Avoiding sales 'sins' will close more deals

Not identifying prospects from suspects

There are many people who will listen to a sales presentation. It may make them feel important or help them fill their time. Whatever the reason, it doesn't help the salesperson get any nearer to the sale. In fact, it takes the salesperson further away from the sale because time has been wasted and the point-of-entry into a company has been mismanaged.

Presenting to people who are not qualified is just that -- presenting. It is not selling. And a company or a salesperson can't make a profit by just presenting.

Probably the greatest misuse of a salesperson's time is presenting to someone who doesn't have the need, the authority or the money.

Professional salespeople know the frustration of trying to sell where there is not a buyer. The salesperson must know how to properly qualify a prospect and determine if there is adequate reason to proceed with the sales presentation.

Even if the initial contact is not with the decision-maker, the salesperson needs to take advantage of the opportunity to move up the decision-making ladder.

Making a sale, not a customer

For many salespeople, just getting a signature on the bottom line is the only objective. To accomplish this end, they use whatever means are available -- assumptive closes, promises of extra incentives, threats of price increases or whatever other tricks are in the bag.

Salespeople like this sometimes walk out with signed purchase orders, but they don't sign on customers. In fact, the customers may be so resentful of the pressure and tricks, they may rethink their commitments.

Even if the order isn't canceled, these purchasers will have no particular loyalty to your company, and likely will buy from your competitor the next chance they get.

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Avoiding sales 'sins' will close more deals

Never asking for the order

As a prominent study proved, more often than not, customers don't have to worry about a pressured close, because in 62 percent of the cases, the salesperson never asks for a sale.

For most salespeople, selling is an uncomfortable experience because they don't know where to go in the presentations. They're afraid -- and rightfully so -- that with each sentence or gesture, they will destroy their chances of closing. So, like a voice-activated tape recorder, they just go on and on, recharging their batteries until the tape runs out. If the customer doesn't volunteer to "buy," then they just don't "sell."

Should the prospect hesitate when asked for the order, alternate ways to bring the sale to a successful close are made available. In this situation, the salesperson must elicit additional information, respond to objections and look for openings to successfully close the prospect.

When prospects say "No," what they're really saying is, "You haven't convinced me to buy."

Pushing for the close

Too often, the salesperson tries to "sell" rather than help the customer "buy." When the salesperson is ready to close, the order is asked for. When the first close is resisted, the trick closes begin.

The customer has fears, uncertainties and doubts about the decision to spend company or personal money, and when closed too soon, reacts negatively to being forced to make a decision. Pushing too hard means the salesperson is forcing the prospect to build a defensive wall that won't come down easily.

Following the sequence of a well-given presentation means asking for the order will come at the right time. After the needs are understood, the benefits described and the fees discussed, it is appropriate to ask for the order.

Wasting selling time

Selling is a problem for many salespeople because they don't know how to spend their time profitably. Selling is prospecting, cold calling and obtaining leads. It is traveling to meet strange people, having to write letters, make phone calls and hand out brochures. It is writing out the order form and servicing the client.

Many salespeople look busy, but they're not closing sales. They suffer from lack of organization, and instead of using their time to be in front of qualified potential customers, they're spinning their wheels in unproductive work.

There is only one way to insure you get all the way to the close, and that's by staying on an orderly, logical path.

When salespeople know what has to be accomplished next in the sales process, they waste less time and energy and close more sales. When they don't know what information or reassurances the customer is really looking for, they tend to go off in all directions and have little success.

During every sale, there is a defined, yet hidden agenda. If this is not adhered to closely, there usually will be no sale. This is why a salesperson should learn the process of selling.

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Avoiding sales 'sins' will close more deals

Increasing sales is not just a matter of raising quotas, adding new products, changing commissions or redefining territories. Your staff needs to know how to close more of your prospects and how to penetrate your current accounts.

Easier said than done? Not really.

With effective sales training, selling becomes a procedure and closing ceases to be a problem. By learning how to stay on a sequenced, logical path -- even through a long sales cycle -- the salesperson can take the presentation from initial contact to final closing in a manner that is comfortable and natural for the seller and the buyer.

All customers, regardless of what they're buying or the industry they're in, have similar reasons for selecting one product/service over another. Understanding how to treat the motives for buying, and to control the decision-making process, is the core of every presentation.

It's so easy to lose a sale. The salesperson can ramble on aimlessly, the presentation is to the wrong person or the buyer doesn't have the need. There are dozens of mistakes, or "sins," salespeople commit every day that cost you sales. These can be avoided and closing increased.

Here are some of the most-typical sins:

• Talking too much, listening too little

A typical salesperson walks into an office, gives the official two minute warm-up -- asking about the fish on the wall or the family photo on the desk -- then, like a high diver, leaps into a hot presentation about this feature and that feature, the options available, the price and the savings. For the close, most do a belly-flop and end up with nothing but a big splash.

Afterward, it's always the ex-prospects who are at fault for not understanding why they need the product or service.

Knowing what questions to ask and how to ask them is the only way to find out if you're making a presentation to the person with the real need, the authority and the money. If you're not presenting to the right person you're wasting your time.

A salesperson needs to find out the facts and the feelings of the prospect before an effective presentation can be made.

Selling the product, not the benefits

When someone buys a drill bit, it's not the drill bit the customer wants, it's the hole. People buy to satisfy a need. No one is willing to pay for a product or service that just sits and does not perform.

Yet salespeople sell as if they will. Presentations continually focus on the width, height, weight, power, speed, buttons, bulbs or whatever of the product/service. It's just like selling cars with no gas, pens with no ink or computers with no software. The value just isn't there.

A customer buys a computer for efficiency and profit, not for its whistles and bells. Be they individuals or committees, they buy benefits, not features.

Prospects have hidden buying motives. There are reasons why they select one brand over another, why one product/service seems to fill the need better.

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8 Magical Motivational Triggers and Their Use in Sales Letters

So what exactly are motivational triggers? Wikipedia describes the word 'motivation' as follows: "Motivation is the set of reasons that determines one to engage in a particular behaviour. This term is generally used for human motivation...".

Motivational Triggers are therefore particular words or phrases that activate the brain in a positive manner. I am certain we can all remember many occasions when something has triggered us to react in a certain (sometimes irrational) way. Maybe we have bought something on the spur of the moment whilst on a particular website. We responded that way because of motivational triggers.

When it comes to writing a sales letter, for instance, there are definite motivational triggers that can be used to encourage the reader to buy whatever it is you are selling. Here are some for you to consider:

1. Admiration
Everyone wants to be popular, or even famous. There's no single person on Earth who can honestly say they don't want to be popular. If they say they don't, then I would suggest they are not being entirely truthful! Everyone likes to feel needed and valued, and everyone likes to be admired.

2. Wealth and Prosperity
We would all like to have more money. Everyone would like to be more successful in the future than they have been in the past. Some people may wish to invest in the Stock Market to become wealthy. Or perhaps they would like to start their own business. Many hundreds of thousands of people are doing this on the Internet.

3. Security
People like to spend money of course, but everyone would like to have more money saved - stashed away 'for a rainy day' or whatever. Some people want to have safe investments; others want to simply save for a future purchase. This gives an immense sense of security and satisfaction. Everyone wants and needs some sort of secure safety net.

4. Appearance
Everyone (with very few exceptions) wants to look better. This desire may manifest itself in many different ways. They may need to lose or gain weight, improve their appearance in some way, become more fit and healthy. So the motivational trigger in this case may be to make available help to achieve this.

5. Knowledge
People like to learn new skills. Learning a new skill will make them feel a great deal better about themselves, more intellectual perhaps, or more creative and useful, for instance learning to fit a new kitchen when they couldn't even hammer a nail in straight in the past. There are many different training courses to be offered to these people.

6. Time-saving
Everyone is interested in learning how to save time. We all wish there were more than twenty-four hours in the day, so learning how to make the most of those hours becomes especially significant. Most people would like to spend less time working and more time enjoying life. A tutorial on Time Management might be appropriate here.

