If you are in the importing business then you might have realized that large sums of cash are always tied up in the business at one time or another. Trade, export and import are one thing that you should gain enough information about them before you get into the business. The bad thing is that whenever this cash is held up and you are not sure on how the exchange rate will be then you are at the verge of losing much.
If you are importing goods from a manufacturer then you are required to order for them in advance. When making an order you are required to deposit some cash as upfront so as to make sure that you are really interested in the product. By paying this cash then it means you will be left with the baggage of covering up all these costs before the products are shipped to where you are. Before the shipping process commences then you will be required to pay the remaining amount. This causes strain to many people as you are forced to pay money whereas you do not even have the products. That means you may opt out of the business for sometime up to hen the goods will be delivered. This has been said to cause a lot of strain too many business people and it is one of the many challenges of importing products.
If you decide to go by sea frightening which is cheaper then you will have to wait for 6 weeks before the products are delivered to you. The worst thing is that you will have to wait for 60 days before you get paid. It could even be longer but it will depend on your customers and the way you invoice. What you should realize before getting into this business is that it is really expensive as you will have to wait for a very long period before the money you had invested matures. This means that much of your money will always be tied to the business and you will have to think about other sources. This means that the business is expensive and needs a good source of income for you to compete effectively with others.
What you are required to do is to work out how long it takes for the products to be delivered to you after the purchase and the factor this into your cash flow.