Foreign purchase

– Foreign purchase from start to finish

In the following article, which is sourced from the Chamber of Commerce, we discuss how an overseas foreign purchase proceeds from start to finish.

  • Foreign purchase registration procedures:

  1. Purchase Request: Either notified by the engineering unit of a company to the business unit or a trader independently imports.
  2. Sourcing: Depending on the type of goods we want to import, we should look for sellers or manufacturers of that product overseas, which can be done in different ways: 1- Checking our previous and similar purchases or our partner companies, 2- Searching the Internet, 3- Inquiries from the Chambers of Commerce
  3. Purchase / Inquiry Submission: It is usually a written inquiry from the seller which may be a direct inquiry or a tender. This query specifies the type – number – how the shipment and other commercial items are requested by the seller.
  4. Performa Invoice receipt: Upon receipt of the Performa Invoice from the seller, the business case – price and technical items are reviewed and approved (if necessary technical approval).
  5. Technical Approval: If required technical verification of product specifications should be approved by the relevant expert.
  6. Financing: If the purchase is visual (cash), the whole amount will be financed by the financial entity to the seller’s account and if the purchase is by letter of credit the amount will be paid in advance. (Usually 2%) and the rest should be paid to the bank before the transaction date.
  7. Business Order Registration Operation: The goods must have an entry permit to enter the country, which can be obtained by filling in the order forms and receiving a 2-digit code.
  8. Shipment Insurance Contract: Due to the fact that in all terms of Incoterms purchase insurance contract and its cost with the buyer and insurance policy is one of the requirements required to open a documentary credit. Therefore, the buyer must obtain an insurance policy from one of the Iranian insurance companies.
  9. Banking: Depending on the type of payment, the buyer will request a direct payment to the seller or a request for credit by referring to the bank.
  10. Shipment and Inspection Contract: Taking into consideration the term of delivery of the goods and the need to inspect the buyer simultaneously with the banking operations, the shipment companies inspect the price and then conclude the contract.
  11. Build / Send Order: Upon receipt of the Swift from the Bank to send the seller a payment to the Buyer, the relevant Swift will be sent to the Seller with a request to make or send (in writing).
  12. Manufacture and Delivery: The seller can wait for the bank to receive a notice but usually starts to build or send in good faith. And deliver the goods to the company in the said place.
  13. Delivery of shipping documents: After receiving the bill issued by the shipping company together with the other shipping documents, the seller requests to the bank and requests the requested amount in credit. And the bank is obliged to pay if the documents are not in conflict with the letter of credit.
  14. Freight Supervision: After receiving the bill of lading, the seller sends a copy of the bill of lading to the buyer to inform the buyer of its shipping and timing.
  15. Delivery of goods to Customs: The carrier delivers the goods to the Customs and receives from the Customs the warehouse bills the warehouse bill remains in the hands of the carrier to pay the carrier the shipping cost to the carrier. The customs office also sends a declaration stating that the goods have been delivered to the buyer’s address.
  16. Customs clearance: In addition to the customs warehouse receipt, the buyer needs clearance documents to clear the bank to receive the clearance and receives the documents for the total settlement of the credit and related fees.

– Order registration operations at the Ministry of Commerce

All merchandise (except for some of the goods listed in the Export and Import Regulations each year, such as passenger and freight exchange in border areas) must be licensed by the Ministry of Commerce. Order forms at the Ministry of Commerce are considered as entry clearance when stamped with oval seal:

The following documents are required to submit an order to the Ministry of Commerce.

  1. Membership Card: You need to have a business card and deposit money into that office to join the order registration office.
  2. Order Forms filled by machine type 2 copies (2 copies if purchased without currency transfer)
  3. Two copies of Performa Invoice: one of which must be original, and the requirements of each Performa Invoice have been met.
  4. Product specification catalog: The product catalog should be attached to the Performa Invoice if required by the relevant expert.
  5. Certificate of the relevant organization if required: According to the Export and Import Regulations, all items requiring the approval of a ministry are numbered from one to nine, each number representing a specific ministry. If the number is not entered or zero, it indicates that the goods are authorized.

– Things to consider in Performa Invoice.