7. Longevity
We would all like to have a long, happy and comfortable life. It's human nature to want to feel well and comfortable, and to be a part of this world for a long time. It's also human nature to want to look forward to the future. So people may need to relieve aches and pains, or perhaps need a more comfortable bed to sleep in.

8. Love and Affection
Everyone needs love and affection; it's part of the basic human need for a fulfilling and complete life. This particular subject is virtually perpetual as there is no soul living that doesn't want to be loved.

So as you can see it's extremely straightforward to write your letter incorporating a few motivational triggers to get the attention and curiosity of your readers. However, the important thing to understand is that when writing such a letter, you are selling the benefits to your reader, rather than simply the 'new bed' or 'latest course' or whatever it is you have chosen to promote.

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Effective Tips for Self-Promotion

The idea of “selling yourself” essentially means “to convince others of your value”. It’s usually a concept referred to when trying to get something – like a new job or a promotion. A lot people have a hard time selling themselves because they feel like it’s arrogant. People are often taught that self-promotion is vain or bigheaded. Truth be told, it’s a necessary part of business. It’s your responsibility to make others sit up and notice your work. You are your own biggest supporter. There is nothing wrong with acknowledging your talents. In fact, it’s a very wise and necessary career move.
So, how do you do it? How do you sell yourself effectively?

Believe in Yourself
You can’t effectively sell yourself if you don’t value who you are. You must have confidence in your abilities. Maintaining a high level of integrity and a high quality of work will help keep you self-assured. You need to feel proud of your actions so don’t do things that will undermine your efforts. Focus on building your confidence and being the person you want to be.

Share Your Knowledge
Knowledge is a valuable resource and it can make anyone look more attractive. Sell your skills by sharing your knowledge. Be willing to teach others what you know. This will not only help them, it will demonstrate your abilities at the same time. A win/win!

Share Your Experiences
Tell your story. People are drawn to those who are willing to open up and share their experiences. It will help you build strong connections with others. Remember that you are unique and there is value to be shared.

Be Authentic
Trust is a critical part of selling yourself. No one values dishonesty. Be genuine in your interactions with others and work to develop honest communication. The truth will earn respect and trust.

Present Yourself Professionally
Everything you do and say creates an image. You always want to present yourself with professionalism. This includes everything from your appearance to how you speak and how you shake hands. It’s always best to play it safe and follow formal business etiquette. Though things have relaxed quite a bit in most professional environments, formality is never viewed as unprofessional. When attempting to sell yourself, it can be a big added bonus.

Be Positive
Show positivity in your interactions with others. Smile, show interest and be enthusiastic. Don’t complain, engage in gossip or negative conversation. Keeping yourself upbeat will draw people to you.Selling yourself is all about showing others who you are. The trick is to present yourself in the best possible light.

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HOW TO SHOW YOU'RE NUMBER ONE

I wear a gold lapel pin that says No. 1. I'm never without it. I used to wear it because I'm the Number-One Salesman. Even though I've stopped selling cars and lead a whirlwind life of lecturing before business and industry groups and on college campuses, and writing what I've learned so that others may benefit from it, I still wear that pin because it reaffirms my belief in myself. I'm sold on myself, and that pin says so out loud.

You wouldn't believe the number of people who ask me, "What does your lapel pin mean?" Strangers on planes, people with whom I share a lecture platform or a television camera, even men and women in elevators who usually stare straight ahead and say nothing-they all ask me that question or a variation of it.

I tell them, "It means I'm the number one person in my life." Sound selfish? Egotistical? Not at all. Looking Out for Number One is a book that enjoyed a status for some time as a runaway best-seller. Some readers regarded it as putting forth an extremely self-centered viewpoint. Others, more charitable, saw it as a handbook on enlightened self-interest. I believe that each of those reactions missed the point. The message I came away with was this: If you don't believe you're number one, no one else will. What you must look out for is that belief.

Now, you do this: Go to your nearest good-sized jewelry store or the jewelry department of any large retail establishment. There you will find that you can buy yourself a similar Number-One symbol. Most jewelers have it. I've even seen it in mail-order catalogs. The symbol might be a pin like mine, or it might be a necklace, a bracelet, a charm or a ring. Wherever you wear it and whenever you do, it will flash in the sun or glisten in the light of the room. It will throw a spark back to your eye and remind you constantly that you are number one. It's part of what's called psyching yourself up, selling yourself on you.

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THERE IS ONLY ONE YOU

I remember my mother smiling and holding my hand and saying, "Joey, there is no one else in the world like you." Thank God, most of us have mothers who think about us that way. Mine was something special, and because I had so much love for her, I believed what she told me. And besides, I didn't have a twin brother, so who could be like me?

However, I did grow up with twin brothers in my neighborhood, Eugene and John LoVasco, and I remember them well.

They were absolute look-alikes. I can still hear their mother telling mine that she couldn't tell the boys apart. It was true. Everyone knew that Eugene and John were twins, and identical twins to boot. But were they? Years later, when I had moved away, I happened to mention them to an FBI friend, and he told me that there is no such thing as identical twins.

Consider this: The FBI has files of fingerprints numbering in the millions, maybe even billions. And we've all been told that no two of those sets of fingerprints on file are alike. No two people since the beginning of time have had identical fingerprints. No two people yet to be born will have fingertips or even palms that will coincide.

But that's not all. My FBI friend also told me that voiceprints can be made of words whispered, spoken, sung or shouted, and that these are often used in positive identification. As with fingerprints, no two people ever had or will have exactly the same voice. The human ear might not be able to detect a difference, but a voiceprint can.

It's an indisputable fact. No two people have identical personalities. On the surface, so-called identical twins may look alike, so much so that their own parents might have difficulty in telling them apart, but if you were to try to match the right half of one's face to the left half of the other's, they simply wouldn't go together.

There is only one you. There is no one in the entire world to equal you, to match your fingerprints, to match your voice, to match your features or to match your personality. You are an original in the fullest sense of the word. You are number one. And now that you know it, your job is to reinforce that fact in your conscious and subconscious mind every day.

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WE'RE ALL SALESPEOPLE

The kid who is trying to talk his mother into letting him stay up an extra hour to watch TV is selling.
The girl who hints to her boyfriend that she'd rather see a romantic movie than a hockey game is selling. And when he tries to talk her out of the idea and get her on the edge of the ice, he's selling.
The teenager who wants the old man's car for Saturday night is selling.
And the guy who steps up the voltage as he says good night at his girlfriend's door is selling.
Anybody who has ever asked the boss for a raise is selling. The mother who talks up the virtues (if any) of broccoli to her child is selling.
Whoever you are, wherever you are, whatever you do and wherever you do it, you're busy selling. You may not have been aware of this, but it's true.
Who, then, is more qualified to show you how to do a better job of selling yourself than someone who climaxed a career in selling by being crowned the World's Number-One Salesman? But first things first.

YOU MUST BE SOLD ON YOURSELF

Before you can sell yourself successfully to others-and thus sell your ideas, your wishes, your needs, your ambitions, your skills, your experience, your products and services-you must be absolutely sold on yourself: 100 percent.
You must believe in yourself, have faith in yourself and have confidence in yourself. In short, you must be totally aware of your own self-worth.
It was my mother, Grace Girard, who instilled in me an awareness of self-worth, who helped teach me self-respect. God knows, she had formidable opposition in my father.
To this day, I still remember vividly the conflicts I had with my father. I could do nothing right. For reasons I have never been able to understand, he spent most of his life assuring me that I would never amount to anything. As a Sicilian kid who sold newspapers and shined shoes in bars, I seemed to have nothing going for me but the street smarts I was learning. I began to believe my father. My self-respect nose-dived through my teen years until one day I found myself staring at the prospect of reform school. Close call, but my mother, thank the good Lord, wasn't buying what my father was selling.
Mother spent most of her life assuring me that I could be Number One. She always stressed to me the importance of selling myself, of thinking of myself as worthy. In her own way she was saying what my friend Dr. Norman Vincent Peale told me years later: "Joe, you are what you believe, you are what you think you are."
It all begins with how you think about yourself. Just who are you, anyway?

