[vc_row][vc_column][vc_column_text]When exporting from South Africa, certain documents need to be completed as an exporter. It is important to ensure all documentation is filled out correctly in order to minimise delays and to ensure a smooth process. In this article, we briefly discuss the most commonly used export documents when exporting from South Africa.
The Pro Forma Invoice
A pro forma invoice is a pre-advice of what will appear in the commercial invoice. It must be noted that the pro forma on its own is not a legal document. The pro forma invoice and the commercial invoice usually look the same, but each clearly states whether it is a pro forma or commercial invoice. The initial pro forma invoice often sets the stage for the first round of negotiations. The difference between a pro forma invoice and a quotation is minimal, and mainly lies in the structure and layout of the pro forma/quotation. Some exporters use the pro forma invoice as their quotation. The pro forma usually becomes the order or sale confirmation, it is important to note that once you have signed the pro forma it will become a legal document as you are accepting it.
It is important to have details such as a description of the goods, the quantity, price, currency, physical addresses, payment methods, Incoterm, freight details and country of origin on the pro forma invoice.
The Commercial Invoice
Once the pro forma is accepted, the exporter prepares the commercial invoice. This document is required by both the importer and exporter. In exporting, the commercial invoice is considered a very important document as it serves as the starting document that underpins an export transaction. The commercial invoice should contain full details of the consignment, including price and other related costs, in order to facilitate customs clearance. It must be signed and dated. Freight and insurance, when included in the selling price, should be itemised separately as these charges are not subject to duty in certain countries.
Based on the terms in this commercial invoice, the importer will instruct their bank to issue a letter of credit assuming that it’s required. This letter of credit (or the documentation associated with any other form of payment) will also need to reflect the terms specified in the commercial invoice exactly, while all subsequent documentation must reflect the terms of the L/C; there can be no exceptions. From this explanation, it is clear that the commercial invoice plays a central role in an export transaction. The details that need to appear on the commercial invoice are the same as those on the pro forma, as well as who’s responsible for the banking fees and related costs, exporters banking details and any other information relevant to the order.
Important to note when exporting, is that some countries require the commercial invoice on their own specified forms. A consular invoice must be prepared in the language of the destination country and can be obtained from the country’s consulate. It often needs to be stamped by an authorised Consul official in the exporting country.
The Packing List
A detailed export packing list will need to be prepared. This document itemises details about the cargo and it is important that the details on the packing list (such as shipper’s/importer’s details, number of items involved, etc.), match what is stipulated on the commercial invoice and bill of lading/airway bill. If there is a mismatch between the packing list and the other transport documents, this may lead to closer scrutiny of the cargo and may ultimately result in delays in the cargo arriving at its destination.
Pricing information is not required on the packing list. The packing list should be attached to the outside of a package in a waterproof envelope or plastic sheath marked “Packing list enclosed”. The list is used by the shipper or forwarding agent to determine the total shipment weight and volume and whether the correct cargo is being shipped.
The packing list should also include the container numbers to assist the consignee when receiving the shipment, thereby ensuring that everything is accounted for. They will be able to verify what is stated on the packing list is included in that specific container.
Letter of Credit
There are different forms, e.g.
- Sight credits,
- Usance credits,
- Transferable credits,
- Revolving credits and
- Standby credits.
Sight credits: A sight credit or L/C is one which will be paid upon presentation of the required documentation to the issuing or confirming bank. It is important to make sure where payment will be made with sight L/Cs. Most common form of LC and can be irrevocable or revocable.
Other documents
Freight transit order: This is a form of inland BOL used in South Africa and required by Spoornet.
Road consignment: This is also known as a road transport document, road waybill or a road manifest. It is a form of inland BOL and will need to be accompanied by a commercial invoice, packing list and other documentation relevant for clearing purposes.
Export Cargo Shipping Instruction: This is a written instruction from the exporter to the freight forwarder or carrier for them to facilitate the movement of goods to the desired destination.
Export permits: Most countries restrict the exports of specific products and international agreements may also be in place. Export permits help to control the outflow of goods, and in order to export any prohibited products, exporters must obtain an export permit. These can be applied for from the International Trade Administration Commission (ITAC).
Customs Declaration form / Bill of Entry Export: SAD500 is a South African document required by SARS, the purpose being to ensure that exported goods are properly declared to SARS. The document will need to be approved by Customs before the goods will be allowed to be exported.
Exports into Africa
This is increasingly becoming a big industry. With road freight into Africa, some African countries local road traffic authorities are reluctant to issue transport permits to haulers not based in that country.
This can lead to problems and delays, thus some South African hauliers have set up branches in such countries. Factors that influence the choice of road haulage for export include speed, convenience of distribution and freight rates. One issue to be aware of in exporting into Africa, is that when it comes to your LC – please ensure your bank confirms that the buyers bank is valid and reputable to ensure that you will receive payment for your goods.
With countries listed by the Office of Foreign Assets Control (OFAC) [USA], one needs to take particular care. Banks do risk assessments on these countries and they currently include the following countries: Balkans, Belarus, Burma, Ivory Coast, Cuba, Democratic Republic of the Congo, Iran, Iraq, Liberia, North Korea, Sudan, Syria and Zimbabwe. These are countries that have been sanctioned based on anti-terrorism, counter narcotics trafficking, non-proliferation and diamond trading. The Office of Foreign Assets Control (OFAC) (USA) administers and enforces economic sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers. The sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals.
Pitfalls common in exporting
When exporting from South Africa, there are a number of pitfalls to watch out for that could lead to unnecessary and costly delays.
- Pitfall #1: Incorrect Documentation – an example would be having the incorrect cosignee or address.
- Pitfall #2: Documentation not received in time – delays in documentation can lead to demurrage and overstay charges.
- Pitfall #3: Lack of communication with the supplier – this could lead to errors in terms of quantities, shipping times and prices.
- Pitfall #4: Marine Insurance not applied for – Should anything happen to a shipment, such as damaged cargo, you will not be covered.
- Pitfall #5: Incoterms – having the wrong incoterm could cause issues in terms of payment, risk as well as incorrect documentation.
- Pitfall #6: VAT compliance – this could lead to unnecessary costs.
- Pitfall #7: LC complications – payment will be affected as well as delays if the LC documentation is not correct.
- Pitfall #8: Track and trace – cargo can go missing or stuck in demurrage if not tracked and followed up on properly.
- Pitfall #9: Packing List – errors on the packing list can cause issues with customs.
- Pitfall #10: Pro forma – this is not a legal document for clearance purposes.
As can be seen, there are many processes and documents involved when exporting goods from South Africa. It is always a good idea to seek professional assistance in order to save time, money and stress, especially as a first time exporter.[/vc_column_text][/vc_column][/vc_row]