The world has become considerably smaller in the age of the internet and importing goods and services – both for a personal or business use – is now easier than ever.
The web has opened up vast global markets and has allowed smaller, less expensive manufacturers to trade without boundaries. In most cases, it’s now possible to go direct to the producer, cutting out the middle man and further reducing costs.
Whether we realize it or not, most of the goods we buy these days are manufactured far from their original parent company’s location. One need only think of the iPhone slogan, ‘Designed in Cupertino – manufactured in China,’ for an example. Outsourcing to foreign partners is now extremely common and can seriously cut your overhead.
However, while working with overseas producers can often prove far more economical, there are still some key financial considerations to bear in mind. Also, you should remember the environmental implications of different freight options when deciding how to receive goods.
Paying for goods and services
One of the most important things to remember when working with foreign companies or individuals is that exchange rates will always affect the final price you pay. Currencies fluctuate daily, so you should be aware when you agree a fee that the price stipulated will be dependent upon levels remaining stable.
Also, sending money overseas can be expensive, depending on the method you use. As well as charges for sending of money abroad, most banks tend to operate their own exchange rates, which are always less beneficial than the real market rates.
To combat these disparities, several internet-only transfer companies have sprung up in recent years, offering much fairer and more transparent base rates and transfer fees. Depending on the amount of money you’re sending, the savings can be substantial. Check online for the best money transfer deals.
Consider the transportation costs of goods
Working with a foreign supplier, you’re going to need to transport the goods to your own country. The service sector differs slightly in that any work performed will be mostly delivered online – which can almost always happen without charge. However, physical products will require delivery by some form of transport.
Transport by air: Air freight is the most common solution when goods and products are needed quickly or to protect higher value items. Commercial airlines will often carry packages for an additional fee or, more commonly, specifically-designed freight aircraft will transport your goods. Prices are calculated mostly on weight – followed by the volume or value of goods.
Transport by sea: Transport by boat is mostly used for goods from the Far East or other similarly far-flung locations. Sea transportation is the perfect solution when there’s no particular urgency in terms of when your goods arrive. The costs of shipping are mostly calculated on volume, followed by the value of the goods in question. Shipping is considerably cheaper than transport by air – on average, fees can be one-quarter to one-sixth lower.
Road or rail transportation: Road and rail transportation are effective options between interlinked countries/continents, and both can be much quicker than transport by boat. Of the two, rail transportation is more eco-friendly – however, it also costs significantly more than carriage by road. Also, the risk of parcel damage caused by transit is higher in both.
Collect the parcel in person; Depending on the size and value of the item, sometimes the best option is to travel and collect the packages in person. Recent changes in section 321 regulations may make the collection of goods in person the best, the quickest and safest option for receiving goods from overseas.
Taxes due on arrival
In most countries, the taxes payable on arrival are calculated by adding the base price of the product with the cost of transportation to work out the taxes due. Just one more reason why choosing the best freight option is of such importance.