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How to Sell Yourself in a Job Interview

1. Find out as much as you can about the company: How is it performing? What is its mission statement and who are its customers? What are the interviewer's priorities and responsibilities? The more you know, the more you'll be able to ask informed questions about the job.
2. Study the description of the job for which you have applied. Be clear on what is expected and if you have the background and skills to do it.
3. Take an inventory of your strengths and practice discussing how they complement the requirements of the job. Write down specific examples that demonstrate these strengths and be able to speak fluidly and intelligently about them.
4. Make a winning first impression at the interview. Be prompt, make eye contact and give a firm handshake. Dress one notch above what's expected for the position you're interviewing for.
5. Look for common ground between you and the interviewer to establish a positive rapport and to stand out from the crowd. You may have the same alma mater or mutual friends. Be careful not to overplay this and look desperate.
6. Turn what could be seen as potential weaknesses into strengths. You might say "I haven't worked in promotions but I coordinated getting the word out for my son's school carnival and we had twice as many people attend this year." Be calm and confident.
7. Use specific examples to describe why you're a perfect match for the job. Ask probing questions to demonstrate a genuine interest in the position. In the process, interview the interviewer to find out why the position is open. Get a sense of what the turnover rate is at the company, what the position's job track is, and how the company keeps its employees happy. You're trying to find out if you want to work for that company as much as they're trying to find out if they want you.
8. Demonstrate that you are a problem-solver. Identify an issue the company is facing or a problem you might potentially encounter in that job and discuss how you'd solve it.
9. Make the interviewer feel good about hiring you. Be enthusiastic, responsive, truthful and friendly.
10. Follow up with a thank-you note that reiterates your qualifications and mentions specific topics covered in the interview to trigger the person's memory about your winning interview.

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How to Sell Yourself (and Why Your Career Depends On It)

To get ahead in life, you need to be in the business of selling. If this statement makes you cringe, it is probably because the word “sales” evokes images of annoying telemarketers and pushy car dealers. Relax, though, as this article is about a product so wonderful and special you should have no qualms in selling it. The product? You.

There are endless situations in life where the key to success is the ability to sell yourself to others. In your career, the ability to convince an interviewer that you are the best person for the job is critical. When it comes to relationships, your ability to show your best qualities can be the crucial factor in clinching a date with the girl or guy you want. When you think about it, if you cannot sell yourself as a person to others, you are going to have a difficult time selling them your ideas, your wishes, your needs, your ambitions, your skills, and your experience.

Despite the necessity of being able to sell yourself to others, for many people like myself it does not come naturally. Introversion, shyness, and lack of self-worth are just a few of the obstacles that can potentially get in the way. To overcome such obstacles, I suggest focusing on the following:

Be Sold on Yourself

This is the first, and perhaps most important, aspect to successfully selling yourself to others. Unless it comes naturally, this is probably also the hardest. Being sold on yourself comes down to this: you must be aware of your own self-worth. This means you believe in yourself, have faith in yourself, and have confidence in yourself.

Being sold on yourself is not something that usually happens overnight. For many years, I did not like myself. I can, however, personally attest that it is possible to change your life and gain a sense of self-worth when there was once none. If you struggle with your sense of self-worth, here are just 3 ideas that may help:

*Live in such a way that you would want to be friends with yourself
*Find some time to reflect on what you like about yourself. If this seems hard, start with the smallest of attributes.
*Don’t do anything that will give you cause to feel ashamed later.

Have a Saleable Package

This article is predominately about letting others know about the inner contents of your package. That being said, there is no getting around the fact that people judge others based on their appearance. Some questions you may consider asking yourself are: am I looking after my appearance to the best of my ability? Are my clothes appropriate for the image I wish to project?

Be Positive and Enthusiastic

Can you remember the last time you received poor customer service? Did the person look bored, disinterested, and as if they wanted to be anywhere but that place? Don’t be that person. Positivity and enthusiasm can both be developed, but once again it takes work. Here are a few tips to help you:

*Look for the best in people
*Associate with positive people
*Care deeply about something
*See life as an adventure
*Smile

Be Real and Authentic

Rather than being about who you appear to be, selling yourself is about letting others know who you are as a person. For this reason, lies and half-truths are a recipe for disaster later down the line. By telling the truth, you will earn both trust and respect which, in turn, will help you build a great reputation. Not only that, it will make you feel good about yourself. The last thing you want to do is sell yourself out by compromising your values and principles.

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Tips for Exporters

-Communicate with your customers in detail before they apply for letters of credit.
-Consider whether a confirmed letter of credit is needed.
-Ask for a copy of the application to be fax to you, so you can check for terms or conditions that may cause you problems in compliance.
-Upon first advice of the letter of credit, check that all its terms and conditions can be complied with within the prescribed time limits.
-Many presentations of documents run into problems with time-limits. You must be aware of at least three time constraints - the expiration date of the credit, the latest shipping date and the maximum time allowed between dispatch and presentation.
-If the letter of credit calls for documents supplied by third parties, make reasonable allowance for the time this may take to complete.
-After dispatch of the goods, check all the documents both against the terms of the credit and against each other for internal consistency.

Summary

The use of the letters of credit as a tool to reduce risk has grown substantially over the past decade. Letters of credit accomplish their purpose by substituting the credit of the bank for that of the customer, for the purpose of facilitating trade.

The credit professional should be familiar with two types of letters of credit: commercial and standby. Commercial letters of credit are used primarily to facilitate foreign trade. The commercial letter of credit is the primary payment mechanism for a transaction.

The standby letter of credit serves a different function. The standby letter of credit serves as a secondary payment mechanism. The bank will issue the credit on behalf of a customer to provide assurances of his ability to perform under the terms of a contract.

Upon receipt of the letter of credit, the credit professional should review all items carefully to insure that what is expected of the seller is fully understood and that he can comply with all the terms and conditions. When compliance is in question, the buyer should be requested to amend the credit.

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Common Defects in Documentation

About half of all drawings presented contain discrepancies. A discrepancy is an irregularity in the documents that causes them to be in non-compliance to the letter of credit. Requirements set forth in the letter of credit cannot be waived or altered by the issuing bank without the express consent of the customer. The beneficiary should prepare and examine all documents carefully before presentation to the paying bank to avoid any delay in receipt of payment. Commonly found discrepancies between the letter of credit and supporting documents include:

-Letter of Credit has expired prior to presentation of draft.
-Bill of Lading evidences delivery prior to or after the date range stated in the credit.
-Stale dated documents.
-Changes included in the invoice not authorized in the credit.
-Inconsistent description of goods.
-Insurance document errors.
-Invoice amount not equal to draft amount.
-Ports of loading and destination not as specified in the credit.
-Description of merchandise is not as stated in credit.
-A document required by the credit is not presented.
-Documents are inconsistent as to general information such as volume, quality, etc.
-Names of documents not exact as described in the credit. Beneficiary information must be exact.
-Invoice or statement is not signed as stipulated in the letter of credit.

When a discrepancy is detected by the negotiating bank, a correction to the document may be allowed if it can be done quickly while remaining in the control of the bank. If time is not a factor, the exporter should request that the negotiating bank return the documents for corrections.

If there is not enough time to make corrections, the exporter should request that the negotiating bank send the documents to the issuing bank on an approval basis or notify the issuing bank by wire, outline the discrepancies, and request authority to pay. Payment cannot be made until all parties have agreed to jointly waive the discrepancy.

