Hi All, I hope someone could provide me with some advice for me. Basically i have a trade agreement with a manufacturing company in my country. I would love to be in a position to provide these goods worldwide. As the goods are bulky (furniture items)im not sure how I can go about it with regards to freight. As I am new to it, is it ok to stick with FOB UK port so an agent can arrange the freight? Also with regard to the payment side of things, as i have a new agreement, manufacturer offers no credit. Is it normal to ask for 100% of the payment up front from my customers in order for me to be in a position to place the order with our manufacturer? Apologies if my business terms are awful.Which im sure they are! Any advice is appreciated.

I guess that the shipment term chosen would depend upon the terms that the customer wants. So you can offer FOB for your convenience but be flexible if someone wants to CIF or some other method.

Personally I would never pay 100% upfront as it is just too dangerous for a buyer. You may scare potential buyers off if you request that sort of term.

What a lot of suppliers in China do in this case is that they open an LC with the customer and then use this LC to borrow money for raw materials and production. Generally they would borrow the money from the trading company through which they process documentation. Perhaps you can do a similar thing with your bank that handles the LC on your behalf.

Why no go over to the forum on Payment and Finance here at alibaba and see if anyone over there can help you out.

Egernia already gave you some advice regarding payment and finance, and I was thinking in the bulkiness of the furniture. Modern furniture is typically sold disassembled - you buy it as an individually wrapped/boxed kit. If it's traditional furniture, you might not be able to do that, but perhaps you could find clients who would be willing and able to assemble (glue?) the items. That should save you a bundle on shipping and could also prevent a lot of unwanted movement during transport, depending on how the stuff is packed, sized, etc..

Quoting from [london_girl]:


Hi All, I hope someone could provide me with some advice for me. Basically i have a trade agreement with a manufacturing company in my country. I would love to be in a position to provide these goods worldwide. As the goods are bulky (furniture items)im not sure how I can go about it with regards to freight. As I am new to it, is it ok to stick with FOB UK port so an agent can arrange the freight? Also with regard to the payment side of things, as i have a new agreement, manufacturer offers no credit. Is it normal to ask for 100% of the payment up front from my customers in order for me to be in a position to place the order with our manufacturer? Apologies if my business terms are awful.Which im sure they are! Any advice is appreciated.

First it depends on thetype of business your looking to do.  Retail or Wholesale?

For retail:  Based on the circumstances you quoted (insufficient funds to warehouse stock) your limited to payment in advance to cover at the minimum the manufacturing costs.  This will not be a great selling point at this level and doubtful you will get much business from an unrecognized name brand. 

For Wholesale/Distribution:   Your best option under this circumstance is to do business via a confirmed, transferable, letter of credit.  By this, means it proves that you have funds and the manufacturer can proceed with the manufacturing of the items knowing they are going to get paid for the goods they produce.  You cold also ask for a confirmed, transferable, red clause letter of credit.  Which would allow you to recieve say 30% of the L/C amount and surrender it to the manufacturer for the cost of materials.  They would then be paid the balance due them on completion and negotiation of the Master L/C.  The whole idea of the transferable L/C is so that you receive your profit as well as expenses to cover the named shipping term negotiated by your buyer before the manufacturer receives full pyament.

Shipping terms have little to do with anything besides the price of each item.  The more you are required to do for or on behalf of the sellers is included in your unit price.  This is why you would not issue a Pro Forma invoice until all the terms of the deal had been worked out.

Best regards,

Ranger