training programs, and connect SMEs with relevant networks. Additionally, staying informed about international trade agreements, participating in trade fairs, and utilizing online platforms that simplify cross-border transactions can help SMEs mitigate trade barriers.

  3. Lack of Market Knowledge and Cultural Understanding

    Expanding into new markets requires a deep understanding of local cultures, consumer preferences, and market dynamics. SMEs often face challenges in conducting market research, identifying target audiences, and tailoring their products or services to meet diverse customer needs. Language barriers, differences in business practices, and lack of networking opportunities can further hinder SMEs in establishing a strong market presence.

    To address this challenge, SMEs should invest in comprehensive market research and analysis to gain insights into target markets. Collaborating with local distributors, agents, or partners who possess the necessary cultural knowledge and networks can provide SMEs with a competitive advantage. Additionally, leveraging digital marketing tools and e-commerce platforms can help SMEs reach a wider audience and connect with customers globally.

  4. Supply Chain Complexity and Logistics

    Efficient supply chain management is crucial for SMEs engaged in global trade. However, SMEs often face challenges related to transportation, customs clearance, warehousing, and inventory management. The lack of bargaining power and economies of scale can result in higher logistics costs, longer delivery times, and supply chain disruptions.

    SMEs can overcome these challenges by optimizing their supply chain processes, exploring alternative transportation modes, and leveraging technology solutions. Collaborating with reliable logistics partners, utilizing cloud-based inventory management systems, and implementing track-and-trace technologies can enhance efficiency and reduce costs. Engaging in strategic alliances or forming networks with other SMEs can also facilitate shared logistics resources and improve bargaining power.

While SMEs face numerous challenges in global trade, they also have immense potential to contribute to economic growth and innovation. By addressing the obstacles discussed above and adopting a proactive approach, SMEs can overcome these challenges and thrive in the global marketplace. Leveraging available resources, embracing technology, and forming strategic partnerships can empower SMEs to navigate the complex world of international trade successfully. With the right strategies and support, SMEs can unlock new opportunities, expand their market reach, and contribute to a more inclusive and prosperous global economy.

Tulyp is a BtoB payment and financing solution that supports importers and exporters on a daily basis. As a FinTech specialized in Trade Finance, we support them in their payment guarantee, financing and liquidity issues. If you have any questions, please contact us. One of our experts will contact you within 24 hours.

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Navigating Global Trade: Essential Tips for SMEs Expanding into International Markets

Expanding into international markets can offer exciting growth opportunities for small and medium-sized enterprises (SMEs). However, venturing into global trade also comes with unique challenges and complexities. To navigate the global market successfully, SMEs need to be well-prepared and equipped with essential knowledge. In this article, we will provide valuable tips for SMEs looking to expand into international markets and make their mark on the global stage.

  1. Conduct Thorough Market Research:

    Before entering any international market, it is crucial for SMEs to conduct thorough market research. Understand the target market’s economic, cultural, and legal landscape. Identify potential customers, competitors, and local business practices. Analyze market demand, pricing dynamics, and regulatory requirements. This research will help SMEs make informed decisions and develop effective market entry strategies.

  1. Establish Reliable Partnerships:

    Building reliable partnerships is key to success in global trade. Seek local partners, distributors, or agents who possess market knowledge and established networks. These partnerships can provide valuable insights, facilitate market entry, navigate local regulations, and help establish credibility with customers. Invest time and effort in cultivating strong relationships based on trust and mutual benefits.

  1. Understand Cultural Nuances:

    Culture plays a significant role in business interactions. Be mindful of cultural differences, norms, and etiquettes in target markets. Adapt your marketing messages, product packaging, and communication styles to resonate with local customers. Building cultural sensitivity will help SMEs establish rapport and foster stronger connections with customers, suppliers, and partners.

  1. Mitigate Risks with Trade Finance:

    Global trade involves various risks, including currency fluctuations, political instability, and payment defaults. Mitigate these risks by utilizing trade finance solutions such as letters of credit, trade credit insurance, and export financing. These financial tools provide security, minimize non-payment risks, and ensure a smoother cash flow. Partner with reputable financial institutions experienced in international trade to explore suitable trade finance options.