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Standard Forms of Documentation

When making payment for product on behalf of its customer, the issuing bank must verify that all documents and drafts conform precisely to the terms and conditions of the letter of credit. Although the credit can require an array of documents, the most common documents that must accompany the draft include:

Commercial Invoice

The billing for the goods and services. It includes a description of merchandise, price, FOB origin, and name and address of buyer and seller. The buyer and seller information must correspond exactly to the description in the letter of credit. Unless the letter of credit specifically states otherwise, a generic description of the merchandise is usually acceptable in the other accompanying documents.

Bill of Lading

A document evidencing the receipt of goods for shipment and issued by a freight carrier engaged in the business of forwarding or transporting goods. The documents evidence control of goods. They also serve as a receipt for the merchandise shipped and as evidence of the carrier's obligation to transport the goods to their proper destination.

Warranty of Title

A warranty given by a seller to a buyer of goods that states that the title being conveyed is good and that the transfer is rightful. This is a method of certifying clear title to product transfer. It is generally issued to the purchaser and issuing bank expressing an agreement to indemnify and hold both parties harmless.

Letter of Indemnity

Specifically indemnifies the purchaser against a certain stated circumstance. Indemnification is generally used to guaranty that shipping documents will be provided in good order when available.

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Standby Letter of Credit

The standby letter of credit serves a different function than the commercial letter of credit. The commercial letter of credit is the primary payment mechanism for a transaction. The standby letter of credit serves as a secondary payment mechanism. A bank will issue a standby letter of credit on behalf of a customer to provide assurances of his ability to perform under the terms of a contract between the beneficiary. The parties involved with the transaction do not expect that the letter of credit will ever be drawn upon.

The standby letter of credit assures the beneficiary of the performance of the customer's obligation. The beneficiary is able to draw under the credit by presenting a draft, copies of invoices, with evidence that the customer has not performed its obligation. The bank is obligated to make payment if the documents presented comply with the terms of the letter of credit.

Standby letters of credit are issued by banks to stand behind monetary obligations, to insure the refund of advance payment, to support performance and bid obligations, and to insure the completion of a sales contract. The credit has an expiration date.

The standby letter of credit is often used to guarantee performance or to strengthen the credit worthiness of a customer. In the above example, the letter of credit is issued by the bank and held by the supplier. The customer is provided open account terms. If payments are made in accordance with the suppliers' terms, the letter of credit would not be drawn on. The seller pursues the customer for payment directly. If the customer is unable to pay, the seller presents a draft and copies of invoices to the bank for payment.

The domestic standby letter of credit is governed by the Uniform Commercial Code. Under these provisions, the bank is given until the close of the third banking day after receipt of the documents to honor the draft.

Procedures for Using the Tool

The following procedures include a flow of events that follow the decision to use a Commercial Letter of Credit. Procedures required to execute a Standby Letter of Credit are less rigorous. The standby credit is a domestic transaction. It does not require a correspondent bank (advising or confirming). The documentation requirements are also less tedious.

Step-by-step process:

-Buyer and seller agree to conduct business. The seller wants a letter of credit to guarantee payment.
-Buyer applies to his bank for a letter of credit in favor of the seller.
-Buyer's bank approves the credit risk of the buyer, issues and forwards the credit to its correspondent bank (advising or confirming). The correspondent bank is usually located in the same geographical location as the seller (beneficiary).
-Advising bank will authenticate the credit and forward the original credit to the seller (beneficiary).
-Seller (beneficiary) ships the goods, then verifies and develops the documentary requirements to support the letter of credit. Documentary requirements may vary greatly depending on the perceived risk involved in dealing with a particular company.
-Seller presents the required documents to the advising or confirming bank to be processed for payment.
-Advising or confirming bank examines the documents for compliance with the terms and conditions of the letter of credit.
-If the documents are correct, the advising or confirming bank will claim the funds by:
*Debiting the account of the issuing bank.
*Waiting until the issuing bank remits, after receiving the documents.
*Reimburse on another bank as required in the credit.
-Advising or confirming bank will forward the documents to the issuing bank.
-Issuing bank will examine the documents for compliance. If they are in order, the issuing bank will debit the buyer's account.
-Issuing bank then forwards the documents to the buyer.

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Letter of Credit Characteristics

Negotiability

Letters of credit are usually negotiable. The issuing bank is obligated to pay not only the beneficiary, but also any bank nominated by the beneficiary. Negotiable instruments are passed freely from one party to another almost in the same way as money. To be negotiable, the letter of credit must include an unconditional promise to pay, on demand or at a definite time. The nominated bank becomes a holder in due course. As a holder in due course, the holder takes the letter of credit for value, in good faith, without notice of any claims against it. A holder in due course is treated favorably under the UCC.

The transaction is considered a straight negotiation if the issuing bank's payment obligation extends only to the beneficiary of the credit. If a letter of credit is a straight negotiation it is referenced on its face by "we engage with you" or "available with ourselves". Under these conditions the promise does not pass to a purchaser of the draft as a holder in due course.

Revocability

Letters of credit may be either revocable or irrevocable. A revocable letter of credit may be revoked or modified for any reason, at any time by the issuing bank without notification. A revocable letter of credit cannot be confirmed. If a correspondent bank is engaged in a transaction that involves a revocable letter of credit, it serves as the advising bank.

Once the documents have been presented and meet the terms and conditions in the letter of credit, and the draft is honored, the letter of credit cannot be revoked. The revocable letter of credit is not a commonly used instrument. It is generally used to provide guidelines for shipment. If a letter of credit is revocable it would be referenced on its face.

The irrevocable letter of credit may not be revoked or amended without the agreement of the issuing bank, the confirming bank, and the beneficiary. An irrevocable letter of credit from the issuing bank insures the beneficiary that if the required documents are presented and the terms and conditions are complied with, payment will be made. If a letter of credit is irrevocable it is referenced on its face.

Transfer and Assignment

The beneficiary has the right to transfer or assign the right to draw, under a credit only when the credit states that it is transferable or assignable. Credits governed by the Uniform Commercial Code (Domestic) maybe transferred an unlimited number of times. Under the Uniform Customs Practice for Documentary Credits (International) the credit may be transferred only once. However, even if the credit specifies that it is nontransferable or nonassignable, the beneficiary may transfer their rights prior to performance of conditions of the credit.

Sight and Time Drafts

All letters of credit require the beneficiary to present a draft and specified documents in order to receive payment. A draft is a written order by which the party creating it, orders another party to pay money to a third party. A draft is also called a bill of exchange.

There are two types of drafts: sight and time. A sight draft is payable as soon as it is presented for payment. The bank is allowed a reasonable time to review the documents before making payment.

A time draft is not payable until the lapse of a particular time period stated on the draft. The bank is required to accept the draft as soon as the documents comply with credit terms. The issuing bank has a reasonable time to examine those documents. The issuing bank is obligated to accept drafts and pay them at maturity.

MNİDA

Understanding and Using Letters of Credit

Beneficiary

The beneficiary is entitled to payment as long as he can provide the documentary evidence required by the letter of credit. The letter of credit is a distinct and separate transaction from the contract on which it is based. All parties deal in documents and not in goods. The issuing bank is not liable for performance of the underlying contract between the customer and beneficiary. The issuing bank's obligation to the buyer, is to examine all documents to insure that they meet all the terms and conditions of the credit. Upon requesting demand for payment the beneficiary warrants that all conditions of the agreement have been complied with. If the beneficiary (seller) conforms to the letter of credit, the seller must be paid by the bank.

Issuing Bank

The issuing bank's liability to pay and to be reimbursed from its customer becomes absolute upon the completion of the terms and conditions of the letter of credit. Under the provisions of the Uniform Customs and Practice for Documentary Credits, the bank is given a reasonable amount of time after receipt of the documents to honor the draft.

The issuing banks' role is to provide a guarantee to the seller that if compliant documents are presented, the bank will pay the seller the amount due and to examine the documents, and only pay if these documents comply with the terms and conditions set out in the letter of credit.

Typically the documents requested will include a commercial invoice, a transport document such as a bill of lading or airway bill and an insurance document; but there are many others. Letters of credit deal in documents, not goods.

