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Local Invoicing for Global Transactions
Watch our practical discussion on how local invoicing can help bridge the gap between global sellers and local buyers.
This webinar covers:
- What the local invoicing process looks like.
- Why local procurement matters in global deployments.
- Common risks related to foreign exchange.
- Real-world examples of the opportunity cost of not using our specialized solution.
- How to know when this solution is the right fit for your transaction.
Cross-Border Billing and Forex Risks
When high-value hardware moves across borders, long procurement timelines mean that even minor currency fluctuations between the quote date and delivery date can erode profit margins. Traditional cross-border billing often forces local end users to absorb this foreign exchange volatility just to secure necessary IT infrastructure.
Understanding how these macro shifts affect pricing predictability is critical for international hardware rollouts.
Mitigating Forex Exposure
Cross-border sales inherently expose both buyers and sellers to transaction risks. When currencies shift after the quote, the buyer may end up paying more than expected, or the seller may receive less than expected. Even worse, a stuck shipment waiting for final payment exposes both parties to forex risk until it moves again.
While options like market hedging and foreign exchange contracts exist for mitigating direct forex risks, global transactions often face additional challenges like:
Outward remittance restrictions that can impact a buyer’s ability to pay.
Strict related party laws, where imports from a sister company almost always face customs inspections and revaluations.
Enterprise-enforced local procurement requirements.
High VAT in certain countries, which will be a sunk cost if an import is structured incorrectly.
Top Lanes that Benefit from Local Invoicing
Local invoicing allows resellers to extend their global reach to buyers in complex markets, and multinational enterprises to source hardware in-country before shipping it to related parties and subsidiaries without regulatory friction. This strategy is particularly efficient for imports into:
The Real Cost of Tech Imports
If you fail to account for the impact of currency volatility on customs valuations and import fees, your cost estimates and budgets could be far from the actual landed costs of a global transaction.
Valuing Tech at Customs
Importers also need to understand that accurate customs valuation is not necessarily equal to the price on the commercial invoice (CI).
Additional value arises from packing costs, the selling commissions paid by the purchaser, royalty or license fees paid by the buyer, resale proceeds, payments to third parties for related services, and free or discounted “assists” from your supplier’s manufacturer.
The estimated value can differ from the final value if the local currency shifts significantly between the export and import dates. Unintentionally overvaluing goods can result in an overpayment of duties and taxes, while undervaluation may constitute duty circumvention.
Calculating Import Fees
Import fees are determined by several factors, including product classification and the Certificate of Origin, and vary by country. These fees include: VAT, duties, and other taxes. The value declared at customs is the basis for calculating all fees.
The commercial invoice is typically converted to the local currency, and the shipment value may differ from expectations upon customs clearance due to forex volatility between export and import. Customs may revalue your goods, and your overall tax liability may change unexpectedly.
Navigating Outward Remittance Restrictions
A self-service manufacturer came to us with a shipment stuck in customs on its way to a customer in India. The wrong Incoterm had been used, the buyer was unable to navigate foreign remittance restrictions to pay our client, and they were considering using a sister company to re-import the goods.
TecEx exported and re-imported the goods so that the transaction was compliant, VAT could be recovered, and a local procurement order and local invoice could be issued. Our transaction structuring set the purchase price for both parties, thereby entirely mitigating forex risk.
The Limitations of an IOR
While a third-party Importer of Record (IOR) is a solid solution when you are unfamiliar with the trade regulations of a new location, don’t have a local entity in the country, or simply aren’t willing to take on import risks, it’s best used for local transactions with global shipments.
As soon as a transaction crosses borders, new foreign exchange, transaction, and import risks and regulations arise. This is where a local invoicing strategy comes in.
Navigate FX Risks with TecEx
When importers need to bring tech to markets facing forex challenges, TecEx goes beyond simply serving as your Importer of Record. Not only do we take on all import/export risks and responsibilities, but our solution ensures that:
Simplify Your Cross-Border Transactions
Submit this form, and an expert will get in touch to discuss how local invoicing can streamline your global procurement cycle or bridge the gap to your global buyers.