  1. Manufacturer or seller company name and phone number
  2. Seal and signature of seller company
  3. Full name of the buyer company
  4. Country and address of seller company
  5. The date of issuance of Performa Invoice and its validity
  6. Duration of construction and shipment
  7. Description of the item and counting unit
  8. Unit and total price
  9. Payment method and seller account number
  10. Customs Tariff Code mentioned in Export and Import Regulations (Harmonized System)
  11. Delivery term
  12. Place of loading of goods
  13. International Standard Number and Type if required.
  14. Inspection items
  15. Product warranty period
  16. Insert standard number

– Shipping documents

Shipping documents include the following documents:

  1. Certificate of Origin is a document issued by the chamber of commerce of the seller’s country indicating that the goods are manufactured in the country of the seller and usually require the seller to certify the origin certificate by the embassy or consulate of the buyer country.
  2. Inspection Certificate: This certificate states that the product is in quantitative, qualitative and packaging terms conforming to the requirements of the information referred to as “Verification of Conformity”.
  3. Packing List: A list that specifies the number of packages, the quantity or the number and unit of goods in packages ready to load.
  4. Performa Invoice: is a sale offer where the business is considered and finalized with a Performa Invoice agreement agreed upon by the parties and recorded as a contract between the buyer and the seller.
  5. Bill of Lading: This is a document issued by a shipping company, and if it is written in the name of anyone, it is recognized as the owner of the goods.
  6. Freight Invoice: This is a document showing the seller’s freight payment. Either Prepaid or will be Collect.

In the terms CFR or C&F and CIF, DAF, CPT, CIP, DDU, DDP, DES, DEQ, as stated in the bill of lading, Prepaid Rental is pre-paid.

For more information about terms which mentioned above, click here.

Difference Between Marketing and Selling

Difference Between Marketing and Selling

Marketing

Marketing is a broad concept. In simple words, it means the process through which the goods and services move from the producer to the ultimate user of the products. Philip Kotler, the father of Marketing says Marketing is a social process by which a need is created, offered and exchanged via products (goods, services or an idea)

Marketing is the systematic planning and implementation so that the buyers and sellers come together and a market is created.

Example: Marketing starts much before and continues even after the product is sold. When a customer buys a car, the after-sale services comes under marketing.

Selling

Selling is a narrower concept. Selling means providing the customer with the good he/she needs in exchange of a price. It is usually between two parties. Selling is more like an agreement wherein the buyer receives the product in exchange for money.

Example: You go to a shop and the shopkeeper “sells” you a Good X and in return you pay him some money in cash.

Difference in Selling and Marketing

  1. Marketing is about customer satisfaction. It starts with customer needs and demand and ends with customer satisfaction. It is a customer-oriented approach. Sales, on the other hand, is about selling what the company produces. It doesn’t care about the need of the customer but about the profits.
  2. Marketing is about providing quality products and consumer satisfaction. Selling is about generating by maximizing sales and is a money-oriented approach.
  3. In marketing, emphasis is given on the wants of the consumer. Whereas in selling, emphasis is on the company’s products.
  4. Marketing is different from selling because here the company first determines customers’ needs and wants and then decides how to deliver a product to satisfy these wants. In selling, it is the other way around.
  5. In marketing the emphasis is on innovation in existing technology and providing better value to the customer by adopting a superior technology. Selling emphasizes on staying with existing technology and reducing costs.
  6. Marketing views the customer as the very purpose of the business. Selling views customer as a last link in business.
  7. Planning in marketing is long-term-oriented in today’s products and in terms of new products, tomorrow’s markets and future growth. Planning in selling is short-term-oriented in terms of today’s products and markets.
  8. Marketing follows customer-oriented approach and selling uses production-oriented approach.
  9. Consumer determines price and price determines cost of marketing. In selling, cost determines price.
  10. Marketing makes use of long-term strategies to get sales – examples, value-added service, customer education, meeting objectives. Selling makes use of short-term tactics to get sales – examples are free gifts, discounts, rebates, bribes, etc.
  11. Marketing is an indirect activity whereas sales is a direct activity.

To sum it up, let us look at the components of the two.

Sales- A part of Marketing

Selling is simply the movement of the goods or services from the seller to buyer. Selling is a part of marketing, and therefore is a narrow concept. It is the main part of marketing but not the whole of it. Every business comes into existence to make some profit, and yes, selling plays a very important role, but marketing concentrates on the customer demands and needs which helps in increasing sales in the long run.

Marketing

Marketing is a wider concept and includes the following components:

  • Designing the product

The first and foremost thing in marketing is the designing of the product. The product is designed in such a manner that it attracts the people Example: Dell laptops that used a different design when almost all the other companies used the similar colors like Black and white. This made a huge impact in the market and was a great success.

  • Placing the product

Placing the product in the mindset of the customer and in different price category plays a crucial role in marketing and here comes the importance of PRICE AND PLACE.

  • Finding the satisfaction level

Most of the companies that are well versed try to find the customer satisfaction level by various methods like Questionnaires, providing samples etc.

  • Finding the target people

One of the most important things that is to be taken care is finding the target which are aimed by the companies to place the product.

  • After sales service

The most important thing that attracts the people are after sale service. IFB is a company known for the service and this gives an assurance the people thereby widening the market for the product.