Advising Bank

An advising bank, usually a foreign correspondent bank of the issuing bank will advise the beneficiary. Generally, the beneficiary would want to use a local bank to insure that the letter of credit is valid. In addition, the advising bank would be responsible for sending the documents to the issuing bank. The advising bank has no other obligation under the letter of credit. If the issuing bank does not pay the beneficiary, the advising bank is not obligated to pay.

Confirming Bank

The correspondent bank may confirm the letter of credit for the beneficiary. At the request of the issuing bank, the correspondent obligates itself to insure payment under the letter of credit. The confirming bank would not confirm the credit until it evaluated the country and bank where the letter of credit originates. The confirming bank is usually the advising bank.

MNİDA

Understanding and Using Letters of Credit

Letters of credit accomplish their purpose by substituting the credit of the bank for that of the customer, for the purpose of facilitating trade. There are basically two types: commercial and standby. The commercial letter of credit is the primary payment mechanism for a transaction, whereas the standby letter of credit is a secondary payment mechanism.

Commercial Letter of Credit

Commercial letters of credit have been used for centuries to facilitate payment in international trade. Their use will continue to increase as the global economy evolves.

Letters of credit used in international transactions are governed by the International Chamber of Commerce Uniform Customs and Practice for Documentary Credits. The general provisions and definitions of the International Chamber of Commerce are binding on all parties. Domestic collections in the United States are governed by the Uniform Commercial Code.

A commercial letter of credit is a contractual agreement between a bank, known as the issuing bank, on behalf of one of its customers, authorizing another bank, known as the advising or confirming bank, to make payment to the beneficiary. The issuing bank, on the request of its customer, opens the letter of credit. The issuing bank makes a commitment to honor drawings made under the credit. The beneficiary is normally the provider of goods and/or services. Essentially, the issuing bank replaces the bank's customer as the payee.

Elements of a Letter of Credit

A payment undertaking given by a bank (issuing bank)
On behalf of a buyer (applicant)
To pay a seller (beneficiary) for a given amount of money
On presentation of specified documents representing the supply of goods
Within specified time limits
Documents must conform to terms and conditions set out in the letter of credit

MNİDA

Cash-In-Advance

Characteristics of a Cash-in-Advance Payment Method

Applicability
Recommended for use in high-risk trade relationships or export markets, and ideal for Internet-based businesses.

Risk
Exporter is exposed to virtually no risk as the burden of risk is placed nearly completely on
the importer.

Pros
• Payment before shipment
• Eliminates risk of nonpayment

Cons

• May lose customers to competitors over payment terms
• No additional earnings through financing operations

Wire Transfer—Most Secure and Preferred Cash-in-Advance Method

An international wire transfer is commonly used and has the advantage of being almost immediate. Exporters should provide clear routing instructions to the importer when using this method, including the name and address of the receiving bank, the bank’s SWIFT, Telex, and ABA numbers, and the seller’s name and address, bank account title, and account number. This option is more costly to the importer than other options of cash-in-advance method, as the fee for an international wire transfer is usually paid by the sender.

Credit Card—A Viable Cash-in-Advance Method

Exporters who sell directly to the importer may select credit cards as a viable method of cash-in-advance payment, especially for consumer goods or small transactions. Exporters should check with their credit card company(s) for specific rules on international use of credit cards as the rules governing international credit card transactions differ from those for domestic use. As international credit card transactions are typically placed via online, telephone, or fax methods that facilitate fraudulent transactions, proper precautions should be taken to determine the validity of transactions before the goods are shipped. Although exporters must endure the fees charged by credit card companies, this option may help the business grow because of its convenience.

Payment by Check—A Less-Attractive Cash-in-Advance Method

Advance payment using an international check may result in a lengthy collection delay of several weeks to months. Therefore, this method may defeat the original intention of receiving payment before shipment. If the check is in U.S. dollars or drawn on a U.S. bank, the collection process is the same as any U.S. check. However, funds deposited by non-local check may not become available for withdrawal for up to 11 business days due to Regulation CC of the Federal Reserve. In addition, if the check is in a foreign currency or drawn on a foreign bank, the collection process is likely to become more complicated and can significantly delay the availability of funds. Moreover, there is always a risk that a check may be returned due to insufficient funds in the buyer’s account.

When to Use Cash-in-Advance Terms
• The importer is a new customer and/or has a less-established operating history.
• The importer’s creditworthiness is doubtful, unsatisfactory, or unverifiable.
• The political and commercial risks of the importer’s home country are very high.
• The exporter’s product is unique, not available elsewhere, or in heavy demand.
• The exporter operates an Internet-based business where the use of convenient payment methods is a must to remain competitive.

MNİDA

Cash-in-Advance

With the cash-in-advance payment method, the exporter can avoid credit risk or the risk of nonpayment, since payment is received prior to the transfer of ownership of the goods. Wire transfers and credit cards are the most commonly used cash-in-advance options available to exporters. However, requiring payment in advance is the least attractive option for the buyer, as this method tends to create cash flow problems, and unless the seller sees no other option or the buyer has other vendors to choose from, it often is not a competitive option. In addition, foreign buyers are often concerned that the goods may not be sent if payment is made in advance. Exporters that insist on this method of payment as their sole method of doing business may find themselves losing out to competitors who may be willing to offer more attractive payment terms.

Key Points

• Full or significant partial payment is required, usually via credit card or bank/wire transfer, prior to the transfer of ownership of the goods.

• Cash-in-advance, especially a wire transfer, is the most secure and favorable method of international trading for exporters and, consequently, the least secure and attractive option for importers. However, both the credit risk and the competitive landscape must be considered.

• Insisting on these terms ultimately could cause exporters to lose customers to competitors who are willing offer more favorable payment terms to foreign buyers in the global market.

• Creditworthy foreign buyers, who prefer greater security and better cash utilization, may find cash-in-advance terms unacceptable and may simply walk away from the deal.

MNİDA

TERMS OF PAYMENT

Foreign companies can obtain bank references on prospective customers before undertaking business in Italy, and to consider whether checks by commercial credit agencies are appropriate. Before agreeing a method of payment (see below) it is best to contact the International Division of your bank. Although there will be companies who manage to secure payment in 60 days or less the period of credit offered by a supplier to a customer tends to be amongst the highest in Europe, anything from 90 to 120 days. The method of payment will need to be agreed when negotiating the contract. It will depend on the degree of commercial trust that exists between the parties involved and whether credit is offered or required by either party.

1) Open Account

Most of the foreign trade is conducted on an Open Account basis - as the most simple, straightforward and flexible method available. However you must ensure that your customer is highly reputable if business is to be conducted on this basis with, for example your invoice being sent direct to them along with documents and requesting payment within the stipulated term. If he pays by cheque all costs associated with clearing the payment are borne by the exporter. If your bank has an operating subsidiary in Italy it may simplify payment by asking them to open a foreign currency account in Italy.Payments for open account can be made in three main ways:

Electronic funds transfer (i.e. SWIFT/IMT)

Bankers draft

Buyer's own cheque.

2) Documentary Collection (or Cash Against Documents)

Normally carried out through a bank and a slightly more secure method of trading than Open Account. The exporter delivers all the necessary documents to his own bank which then sends them to a bank in the importer country. Documents are only released in accordance with the exporter's instructions e.g. against sight payment, or acceptance of a term bill of exchange.Unless the goods are consigned to a third party the exporter risks loss until settlement is made, if the importer fails to take up documents by paying or accepting the bill of exchange. There is also an additional risk of a buyer subsequently dishonouring an accepted bill of maturity. As with Open Account the exporter may be able to insure against this by Credit Insurance.

MNİDA

ENTREPRENEURIAL CHARACTERISTICS

Status Requirements

Entrepreneurs find satisfaction in symbols of success that are external to themselves. They like the business they have built to be praised, but they are often embarrassed by praise directed at them personally. Their egos do not prevent them from seeking facts, data, and guidance. When they need help, they will not hesitate to admit it especially in areas that are outside of their expertise. During tough business periods, entrepreneurs will concentrate their resources and energies on essential business operations. They want to be where the action is and will not stay in the office for extended periods of time.

