In import business, you may face a number of problems arising from language differences, new payment methods, different paperwork requirements and plethora of rules and regulations.

Among these complexities, managing suppliers effectively seem to most importers a Herculean task. But in reality, they are not so complex , and one can overcome them with a little planning and research.  

The challenges

• Legal: You may face restrictions at either end of the transaction while dealing with a overseas supplier. Before finalizing a deal, you should ask yourself questions like- who will bear the insurance cost? who will be liable if a product causes harm or loss? Is there any possibility of infringement of any intellectual property right? Considering all these things is necessary to ensure smooth operation of your import business activities in the future.    
• Language problem: If you are dealing with a client who use different language than that you use, it is better to hire some kind of professional language support service provider.
• Problems related to payment: Try to understand different modes of payment such as  By Open Account (O/A), By Documents Against Payment (D/P), By Documents Against Acceptance (D/A), By Prepayment, etc. before entering into international trade.  
• Shipping procedures: Before starting your import business, It is better to identify yourself with the complex  shipping procedures to avoid any confusion in near future.
• How many suppliers you need: While engaged in import business, it is important to determine exactly how many suppliers you need. Too many of them can increase your managerial burden while too less can result in supply-chain disruption.
• Choose your suppliers carefully: While choosing a supplier, check where its raw materials have come from. Also ensure that the supplier don't follow unethical business practices. Choosing a wrong supplier can hamper your reputation in the local market.    
  

How to find a supplier

While looking for your overseas supplier, always ask yourself the following questions-

• Familiarity: Are you familiar with the country? As we have discussed earlier, you may face problems arising from linguistic and cultural difference in a totally unknown country.
• Language: Which language will be the medium of communication?
• Distance: How far away the country is where your supplier is located?
  

How to choose a supplier

• Is the supplier reliable?
• Is it able any reference located in your country?
• The best way to check the credibility of the supplier is by visiting it.
• Never make advance payment and avoid long-term contracts with a supplier about whose credibility you are not sure.   
• Check the financial status of the supplier company.
  

Maintaining relationship with suppliers

• Trust is a crucial element in any business. But in import business, you have to be very careful at the initial stage. You should not try a long term contract at this stage. Let the relationship grow at its own pace. Later you may move to longer contract periods.
• Try to overcome the communication gap created by the language problem hiring a professional language service provider. Later, you may get some of your employees get trained specially for this purpose.
• Always emphasize upon face-to-face communication with your supplier. Such opportunities are likely to be infrequent, but always grab it whenever you get opportunity.   
• Cooperate with your supplier. If the supplier is facing any problem, try to resolve it together.
  

Payment methods in international trade

While doing business internationally, trading can seem complicated and risky. Geographical distance, language difference, plethora of rules and regulations- businesses have to face so many difficulties in import-export business. Among these difficulties, the most common problem they face is the risk in the transaction. To overcome it, they need a good understanding of different payment methods in international trade. There are four primary methods of international payment-  

• Documents against payment (D/P): In this type of payment, the seller (exporter) gives instruction to a bank that the documents attached to a draft for collection are deliverable to the drawee only against his payment of the draft. After the goods are shipped, the seller (exporter) sends the export documents to the buyer's (importer's) bank. Only when the buyer (importer) pays, the documents are given to it by the bank.   
• Advance payment or cash in advance: This mode of payment offers greater level of protection to the seller (exporter). Here, the supplier ships goods only after the payment has been received.
• Letters of credit or documentary credit: In this type of payment, a bank substitutes an buyer's (importer's) creditworthiness and guarantees an seller (exporter) payment for goods or services when presented with a set of specified export documents by the supplier.
• Open account: In this mode of payment, the level of protection for the buyer (importer) is greater. The exporter ship goods prior to being paid and without without any third-party guarantee of payment. Goods are purchased by the buyer (importer) without payment, and future payment for delivered goods totally depends on the trustworthiness of of the buyer (importer).    
  

How to draw up the contract with your supplier

There are so many difficulties, risks and confusions you may face when you enter into this bigger world of international trade. To avoid them to a great extent, the best way is to drawing up a clear written contract. Disagreement may arise at any point and so it is better to write down everything rather than trying a verbal agreement. But the question arises here- what a ideal contract should include. Find below some useful information to solve this complex and most common problem you face while transacting with a overseas supplier-

• Products: Specify what you are going to import. Note down any legal or technical rules they products should comply with.
• Price: Make it clear how much you will pay in what currency and at which exchange rate.
• Payment Mode: Choose a payment mode that suits your interests and requirements.
• Delivery of Products: Specify how the products will be transported to you.
• Trading terms: Clearly set out the obligations of the exporter and the importer in relation to shipping costs, duties, risks related to delivery, level of service, customs-related formalities, etc.; make clear divisions of functions.
• Insurance: Make it clear who will be responsible for what kind of risk at which stage of the process.  
• Potential problems: State clearly what would be the procedure and where the legal proceeding would be heard if a dispute arises.
  

Trading with overseas suppliers can lower the input of your business and give you access to specialized products that may not be available in your country. No matter whether you are looking for low-priced supplies or products giving you a competitive edge, import business you help you multiply your profit rapidly. Challenges are always there- language differences, new payment methods, increased paperwork requirements, and many more. But you have take the risk, face the challenges and win the game; that is the way all great businesses pave their way to success.