Saturday, 4 July 2020

WHAT IS EXPORT TRANSACTION CYCLE?

Export transaction cycle is the total number of days it takes to consummate your transaction from inception to completion. A proper understanding of the export transaction cycle is critical to a successful transaction because of the delivery period agreed to in the contract and amount of interest accruing if you are taking out a loan.

What are the factors that typically affect the transaction cycle? Sourcing, processing, transportation, shipping, documentation and payment period. Putting days to each of these factors helps estimate how long it will take to execute the transaction. This in turn influences the delivery period you agree to in your contract with your buyers and your loan repayment period.

Assume sourcing takes 14 days, processing- 4 days, transport to port city- 5 days, shipping-14 days and documentation-3 days-,payment -5 days you could throw in 1-3 days for contingencies- these total 48 days.

This clarity guides your decision making. Ignorance is not an excuse in exports- understand the transaction cycle before signing that contract.

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