Symbols of achievement such as position have little relevance to them. Successful entrepreneurs find their satisfaction of status needs in the performance of their business, not in the appearance they present to their peers and to the public. They will postpone acquiring status items like a luxury car until they are certain that their business is stable.

Interpersonal Relationships

Entrepreneurs are more concerned with people's accomplishments than with their feelings. They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business. During the business-building period, when resources are scarce, they seldom devote time to dealing with satisfying people's feelings beyond what is essential to achieving their goals.

Their lack of sensitivity to people's feelings can cause turmoil and turnover in their organization. Entrepreneurs are impatient and drive themselves and everyone around them. They don't have the tolerance or empathy necessary for team building unless it's their team, and they will delegate very few key decisions.

As the business grows and assumes an organizational structure, entrepreneurs go through a classic management crisis. For many of them, their need for control makes it difficult for them to delegate authority in the way that a structured organization demands. Their strong direct approach induces them to seek information directly from its source, bypassing the structured chains of authority and responsibility. Their moderate interpersonal skills, which were adequate during the start-up phases, will cause them problems as they try to adjust to the structured or corporate organization. Entrepreneurs with good interpersonal skills will be able to adjust and survive as their organization grows and becomes more structured. The rest won't make it.

Emotional Stability

Entrepreneurs have a considerable amount of self-control and can handle business pressures. They are comfortable in stress situations and are challenged rather than discouraged by setbacks or failures. Entrepreneurs are uncomfortable when things are going well. They'll frequently find some new activity on which to vent their pent-up energy. They are not content to leave well enough alone. Entrepreneurs tend to handle people problems with action plans without empathy. Their moderate interpersonal skills are often inadequate to provide for stable relationships. However, the divorce rate among entrepreneurs is about average.

MNİDA

ENTREPRENEURIAL CHARACTERISTICS

Comprehensive Awareness

Successful entrepreneurs can comprehend complex situations that may include planning, making strategic decisions, and working on multiple business ideas simultaneously. They are farsighted and aware of important details, and they will continuously review all possibilities to achieve their business objectives. At the same time, they devote their energy to completing the tasks immediately before them.

Accounting reports illustrate this characteristic. Accountants spend hours balancing the accounts and closing them out. For them, the achievement is to have balanced books. The entrepreneur only wants to know the magnitude of the numbers and their significance for the operation of the business.

Realism

Entrepreneurs accept things as they are and deal with them accordingly. They may or may not be idealistic, but they are seldom unrealistic. They will change their direction when they see that change will improve their prospects for achieving their goals. They want to know the status of a given situation at all times. News interests them if it is timely, and factual, and provides them with information they need. They will verify any information they receive before they use it in making a decision. Entrepreneurs say what they mean and assume that everyone else does too. They tend to be too trusting and may not be sufficiently suspicious in their business dealings with other people.

Conceptual Ability

Entrepreneurs possess the ability to identify relationships quickly in the midst of complex situations. They identify problems and begin working on their solution faster than other people. They are not troubled by ambiguity and uncertainty because they are used to solving problems. Entrepreneurs are natural leaders and are usually the first to identify a problem to be overcome. If it is pointed out to them that their solution to a problem will not work for some valid reason, they will quickly identify an alternative problem-solving approach.

MNIDA

ENTREPRENEURIAL CHARACTERISTICS

A series of interviews were conducted with distinguished entrepreneurs. They were asked what characteristics they felt were essential to success as an entrepreneur. Good health was a characteristic mentioned by every entrepreneur interviewed. Entrepreneurs are physically resilient and in good health. They can work for extended periods of time, and while they are in the process of building their business, they refuse to get sick.

In small businesses, where there is no depth of management, the leader must be there. You may not be able to afford a support staff to cover all business functions, and therefore you will need to work long hours. We all know people who use part of their sick leave each year when they are not sick. Entrepreneurs are not found in this group. At the end of the eight-hour day, when everyone else leaves for home, the entrepreneur will often continue to work into the evening, developing new business ideas.

Self-Control

Entrepreneurs do not function well in structured organizations and do not like someone having authority over them. Most believe they can do the job better than anyone else and will strive for maximum responsibility and accountability. They enjoy creating business strategies and thrive on the process of achieving their goals. Once they achieve a goal, they quickly replace it with a greater goal. They strive to exert whatever influence they can over future events.

In large, structured organizations, entrepreneurs are easy to recognize by the statements they make: "If they wanted that job done right, they should have given it to me." A dominant characteristic of entrepreneurs is their belief that they are smarter than their peers and superiors. They have a compelling need to do their own thing in their own way. They need the freedom to choose and to act according to their own perception of what actions will result in success.

Self-Confidence

Entrepreneurs are self-confident when they are in control of what they're doing and working alone. They tackle problems immediately with confidence and are persistent in their pursuit of their objectives. Most are at their best in the face of adversity, since they thrive on their own self-confidence.

Sense of Urgency

Entrepreneurs have a never-ending sense of urgency to develop their ideas. Inactivity makes them impatient, tense, and uneasy. They thrive on activity and are not likely to be found sitting on a bank fishing unless the fish are biting. When they are in the entrepreneurial mode, they are more likely to be found getting things done instead of fishing.

Entrepreneurs prefer individual sports, such as golf, skiing, or tennis, over team sports. They prefer games in which their own brawn and brain directly influence the outcome and pace of the game. They have drive and high energy levels, they are achievement-oriented, and they are tireless in the pursuit of their goals.

MNIDA

LETTER OF CREDİT

How it works

A business called the InCosmetika from time to time imports goods from a business called BLISS, which banks with the ABC Bank. InCosmetika holds an account at the Commonwealth Bank. InCosmetika wants to buy $500,000 worth of merchandise from BLISS, who agrees to sell the goods and give InCosmetika 60 days to pay for them, on the condition that they are provided with a 90-day LC for the full amount. The steps to get the letter of credit would be as follows:

InCosmetika goes to The Commonwealth Bank and requests a $500,000 letter of credit, with BLISS as the beneficiary.

The Commonwealth Bank can issue an LC either on approval of a standard loan underwriting process or by InCosmetika funding it directly with a deposit of $500,000 plus fees which are typically between 1% and 8% of the face value of the LC.

The Commonwealth Bank sends a copy of the LC to the ABC Bank, which notifies BLISS that payment is available and they can ship the merchandise InCosmetika has ordered with the full assurance of payment to them.

On presentation of the stipulated documents in the letter of credit and compliance with the terms and conditions of the letter of credit, the Commonwealth Bank transfers the $500,000 to the ABC Bank, which then credits the account of BLISS for that amount.

Note that banks deal only with documents required in the letter of credit and not the underlying transaction.

Many exporters have mistakenly assumed that the payment is guaranteed after receiving the LC. The issuing bank is obligated to pay under the letter of credit only when the stipulated documents are presented and the terms and conditions of the letter of credit have been met.

Availability

DC being an irrevocable undertaking of the issuing bank makes available the Proceeds, to the Beneficiary of the Credit provided, stipulated documents strictly complying with the provisions of the DC, UCP 600 and other international standard banking practices, are presented to the issuing bank , then :

i.if the Credit provides for sight payment – by payment at sight against compliant presentation

ii.if the Credit provides for deferred payment – by payment on the maturity date(s) determinable in accordance with the stipulations of the Credit; and of course undertaking to pay on due date and confirming maturity date at the time of compliant presentation

iii.a.if the Credit provides for acceptance by the Issuing Bank – by acceptance of Draft(s) drawn by the Beneficiary on the Issuing Bank and payment at maturity of such tenor draft, or

iii.b. if the Credit provides for acceptance by another drawee bank – by acceptance and payment at maturity Draft(s)drawn by the Beneficiary on the Issuing Bank in the event the drawee bank stipulated in the Credit does not accept Draft(s) drawn on it,
or by payment of Draft(s) accepted but not paid by such drawee bank at maturity;

iv. if the Credit provides for negotiation by another bank – by payment without recourse to drawers and/or bona fide holders, Draft(s) drawn by the Beneficiary and/or document(s) presented under the Credit, (and so negotiated by the nominated bank )

Negotiation means the giving of value for Draft(s) and/or document(s) by the bank authorized to negotiate, viz the nominated bank. Mere examination of the documents and forwarding the same to DC issuing bank for reimbursement, without giving of value / agreed to give, does not constitute a negotiation.

