The following blog is part of a 4-part series which explores our experiences with a number of businesses just like yours. Businesses that have put up their hand and said, “Hey, I need someone to help get this sorted”. This first instalment focuses on international ecommerce invoicing and risk.
If you have an ecommerce business, it’s likely the impacts of COVID over this past year have seen your sales grow. With this new growth come additional demands, not only on you, but also on your team (children, partners, neighbours, family friends – whoever you can get to help pack some of your treasures). It’s certainly not easy, so it might be time to start finding some international ecommerce solutions.
As your ecommerce model grows and you are starting to despatch more and more overseas, there comes a time where your strategy and processes need some improvement in the following areas:
- Understanding documentation to ensure delivery
- Assessing freight rates / transit times and drop-shipping (3PL) strategies
- Pricing, taxes and repatriating your revenue
International eCommerce: Invoicing and risk
Are your international invoices the same or similar to your domestic invoices? If so, then the following blog on ecommerce invoicing and risk is an important read for you.
This is not normally a problem when you do one or two overseas shipments a month, but if this is becoming a serious venture, and you’re moving more and more product to an overseas destination, then we suggest that it matters.
The problem isn’t that your buyer cares about how your invoice looks. It’s more about ensuring that your documents comply with international requirements. Remember, you are international now. Just like our invoices have certain compliance requirements in Australia (GST, ABN, etc etc), your invoices for export (called commercial invoices) also have some compliance requirements. (Learn more about commercial invoices)
When you ship goods overseas there are a number of officials that will want to examine your documents as your cargo travels to your end customer. These officials can cause you a lot of trouble if you give them reason to. So we say, don’t give them a reason and ensure your documents are as they need to be.
Two important things to note:
1 – Don’t draw unnecessary attention – incomplete, inconsistent or incorrect invoices raise flags to customs officials. If you want to live a pain-free existence, no one wants the attention of a customs official.
2 – Manage your risk – You need to state a few important things on your invoices to ensure you’re not responsible for any charges you haven’t considered. See our blog on INCO terms
As your business grows, so does the need for your professional administration. It’s not overly difficult but you would be surprised how many businesses we see that make the following common errors:
1 – Not stating a Harmonised Commodity Description (otherwise known as a HS code). Or using an incorrect HS code for your products. (Learn more about HS Codes)
2 – Incorrectly describing the goods, the quantity and/or their value
3 – Not clearly stating the incoterms under which this shipment has been transacted (learn more about incoterms)
Items 1 & 2, if/when noticed are going to get the goods delayed in their processing through customs. Now you need to devote time trying to communicate with a customs official in another market who has very little interest in your pleas to hurry up.
Item 3 is about risk. When Australian export companies don’t include an incoterm on their documentation, they can become liable for a range of taxes and charges that they did not expect or forfeit the goods. Again, to get the goods underway, someone will need to address the issue, pay the fees, send numerous emails all while working to placate your buyer. 5 star review……perhaps not this time.
Avoiding these risks and invoicing issues
Now you reflect on the export program that your team is building. It may feel like it’s draining all your remaining energy, time and resources. But it is well worth it and it will only build from here. Happy customers in Australia can be duplicated in other markets. You just need to be clear on the rules and set up the processes, so you don’t have these issues. You can then get back to devoting your time to building your business.
I am continually reminded by our team that this is a blog and not a research assignment, so we are going to limit this discussion about ecommerce invoicing and risk to the above key points. There are many more elements in this discussion we can’t address here so we encourage you to review our resources page in more detail.
For specific questions that we haven’t addressed, feel free to reach out to us and we would be only too happy to point you in the right direction.
Coming up in our e-commerce series:
- Overseas compliance – I know…..boring. But we are professional and growing internationally. We need to get it right from the get-go.
- Taxation Liabilities – We only need mention the UK and Europe post Brexit to give exporters the willies
- Logistic options – This is gold as it’s a key part of the process. Get it there cheap and fast and minimise any headaches.
Who is CVEN?
CVEN is your team of international trade specialists.
We understand the difficulties involved with starting and growing your export. CVEN is an export management company with over 25 years of experience providing export solutions to business. We get to work tackling the export side of things, so you can stay focused on running your business.
If you’ve hit a roadblock with your ever-growing online business, get in touch and we’ll help get your international ecommerce operations running smoothly.