Every businessperson is aware that cutting costs is one of the finest strategies to boost profitability. This fundamental business and economic principle does not apply differently in the import-export sector. Cost-cutting measures can help the company become more competitive and free up the owner to invest in new product lines or expand into new markets, both of which can help the business thrive.
Here are our top four suggestions for lowering expenses, managing finances, and increasing profits for importers and exporters.
The cheapest option is not always the best option
Consider the business impact of delays and how they will be handled when comparing shipping/freight services and costs. Other comparison variables to consider include shipping timeframes, shipment tracking procedures, and shipping cost per item. In particular, the tracking capability can significantly reduce costs by streamlining the process, lowering overhead, and other en-route expenses. Additionally, a shipping service with a track record of success and the capability to manage missed or delayed shipments efficiently while minimizing your financial or reputational loss will be a more trustworthy business partner.
In the long run, a “cheap” shipping service that takes weeks to deliver your products may end up costing you much more. Therefore, you should consider that the quality of the service is equal to the cost and you should weigh your options considerably on how it will affect your business.
Recognize Licenses, Free-Trade Arrangements, and Potential Fines
The most inefficient expense for an import/export company is certainly fines. You need the appropriate form of license to import or export specific commodities, especially if they are on your government’s “restricted” or other special list. Additionally, unneeded expenses and fines, operating without the proper permit can cause delays and damage your reputation. In extreme circumstances, you could even go to court.
Furthermore, purchasing from nations with free-trade agreements may enable an importer to avoid paying duty, which over time may result in considerable savings and a stronger bottom line.
Observe Subsidies & Tax-Free Programs
On the opposite end of the spectrum, you should be aware of whether the products you are importing or exporting are covered by a subsidy program. Many governments provide incentives to importers and exporters who trade in certain items and possess the necessary licenses, such as reduced taxes or duty relief. These can result in significant expense reductions for your business.
Be aware of import duties and customs fees
The “other costs” can significantly reduce your ultimate profits in addition to start-up and ongoing running costs as well as one-time expenses like registration fees and deposits. To reduce these expenses, think about all fees, duties, levies, and taxes that you would pay when doing business abroad and see whether they can be avoided or at the very least minimized. To avoid paying storage and inspection fees, find out if you can have your products properly certified and examined. Using a globally recognized commodity code system of tariff numbers might also lessen the potential of paying fines or additional costs for items with incorrect or inadequate labels.