Steve: Good afternoon Kate.
Kate: Hi Steve.
Steve: You know today I would like to talk a little bit about your main job here which of course, is not to talk to me about language but it's to handle all of the detail that goes with international trading. Kate: That's right. You've just reminded me. Steve: All right. Now some questions here. We are located in West Vancouver. We deal with suppliers who are, that is suppliers of wood products who are in North America and Europe and we sell to North America, Europe and Japan.
Kate: That's right. Steve: What are some of the, sort of documents, trading documents, banking documents, etc., that are necessary in order to carry out this business?
Kate: Well, our business to Japan is fairly well established so the pattern is fairly standard. We send our customers copies of invoice. We have something called a Mill Certificate Steve: Sorry, could I interrupt? So, the customer gets an invoice, that's how much money he owes us. Kate: Yes, and that's also proof for him that he needs to take to his country's customs and duty officers in order for them to calculate the tax owing on whatever he is importing into the country. Steve: Ok. And then you have a Mill Certificate. What is a Mill Certificate?
Kate: The Mill Certificate contains generally no monetary details. No details of the prices but has all the details of the shipment itself so that document is more useful for example, to the people on the dock who are dealing with the physical goods that are coming in but have nothing to do with the payment.
Steve: So there's an invoice, there's a Mill Certificate. Is there any other documents?
Kate: Yes, there must be what is called a Bill of Lading and this is issued by the shipping company, whatever vessel line we use to send it. Usually our lumber is in containers. Sometimes it goes by bulk shipment but this shipping company will issue this Bill of Lading which contains details of who the lumber is coming from, that is our company, who the lumber is going to, our customer generally and then all the details, number of pieces, number of packages, volume and all these details must match exactly to the details on our invoice and Mill Certificate.
Steve: I see. So, a lot of the same information is on the invoice, not exactly the same, but there's a certain amount of overlap of information between the Mill Certificate, the invoice and the Bill of Lading. Kate: There must be an overlap in order for cross reference and again, customs officers, the dock people, everyone must see the same information. If there are any discrepancies, this is a real problem.
Steve: Now a discrepancy is a term that refers to a situation where there is a difference between let's say, the number of pieces or some other figure on one document as compared to another document. Kate: Or, perhaps there's a discrepancy with the reality of what comes off the ship. Every once in a while we have a problem in that the originating mill tells us they've sent 24 packages, but they made a mistake and they only sent 23. So, all of our documentation says 24 packages, including the Bill of Lading because we told that to the shipping company but on the dock at the other end there are only 23.
Steve: What happens then? Does the customer usually claim for the missing package?
Kate: They will contact us and in some cases we need to issues some documents quickly so they can explain to the dock what happened and in some cases we simply refund the money they've paid or that we invoice them for. Steve: What banking documents?
Kate: That's another issue. A lot of our customers pay by direct transfer through the banks. Some of them use the bank as an intermediary and they use a form of credit called a Letter of Credit. In that case we must submit all of our documents, the invoice, the Mill Cert, the Bill of Lading generally to the bank along with the details of the Letter of Credit which is paying for that and the bank's are absolutely the pickiest, the most detail oriented. Steve: Pickiest means the most fussy. They are very detail oriented.
Kate: Yes, so every single I must be dotted and T must be crossed and every decimal must be exactly the same and the wording, the phrasing, everything must be exactly as per the bank's specifications or we have to issue a new version and generally there are bank charges. Generally non Letter of Credit business is easier.