  1. Comply with Regulations and Standards:

    Each country has its own regulations, trade agreements, and product standards. Ensure compliance with local laws, import/export regulations, and product certifications. Familiarize yourself with international trade agreements that may offer preferential tariffs or reduced barriers. Non-compliance can lead to delays, penalties, and damage to your reputation. Seek guidance from experts or trade organizations to navigate the complex regulatory landscape.

  1. Adapt Marketing and Sales Strategies:

    Tailor your marketing and sales strategies to suit the target market. Translate marketing materials, localize websites, and utilize digital marketing channels suitable for the region. Understand the preferred sales channels and engage local sales representatives or agents. Leverage e-commerce platforms to reach a global audience. Adapting your strategies to local preferences will enhance your market presence and competitiveness.

  1. Invest in Logistics and Supply Chain Management:

    Efficient logistics and supply chain management are vital for international trade. Optimize your supply chain to ensure timely delivery, minimize transportation costs, and manage inventory effectively. Consider partnering with reliable logistics providers experienced in international shipping. Stay updated on logistics regulations, customs procedures, and import/export documentation requirements to avoid disruptions.

Expanding into international markets can be a transformative journey for SMEs. By following these essential tips, SMEs can navigate the complexities of global trade and maximize their chances of success. Thorough market research, strategic partnerships, cultural understanding, trade finance solutions, regulatory compliance, adapted marketing strategies, and efficient logistics management are crucial elements in achieving sustainable growth and competitiveness in international markets.

Tulyp is a BtoB payment and financing solution that supports importers and exporters on a daily basis. As a FinTech specialized in Trade Finance, we support them in their payment guarantee, financing and liquidity issues. If you have any questions, please contact us. One of our experts will contact you within 24 hours.

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Open Accounts in international trade

In international trade, an open account is a payment method that allows buyers to purchase goods or services on credit from a seller without providing any upfront payment. This means that the seller extends credit to the buyer and allows them to pay for the goods or services at a later date, usually within 30, 60, or 90 days. An open account is a common payment method used in international trade, but it does carry some risks for both the buyer and seller.

How does an Open Account work?

When a buyer and seller agree to use an open account, they establish a credit arrangement that outlines the payment terms, such as the payment due date, payment method, and any interest or penalties for late payment. The buyer then places an order for goods or services, and the seller ships the products or provides the services. The seller will issue an invoice, which specifies the payment terms and the due date for the payment.

The buyer is expected to pay the invoice on or before the due date, which is usually within 30, 60, or 90 days. If the buyer fails to pay on time, the seller can charge interest or impose penalties. If the buyer continues to default on payment, the seller may decide to stop supplying goods or services to the buyer, or they may take legal action to recover the debt.

Benefits of an Open Account: 

Using an open account can provide benefits to both the buyer and seller. For the buyer, an open account allows them to purchase goods or services without having to pay upfront, which can be useful when cash flow is tight. This payment method also allows buyers to negotiate better terms with their suppliers, as they can establish a credit history and build trust with the seller over time.

For the seller, an open account can help them to increase sales, as buyers are more likely to purchase products or services if they can pay on credit. This payment method also saves sellers the cost and hassle of collecting payments upfront or using a letter of credit, which can be expensive and time-consuming.

Risks of an Open Account:

While an open account can provide benefits, it also carries risks for both the buyer and seller. For the buyer, an open account means that they must have a good credit history and a reliable payment history with the seller. If the buyer defaults on payment, it can damage their credit score and their relationship with the seller, which can make it more difficult to obtain credit in the future.

For the seller, an open account means that they are extending credit to the buyer and taking on the risk that the buyer may not pay on time or at all. This risk can be mitigated by using credit insurance, which protects the seller against non-payment by the buyer. However, credit insurance can be expensive and may not cover all types of risks.