MNIDA

LETTER OF CREDİT

A letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking (it can also be revocable, confirmed, unconfirmed, transferable or others e.g. back to back: revolving but is most commonly irrevocable/confirmed) to a beneficiary against complying documents as stated in the Letter of Credit. Letter of Credit is abbreviated as an LC or L/C, and often is referred to as a documentary credit, abbreviated as DC or D/C, documentary letter of credit, or simply as credit (as in the UCP 500 and UCP 600).

A Standby Letter of Credit, SBLC, is a credit enhancement device which helps secure a primary loan. Banks, after the current financial collapse, require standby letters of credit for most real estate development loans.

The LC can also be the source of payment for a transaction, meaning that redeeming the letter of credit will pay an exporter. Letters of credit are used primarily in international trade transactions of significant value, for deals between a supplier in one country and a customer in another. They are also used in the land development process to ensure that approved public facilities (streets, sidewalks, stormwater ponds, etc.) will be built. The parties to a letter of credit are usually a beneficiary who is to receive the money, the issuing bank of whom the applicant is a client, and the advising bank of whom the beneficiary is a client. Almost all letters of credit are irrevocable, i.e., cannot be amended or canceled without prior agreement of the beneficiary, the issuing bank and the confirming bank, if any. In executing a transaction, letters of credit incorporate functions common to giros and Traveler's cheques. Typically, the documents a beneficiary has to present in order to receive payment include a commercial invoice, bill of lading, and documents proving the shipment was insured against loss or damage in transit. However, the list and form of documents is open to imagination and negotiation and might contain requirements to present documents issued by a neutral third party evidencing the quality of the goods shipped, or their place of origin.

MNİDA

INCOTERMS

Incoterms or international commercial terms are a series of international sales terms widely used throughout the world. They are used to divide transaction costs and responsibilities between buyer and seller and reflect state-of-the-art transportation practices.

Group E – Departure

EXW – Ex Works (named place)
the seller makes the goods available at his premises

Group F – Main carriage unpaid

FCA – Free Carrier (named place)
the seller hands over the goods, cleared for export, into the custody of the first carrier (named by the buyer) at the named place. This term is suitable for all modes of transport, including carriage by air, rail, road, and containerised / multi-modal transport.

FAS – Free Alongside Ship (named loading port)
the seller must place the goods alongside the ship at the named port. The seller must clear the goods for export; this changed in the 2000 version of the Incoterms. Suitable for maritime transport only.

FOB – Free On Board (named loading port)
the classic maritime trade term, Free On Board: seller must load the goods on board the ship nominated by the buyer, cost and risk being divided at ship's rail. The seller must clear the goods for export. Maritime transport only.

Group C – Main carriage paid

CFR – Cost and Freight (named destination port)
seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods have crossed the ship's rail. Maritime transport only.

CIF – Cost, Insurance and Freight (named destination port)
exactly the same as CFR except that the seller must in addition procure and pay for insurance for the buyer. Maritime transport only.

CPT – Carriage Paid To (named place of destination)
the general/containerised/multimodal equivalent of CFR. The seller pays for carriage to the named point of destination, but risk passes when the goods are handed over to the first carrier.

CIP – Carriage and Insurance Paid to (named place of destination)
the containerised transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.

Group D – Arrival

DAF – Delivered At Frontier (named place)
It can be used when the goods are transported by rail and road. The seller pays for transportation to the named place of delivery at the frontier. The buyer arranges for customs clearance and pays for transportation from the frontier to his factory. The passing of risk occurs at the frontier.

DES – Delivered Ex Ship (named port)
Where goods are delivered ex ship, the passing of risk does not occur until the ship has arrived at the named port of destination and the goods made available for unloading to the buyer. The seller pays the same freight and insurance costs as he would under a CIF arrangement. Unlike CFR and CIF terms, the seller has agreed to bear not just cost, but also Risk and Title up to the arrival of the vessel at the named port. Costs for unloading the goods and any duties, taxes, etc… are for the Buyer. A commonly used term in shipping bulk commodities, such as coal, grain, dry chemicals - - - and where the seller either owns or has chartered, their own vessel.

DEQ – Delivered Ex Quay (named port)
It means the same as DES, but the passing of risk does not occur until the goods have been unloaded at the port of destination.

DDU – Delivered Duty Unpaid (named destination place)
It means that the seller delivers the goods to the buyer to the named place of destination in the contract of sale. The goods are not cleared for import or unloaded from any form of transport at the place of destination. The buyer is responsible for the costs and risks for the unloading, duty and any subsequent delivery beyond the place of destination. However, if the buyer wishes the seller to bear cost and risks associated with the import clearance, duty, unloading and subsequent delivery beyond the place of destination, then this all needs to be explicitly agreed upon in the contract of sale.

DDP – Delivered Duty Paid (named destination place)
It means that the seller pays for all transportation costs and bears all risk until the goods have been delivered and pays the duty. Also used interchangeably with the term "Free Domicile"

MNİDA

Sell More Over the Phone

Q: Customers don't return my calls, so should I continue to leave messages?

A: Try leaving the customer different types of messages. Vary your tone, your content, and use what we at SalesPEAK call, "strong words" to get a call back.

Slow down when you leave your phone number. Many people are checking messages from their cell phones on cars and while traveling; connections might be poor and your phone number was heard at break-neck speed. Make it easy for the customer to call you back.

Also, some people won't return a salesperson's call unless they've heard several messages. Some in senior management say that they have to hear the salesperson's name up to 14 times before they'll call back! (Just don't make all of those calls in one day!) Which brings me to the next question, heard weekly…

Q: If I continue to call without a response, where do I draw the line from "persistence" to "pest"?

A: Sometimes there is a fine line between these two descriptions. Research shows that the salespeople who contact customers 12 times are in the top 10% of the selling profession.

So, consider your relationship with the customer. If this is someone you are on good terms with, you are not a priority on their "response list". If you continue to be creative, use the phone, email and other contact tools at your disposal, the likelihood of getting a call back increases exponentially in your favor.

On the other hand, if this is a cold call, discover the personality type of the customer; either by listening closely to their voice mail, asking one of their colleagues, or through research, and match the customer's personality style to get a call back.

Q: What are the most effective methods of getting past gatekeepers?

A: First, be glad there's a gatekeeper! With increasing technology, talking with a human creates an opportunity of building a relationship with this person.

In your friendliest, yet most confident and commanding voice, state your name and then say, "I need to speak with Mary Edwards". You are creating a sense of urgency and in addition, you have already told the gatekeeper who you are, so she/he doesn't have to ask. Remember, whomever is asking the questions on the phone, is in command of the call. Make sure you're proactive and you'll get through more often.

Also, use the gatekeeper's name and often. Use a warm inflection in your voice and put an exclamation point into your tone when you say her/his name.

MNİDA

The Best Techniques to Use When Selling Over the Phone - 2

3: Use Scripts

A script is a group of words, in order, that generate predictably profitable results. A script is effective because your listener will know when it is their turn to talk, and they'll know what you want them to say. When a prospect asks you how much your product costs and you use the script "Well, that depends on how much money you have in the bank!" you will receive a predictably different result than when you use the script "Forty-five dollars a month. Less than most people spend on coffee and cokes."

