Before you jump into the trading world, you should be aware of common mistakes beginners make. Here are five to avoid.

The export-import trade is a profitable venture that offers numerous opportunities on an international scale. However, there are many challenges involved. Having the right strategy before you can get started is crucial. Here are some common mistakes you should look out for:

1. Lack of Insurance
Many things can go wrong between the port of origin to the target port. High temperatures can spoil products, or you could even encounter theft. Still, some traders ignore insurance to avoid incurring more costs. Without insurance, entrepreneurs could undergo huge losses, making it crucial to include insurance in your expenses. Try to gather as much information as you can on insurance beforehand. Remember, insurance options vary depending on the type of product, packaging, and destination.

2. Lacking Protection Against Fluctuation of Currency
Many new traders struggle with currency fluctuations. Often, the originally said prices might end up in huge losses. While this is a common occurrence in the international economy, there are many methods you can take to reduce the risk. One of the most effective solutions is to use a common currency, which cuts down the risk margin for both the trader and buyer. Some traders opt to set baseline rates that comprise upper and lower price limits. Prices are set within this extent for a certain period. If currency rates drop beyond the set limit or if the period expires, then prices are adjusted. Implementing this type of agreement can spare both parties from future consequences.

3. Underquoting Products to Cut Down Cost
Underquoting products is common among experienced traders. Some underquote export goods in a bid to reduce insurance premiums or cut down clearance costs. It may sound like a good idea at the moment but can lead to the collapse of your trading company in the long run. Officials can confiscate your consignment, and individuals who are involved could face legal action, damaging the reputation for all parties.

4. Inadequate Record Keeping
Records are crucial for any business, and every transaction should be recorded. This can come in handy in many ways. For example, before getting paid, you must provide documentary evidence. Having all the applicable documents in order helps smoothes the payment process. Moreover, if you lose your goods, your insurer will need proper records to process compensation. If disagreements arise, you’ll need documentary evidence to prove your innocence. Taxation authorities can also conduct due diligence regularly. They’ll need to peruse your records for proof of compliance. Make sure to file your transactions and be on the safe side.

5. Fraudulent Practices
Every business struggles with finding buyers. These circumstances present the buyers with a chance to make huge profits. In some target markets, you’ll have to deal with numerous challenges to acquire customs clearance unless you give a bribe. However, bribing can lead to huge penalties and even legal action. It also prevents businesses from trading on a fairground. When you bribe your way to getting a client, it is highly likely that another bidder will steal the client from you. However, when you develop your client base on a proper foundation, you’ll be able to maintain a long-term partnership.

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International trading can be complicated, especially for beginners. However, with proper knowledge and guidance, even novice traders can be successful. For more information, subscribe to EXIMA’s newsletter today and learn everything you need to know about international trade!

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