Handling the Critical 5Ps of Export Business Success-Part-4 (The Paperwork)

International trade is largely a business of documentations. This is due to the fact that the goods can be in transit for more than 2months but the documents gives evidence of the shipment and details of the goods. This in turn gives comfort the buyer, broker, bank, insurance and any other party involve in the transaction. Documentations are so vital in international trade and therefore could jeopardise the success of an export project if not properly done. For example it can hinder the clearance of the goods at either the port of loading or the port of discharge. Under a letter of credit transaction, it can delay the payment if the documents have some discrepancies. 

Based on the nature of the documents involve, they could be broadly categorise into commercial, financial and regulatory documents. The commercial documents include Bill of lading, commercial invoice, packing list, certificate of analysis etc. The financial documents include Draft and Bill of Exchange while the regulatory documents vary from one country to the other and from one product to the other. In Nigeria it involves NXP, NESS receipt, NAFDAC Certificate, MANCAP Certificate, Health Certificate etc

A new entrant in the export business should answer the following questions about the paperwork as he prepares to start the business and they include the following: What are the documents required in the export process? Where can the documents be obtained? When are the documents supposed to be processed? Who are the people that need the documents? Why the documents are necessary? Which documents are required for different categories of products? How does the exporter prepares the documents to be issued by his company? I will attempt to answer these questions in a concise manner in order to give the readers a foundation for further research. 

The first question states, what are the documents required in the export process? The basic export  documents include transport documents (Bill of lading, Airwaybill, Road Waybill etc), Commercial Invoice, Packing list, Quality and Quantity Certificate, Certificate of Origin, Phytosanitary Certificate, Fumigation Certificate, NXP form, Export Certificate, Certificate of Incorporation, Proforma Invoice, Receipt of payment Nigeria Export Supervision Scheme (NESS) fee, Single goods declaration, NXP endorsed by the Nigerian Customs Service and Clean certificate of inspection etc.Kindly note that not all these documents (especially the certificates) are required for every export transaction 

The second question poses a great challenge to an exporter and it states, where can the documents be obtained? The transport document is obtained from the carrier (Shipping line, Airline etc), the exporter issues the Commercial Invoice, Packing list and proforma invoice on his letter head. The Quality and Quantity Certificate are issued by the inspection agent appointed by the buyer, Certificate of Origin can be issued by NACCIMA, Phytosanitary Certificate is issued by Nigerian Agricultural Quarantine Service, Fumigation Certificate is issued by federal produce, NXP form can be obtained from commercial banks, Export Certificate is issued by the Nigeria Export Promotion Council, Certificate of Incorporation is issued by the Corporate Affairs Commission, NESS fee can be paid in some commercial banks, Single goods declaration and Endorsed NXP are obtained from the Nigerian Customs Service and the Clean Certificate of Inspection is issued by the government appointed inspection agents and this include Cobalt International, Carmine Assayer and Neroli Technology.

The next question states that, when are the documents supposed to be processed? This is also a very crucial question because if the documents are not issued in the correct period, this could jeopardise the success of the transactions. The documents obtained and processed through the bank before shipment are called the pre export documentations and they include NXP form, Export Certificate, Certificate of Incorporation, Proforma Invoice, Receipt of payment Nigeria Export Supervision Scheme (NESS) fee. The documents processed and obtained after shipment are called post export documentations. These can be divide into two groups namely the Shipping Documents (transport documents (Bill of lading, Airwaybill, Road Waybill etc), Commercial Invoice, Packing list, Quality and Quantity Certificate, Certificate of Origin, Phytosanitary Certificate, Fumigation Certificate etc)  and the Exchange Control Documents (Single goods declaration, NXP endorsed by the Nigerian Customs Service and Clean certificate of inspection)

The fourth question states that, who are the people that need the documents? The pre export documents need to be processed by the exporters through the bank in order to legally clear their goods for export in Nigeria. The shipping documents are needed buy the seller to show evidence of shipment and claim payment and they are needed by the buyer to meet the regulatory to meet the regulatory requirements needed to clear the goods at the port of discharge. Finally the exchange control documents are needed by the banks to confirm that export proceeds received by an exporter were based on legally exported items before reporting to the inflow to the Central Bank of Nigeria.

The fifth question is a question of function and it states, why are the documents are necessary? These documents are very vital because of what they represent. For example a Bill of lading in the hand of an exporter performs three major functions which include evidence of receipt of goods by the shipping line, evidence of contract of carriage with the shipping line and evidence of title to the goods by the consignee stated on it. The commercial invoice also have a number of functions which include showing the details of the item and the amount to be paid, it forms the basis for the payment of duty and amount to be insured. The packing list helps the exporter in stuffing the container, it helps the customs in their examination and helps the importer in calculating the total units of items in the container. Other documents like certificates help the importer to confirm the quality, quantity, origin and parameters of the goods. 

The second to the last question states that, which documents are required for different categories of products? It is very important to note at this point that while the pre export documentations and exchange control documents are constant for every shipment (especially if it is going through the seaport), the shipping documents varies from one products to the other. For example Agricultural produce like cocoa will require Phytosanitary and Fumigation Certificates but these are not needed for solid minerals. Processed food will require NAFDAC certificate but non-food Item will not require this document but will require MANCAP certificate. It is therefore important for the exporter to investigate and know which of these documents applies to his product before commencing the export project. 

The last question that needs to be answered by the exporter states that, how does the exporter prepares the documents to be issued by his company? The documents to be issued by the exporter include the proforma invoice, commercial invoice and packing list. The content of both the proforma and commercial invoice are similar and these include the items being shipped, unit price, quantity, total value, Incoterms and other cost. The proforma is issued before shipment while the commercial (or final invoice) is issued based on the items that were eventually shipped. The packing list contains the the details of the packaging materials ( bag, carton, pallet etc), the number of items inside each pack, the container number, unit weight etc. Samples of these documents can be obtained on the Internet. You can also find it in my book title Export Business Made Easy.

On a final note, proper documentations are very critical to the success to an export transaction. The paperwork therefore require detailed investigation and understanding in other to avoid all the challenges that may arise at both the port of loading and port of discharge due to wrong documentations. 

For questions on this thought, you can reach me via email to bayemibo@3timpex.com