Listen carefully to these two scripts: "That depends on how much money you have" tells your prospect to respond just as glibly with "Oh, about 25 cents." While a specific amount, followed by an example gives your listener the opportunity to say "Great, that works for me."

Prepare scripts for the nine questions you are asked most frequently. They are probably about product cost, delivery time, references, options and guarantee.

4: Keep your best result in mind

When Grandma Lillian was making prospecting calls, her favorite result was to get an appointment. "You can't get a haircut over the phone," she told me, "what I want is an appointment in their home."

She had a second acceptable outcome - the prospect's permission to call again. "Shall I call you in about a month?" I heard her say sweetly, several times each hour. And then she put their name and phone number into her calendar for the agreed upon date.

Either way, Grandma Lillian felt good about herself and had customers and distributors who loved her, too.

MNIDA

The Best Techniques to Use When Selling Over the Phone

1: Work with a clean desk

Even if this means sweeping the current piles into a shopping bag until your telephone time is finished, don't have anything on your desk except your calendar and your favorite pen.

You get two benefits: distractions are limited, and, perhaps more importantly, the person you are speaking with senses that they have your full attention.

If your prospect doesn't feel that they are getting your full attention, why should you have theirs?

2: Have a mirror on the wall in front of you

If you doubt that the smile on your face carries through your voice try this exercise. Record your side of a prospecting telephone conversation. Play it back while you watch your face in the mirror. Surprise! Your face will match the feelings you had while you were on the phone. You will actually see the fear or anxiety or need that you felt.

Your tones affect your listener that way, too. A mirror on the wall in front of you increases your telephone prospecting profitability in these specific ways:

First, you can see what your listener is hearing. The added awareness of your own body language makes your verbal language more effective.

Second, because you keep your chin up to look at the mirror on the wall, your voice will automatically have more enthusiasm and energy.

Try this experiment with your tape recorder. Role play a prospecting telephone call with your head down, chin to chest, doodling on an order form. Now raise your chin, look in the mirror, and repeat the same sentences. Because you sound more successful you will be more successful - people like to do business with a winner.

MNIDA

Some Do's And Don'ts On The Phone

Have a pleasant and sincere, positive voice.

Have a smile on your face as you talk on the phone.

Work on your vocabulary. Remember, you're on the phone, you have to create a positive "mental picture" in the customers mind of your product or service.

Synchronize your rate of speech with the rate of speech of the person to whom you are speaking. Don't talk too fast or too slowly.

If you are calling them, ask if it is a convenient time to talk.

Make your conversation brief, easy to understand, and to the point.

Make sure you have all the information in front of you to handle your customers questions. If you have to put them on hold, you may lose them.

Don't ask anyone to place a call for you unless you are ready to talk. The person on the other end of the line is busy too.

Don't do all the talking. Give the person on the other end of the line an opportunity to answer you, to ask questions, or to make comments. Never interrupt your customer.

Be as courteous voice-to voice as you would be face-to-face.

The Last Word About Selling On The Phone

The phone is instant communication. No waiting for it to boot up. Many customers are calling on an impulse. They have developed a sudden need and want that need filled. You have a great opportunity to bring additional revenue to your business. People buy where they feel comfortable and appreciated. Give them that feeling when they call. It's just common courtesy.

MNIDA

You Can't Give Information If You Don't Have Information

The sales person should be responsible for a variety of information. Customer service, product sales, product promotions, accuracy of order or customer information along with courtesy and diplomacy.

Here are some areas your phone people need to be trained to do:

Sales orders
Inquiries of merchandise or services
Dates of delivery or service scheduling
Follow-up or service calls
Policies re: returns or exchanges of goods or services
Complaints
Customer Services - price adjustments, follow-up calls, replacement merchandise.

In order to be effective, phone salespersons must be familiar with all departments and products the company offers. Some things the sales person might need:

Copies of all current marketing and adverting promotions and ads.
Copies of competitors ads (to match offers)
Order/Shipping/Credit Card Forms
Calculator/Scratch Pads
Pricing Guides
Product or service availability and schedules.
Company policies and legal disclaimers

MNIDA

Discovering Your Customers Needs

If you were going to purchase a car would you just pick a dealer, call them up, and ask, "Hey, how much are cars today?"

Probably not. Why? Because there is a lot of information you don't know. Here are some questions the car dealer might need to know the answers to:

1. Mid-Size, Compact , Luxury?
2. Color?
3. Brand Name?
4. Car,
4-Wheeler, Mini-Van?
5. Two-Door/4 Door?
6. Accessories?
7. In Stock/Special Order?
8. New or Used?
9. Available Financing?
10. And yes, you might even want to know the price.

Notice that Price is not the number one question on the list. Why? Because price is a perception of value. If I were to simply ask you, "How much is a car?" , you would have a hard time coming up with a price until you had more information.

MNIDA

The Phone Is Conversation And Communication

The First Rule Of Using The Phone is to realize that you are having a conversation with someone. When you meet a friend on the street, do you talk to them in the same way you do on the phone? Most people would say no. You are having a face-to-face conversation with someone. You are smiling as you are talking. Smile when you talk on the phone. Pretend they are right there in the room with you.

The Second Rule Of Using The Phone is that the person asking the questions in any conversation is always in control of the conversation. If the customer is asking the questions, they are in control. They have you on the defensive. You can't sell effectively until you regain control.

The Third Rule Of Using The Phone is to understand that it is physically and emotionally impossible to be polite and courteous and aggressive and pushy at the same time. You are either one or the other. You can't be polite and courteous at work if you are naturally aggressive and pushy at home.

MNİDA

STEPS TO THE SALE

1. Introduction:

When answering the phone give:Company NameYour name."Good morning; Smith Realty; Mrs. Anderson speaking"
Remember, this is your "first impression" with the customer. This one area is very important. The customer may decide whether or not to do business based on how they are treated when they call your company.

2. Finding A Need:

Ask "open-ended" questions. Questions that can't be answered by a yes or a no. Let the customer talk as much as they want without interruption. Remember, the person asking the questions is in control of the conversation.

What are they asking for? Have they done this before? What did they like about their last experience? What didn't they like? What was the level of service? Each product or service should have a group of questions that are commonly asked. Brainstorm with each other for answers to these questions without losing control of the conversation.

3. Recommendations And/Or Up-Selling:

As with our car analogy above, you can't recommend a car without asking a few questions. To present the product , you might say something like, "Based on what you told me, here is what I recommend...."As an up-sell, "I have had several people add.......to this package."

4. Overcoming Objections:

An objection is not really an objection. It is a request for more information. The point to keep in mind is that there are only two kinds of objections:

Valid Objections - I'm a size 18 this is a size 6, is a valid objection.

Invalid Objections: - Most common is "It costs too much." Or, "Well, it sounds good but I need to think about it before I spend that much." In most cases this is not a valid objection. If they couldn't afford it why bother looking?

What they are really saying is, "You haven't shown me enough benefits to justify the price." If they really and truly can't afford it, they are not a valid customer. You haven't lost anything. If they can't buy from you they can't buy from the competition either.

5. Closing The Sale:

The First Rule Of Selling Anything: "When logic and emotion come into conflict, emotion always wins." If you think customers are going to sit down and make logical comparisons of the merits of your product or service against your competitor...you are mistaken. They will purchase on emotion and create a logical argument to justify their decision. Remember the "fact-finding" section? This is where you show the benefits of the items they said they wanted.

No one wants a one-inch drill bit, they want the benefit that the one-inch drill bit will give them. They want the one-inch hole. As a result price is seldom an issue. It is usually a defensive excuse or an invalid objection. People buy benefits and benefits are almost always emotional. Benefits give a feeling of "well-being" and "well-being" is an emotional "feeling."

The Second Rule Of Selling Anything: Ask for the order. The reason most often given by people for not buying is, "No one asked me to."

An easy way to ask is, "If you have your credit card handy I can start processing your request."

MNIDA