Home – New Forums Money matters Please HELP. I Need professional advice

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  • #991377
    Mike Key
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    Hi everybody,
    I’ve started working as an agent only some months ago.
    Now I hope you don’t mind me asking for your advice on a difficult situation I encountered:
    I have been contacted by an international manufacturer whom wants to export in the Oceania area; I represent them and have agreed on a commission.
    Now, a couple of buyers I have found want to pay with a check, directly to me, when the items arrive; the manufacturer, on the other hand, for the first shipment wants the money immediately.
    Both parties want me to advance the money, no letter of credit or other terms of payment.
    How would you suggest I should do?
    In addition of the commission agreed with the manufacturer, do I ask them more money? How do I calculate how much I ask them?
    Or do the buyers need to pay me for advancing the money?
    Is there another way of working this out?
    I really hope you can help me, I look forward to hearing from you and remain with best wishes,
    Mike Key

    #1181281
    MCP
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    Mike,
    Your best source of advice on this matter will be your bank.

    Which currency is the manufacturer using? Most foreign companies use $US however Euro’s are also common. You will need to set up a foreign currency account all of the big banks can do this for you (in any currency).

    When it comes to your client paying for the goods it will all depends on who has the goods and your agreement with your manufacturer/supplier. If your supplier wants to receive the cash before sending the goods then you should set up a letter of credit through your bank – your bank will know the most safe method of doing this.

    How much do you trust your supplier? If you sell goods and then need to waiting for your commission then you are taking a big risk. Also if they dont want you to use a letter of credit – which is a fairly standard payment method for foreign transactions – then they may not be a legitimate business. It may be best to buy a small volume of product (using a bank letter of credit) for your first shipment and then selling direct to your client for a profit. This will help establish the relationship for both you and your supplier to build trust.

    Your clients will prefer to pay you directly for the goods as it means that they dont have to go to the trouble of setting up foreign bank accounts and letters of credit.

    Regards,
    Marco

    #1181282
    Mike Key
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    Thank you so much Marco,
    I work mainly in New Zealand and I must say that letters of credit or similar aren’t used.
    I have managed to get the deal through protecting myself (everybody pays me and then I retransfer the money).
    But I am not satisfied because I should of managed to arrange different payment terms.
    Thank you for your help, I much appreciate it.
    I look forward to hearing from you and remain with best wishes,
    Michele

    #1181283
    ThexArm
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    Just wondering why do you want to be an agent? As an agent you work on commission and although u r developing a market for their product you don’t get paid for it.

    Think about being a distributor. As a distributor you develop the business in NZ and you set your prices. Also, if you generate enough volume you may be able to negotiate better terms.

    As Marco mentioned, speak to your bank and set up a foreign currency account. There are few things you can do to protect yourself from fluctuations in foreign currencies.

    It is normal practice to buy goods on letter of credit. It would be available in NZ as well. Only thing is, your supplier may not agree to it until they grow confidence in you. So, it is good to start all these conversations with the supplier and later on these become negotiating points for you. If you do well and if there is good market, sometimes they even pay you for marketing their product.

    If you think the business is going to be good then register a company and also register trademarks of the product in NZ. So that no one else can enter without your permission. By doing that you are creating an asset which can be sold later on if the business grows well. Get a good accountant on your side.

    #1181284
    Mike Key
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    Thank you ThexArm,

    Your answer is very interesting.
    Having started only recently my activity, I thought that the best thing would be working as an agent for the first couple of years, then start distributing.
    I moved to New Zealand from Italy only a couple of years ago, so now I am trying to learn the job and create a network.
    On the other hand to start distributing you need quite a capital to invest.
    I strongly believe I need to do 1 step at a time, build myself up in the import export environment and then move to the next step.

    I appreciate very much your answer, thank you

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