To conclude, an open account is a common payment method used in international trade that allows buyers to purchase goods or services on credit from a seller. This payment method can provide benefits to both the buyer and seller, but it also carries risks. Buyers must have a good credit history and reliable payment history, while sellers must take on the risk of non-payment. To mitigate this risk, sellers may use credit insurance or other risk management strategies. Overall, an open account can be an effective payment method in international trade, but it requires careful consideration and management of the associated risks.

Tulyp is a BtoB payment and financing solution that supports importers and exporters on a daily basis. As a FinTech specialized in Trade Finance, we support them in their payment guarantee, financing and liquidity issues. If you have any questions, please contact us. One of our experts will contact you within 24 hours.

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How to import goods from France?

Whether you are a seasoned importer or a novice, it is often difficult to know what standards to follow when importing goods from a country outside the European Union.

Before embarking on this adventure, it is important to understand that importing and exporting is a profession in its own right and often very administrative. It is for these reasons that it is important to understand the basics.

Here are the 6 steps to follow when you import from a country outside the European zone.

Step 1: Apply for an EORI number

Before you can even enter into a commercial operation, you will need to apply for an EORI (Economic Operator Registration and Identification) number for your company.

The EORI number is a European identifier specific to your company (based on your SIRET number) that will allow you to make your various declarations to the customs authorities.

To apply for an EORI number, you will need to fill out a specific registration application form Cerfa 13930*01.

Once you have obtained your registration number, you now have the “right” to import goods into France.

Step 2: Find a supplier.

When you make the choice to import goods, the first thing you have to do is to find a supplier that meets your needs. Let’s assume that you have already identified the country of origin of the goods and the supplier.

However, there are a few things to check:

  • Check that the goods can be taken out of the country of origin. There are certain types of products that cannot leave the country of export because they are protected.For example: products related to national heritage and products protected by conventions. For example, products concerning endangered wildlife are often forbidden to be exported.
  • Check that your supplier has all the necessary authorizations to export the goods. In Asia, for example, your supplier must provide you with an export license or an exporter identification number. If he is not able to do so, there is surely a problem and you should be suspicious.

Step 3: Can the product enter the European Union and especially France?

There are several different customs classes and not all goods are subject to the same customs clearance rules. It is therefore important for you to find out about this and to identify the customs code and the country of origin of the goods. To do this, you can request a certificate of origin from the supplier and verify that it is legal to import the goods through customs.

Once you have access to this information, you will be able to find out about the duties and taxes applied.

Step n°4 : Organize the transport of the goods.

Now that the supplier has been found and you have checked the customs rules. You will have to organize the transport of the goods. Depending on the country of origin, you will import your goods by sea, air or land.

Once the mode of transport is selected, you will have to negotiate with your supplier which Incoterm to use for the operation. Incoterms define the obligations of the seller and the buyer in a commercial transaction: delivery, insurance, transport, risks and mandatory documents. It is important to choose an Incoterm that suits you and your supplier in order to share the risk during the transport.

You will find a complete description of Incoterms in another article: Incoterms Quesako

Step 5: Negotiate purchasing and payment terms

Like every commercial operation, there is a part of negotiation. After having negotiated the Incoterm, you will have to negotiate the shipping time, the packaging and the terms in case of non-conforming or defective goods as well as the list of documents you will need to import.

It is important to note that there are certain documents that you will need to have: invoice, packing list and the Bill of Lading. You can find this list here : Documents to be provided

Payment terms are also key when importing. We recommend every importer to avoid payment on order. If there is a problem or your supplier is fraudulent, it will be difficult if not impossible to recover the payment once it is gone.

There are different solutions you can consider:

  • Use the Tulyp payment solution. Our solution allows you to secure the payment and release the funds when your supplier proves that he has sent the goods.
  • Make a compromise: payment of a deposit and payment of the balance upon receipt.
  • Contact your bank to obtain a bank guarantee: payment against document, letter of credit, stand-by letter of credit.

Step n°6 : The transport of the goods

Once the payment is negotiated and your supplier is ready to ship the goods, you will have to organize the transport according to the Incoterm used. You will then give the conditions of the transport to the company in charge: carrier or customs agent to carry out the customs clearance.

Here is the information to give him:

  • The transport documents.
  • Indicate the imported goods, your EORI number and your VAT number.

The customs declarant will then take care of the customs clearance of the goods as well as the import customs declaration.

By following these steps you should be ready to import goods from countries outside the European zone. It is important to be accompanied during these operations by experts in order to be able to navigate quietly through the various administrative formalities.

Tulyp is a BtoB payment and financing solution that supports importers and exporters on a daily basis. As a FinTech specialized in Trade Finance, we support them in their payment guarantee, financing and liquidity issues. If you have any questions, please contact us. One of our experts will contact you within 24 hours.

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Overview of the Bill of Lading

What is a Bill of Lading?

The Bill of Lading is a key document for all international transactions carried out by sea. Also called B/L, the Bill of Lading is a document issued by the shipping company that is in charge of the transportation of the goods.

This document is important for the importer and the exporter because it specifies that the goods have been loaded by the carrier and that the carrier takes legal responsibility for the goods. In addition to being a transport document, it is a title deed for the goods from the port of shipment to the port of arrival.

What does the Bill of Lading contain?

The Bill of Lading contains a lot of information about the transport but also about the goods. Here are the details of the Bill of Lading container:

The players involved :

  • The exporter: the company selling or sending the goods.
  • The importer: the company buying or receiving the goods.
  • The carrier: the logistics company in charge of transporting the goods.

Transportation information:

  • Name of the vessel carrying the goods
  • The unique number of the Bill of Lading.
  • Port of departure and port of destination.
  • Unique voyage number.

The elements concerning the transport:

  • All information about the goods: type, quantity, weight and volume of the goods.
  • The type of container used to transport the goods and the type of packaging.
  • The product class of the goods: class of dangerous products.

What is a Bill of Lading for ?

It designates the receipt of the goods by the carrier. For the importer, it is a proof that the goods have been sent by the exporter.

It is a title deed during the transport that answers legal and responsibility issues on the ownership of the goods.

Who can issue a Bill of Lading?

The company in charge of the transport of the goods is the only company that can issue a Bill of Lading. The carrier is the Carrier (Ex: CGA CGM, Maersk, etc.), it is the company owning the vessel. A forwarder cannot issue a Bill of Lading.

Tulyp is a FinTech specialized in Trade Finance. The Tulyp solution supports international trade actors on their payment guarantees, financing, and liquidity issues. If you have any questions you can contact us, one of our experts will contact you within 24 hours.

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What are the important documents for import / export?

When exporting or importing goods, it is important to be aware of the customs and freight procedures to be followed.

For all international trade transactions, there are documents that must be provided to facilitate the clearance of the goods at the port of departure and at the port of arrival. Depending on the method of transportation used, the documents may vary, but certain documents remain standard for every international transaction.

Here is a list of standard documents to be presented for a smooth transport:

Commercial documents :

  • Commercial transport invoice: this document is important because it contains obligatory information for the transport: descriptions of the loaded goods, the price of the cargo, and the value of the loaded goods.
  • The packing list: this export document is very important for export clearance. It contains the information related to the goods during the export clearance: size, gross & net weight of the goods and number of units present. This exhaustive list of information is important for the export clearance but also for the importer because it is him who will pay the penalties in case of false or incomplete information.
  • Certificate of origin: It is a customs document that certifies the origin of a good, more precisely, its country of manufacture. It is issued and authenticated by the Chambers of Commerce and Industry: they verify the information filled in and impose a conformity visa.

Shipping documents :

  • Bill of Lading: The Bill of Lading also called the Airway bill for air transport, Rail waybill for air transport, and Roadway bill for road transport, are important documents for the importer or exporter in an international transaction.These documents are issued by the carrier designated for the transportation of the goods, they specify that the goods have been loaded by the carrier and are on their way to the buyer.

Tulyp is a FinTech specialized in Trade Finance. The Tulyp solution supports international trade actors on their payment guarantees, financing, and liquidity issues. If you have any questions you can contact us, one of our experts will contact you within 24 hours.

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