All international shipments are subject to a duty on exports and imports. Shippers and traders usually have Customs Specialists working tirelessly to ensure smooth Customs Clearance.
Some shippers choose to deploy software-based solutions to ensure Customs Compliance. Regardless of the method adopted, the Customs Clearance processes at a company should run smoothly to ensure hindrance-free trade and to maintain the good health of the supply chain.
Through this blog, you will glean some handy tips to bolster the customs compliance process at your company.
10 Tips for a Smooth Customs Clearance Process
Navigating the complex web of compliance and associated risk mitigation requires a good synchronization between available knowledge, technology, strategy, and tactics.
The 10 tips listed below will augment your Customs & Compliance process to make it more efficient.
1. Education and Awareness
Risks can be mitigated best when you’re aware of where problems might arise. When placing your trade requests, your team should have all the marking and labelling information of the goods to determine whether they’re classified for government control or regulation based on specifics.
Learn about the cargo categories and the kind of compliance, regulations, and licenses required before you accept the cargo.
If you have operations in several countries, leveraging the prowess of centralized, global-scale technology can help you streamline international compliance requirements based on the region where the trade takes place.
2. Clarity with Vendors
One of the major challenges of good Customs Compliance is getting the paperwork in order. The first step in ensuring that the paperwork is accurate is providing clear instructions to all your vendors on creating customs documentation.
Some of the key details that the paperwork should include are:
- Part numbers/SKU numbers
- A detailed description of the goods in the package
- Tariff classification number (verified)
- The terms of sale applicable to the goods
All the customs-related paperwork should be standardized and benchmarked from the point of initiation to ensure the cascading processes that rely on it run smoothly.
It pays off down the line if your business proactively facilitates all the details, documentation, and paperwork to your trading network and associates as soon as they’re created.
Waiting for paperwork to be requested before initiating it causes delays because of interdepartmental correspondences.
As soon as a trade request is created, the associated paperwork should also be put in the works when the details that need to be filled in are received. All the authorization letters, licenses, signatures, and seals should be ready to mobilize.
4. Research and Acquire Permits Beforehand
Several import categories, like certain textile articles and dairy quotas, require a license or permit to import (you can read more about this here.)
If you have requested imports for goods that require a permit, authorization, or license under federal government regulations, they should be applied for as soon as the trade is initiated.
It may sometimes take a while to get the license issued, which is why it makes sense to research the cargo you plan to import for the licensing and authorization requirements.
5. Leverage Preferential Trade Agreements
Preferential Trade Agreements are bilateral or multilateral treaties that facilitate trade between the involved countries. These agreements allow a “freer” or more liberal movement of certain types of goods between borders to enhance international trade relations.
You can check whether the goods you import qualify for the FTA benefits. If they do, you can request your vendor to get a valid certificate for the import.
This certificate can help you claim duty reductions on the import. Sometimes, you may be able to eliminate the total amount of customs duty based on the terms in the FTA.
Customs Compliance also involves reconciling your shipment to tally the order value, customs duty levied, quantities and other details with the commercial invoice and the purchase orders.
As soon as you receive the shipment, reconciliation should be prioritized to promptly notify the vendor if any discrepancies are discovered.
The sooner you discover the discrepancies, the sooner the vendor can be notified of the overages or shortages. Official record of this correspondence helps establish a trail of information if there are issues with customs compliance later in the supply chain of your business.
Reconciliation can be handled easily by customs compliance software – it can help you save time on manual tallying.
Discrepancies in customs entries can create severe compliance issues. It’s important to assess if the customs declaration filled out is accurate. Several pieces of critical information need to be reviewed with utmost attention:
- Number of pieces or the weight of the item
The customs duty calculated on these parameters should be accurate. Your business can introduce a reviewing system in the customs process to avoid potential mismatches.
A robust customs compliance platform can help you keep this data updated with the latest regulatory requirements. It also helps reduce a lot of manual work.
8. Internal Audits
One of the key enablers of a good, transparent Customs Compliance process is the internal auditing exercise. Through this process, all the customs clearances and receipts can be verified against purchase orders and applicable regulations to avoid problems in the future.
It can help you identify anomalies and potential malpractices and take action while there is still time.
Internal audits also take into account the international courier shipments that the office receives at the reception instead of the customs department. It, therefore, helps account for every cross-border item and transaction of your company.
9. Error Correction
There could be countless reasons for errors in customs computations – invoice mismatches, clerical errors, computation errors, ignorance or missing customs declaration for certain items, etc. These errors can be fixed by notifying the customs authorities and requesting amendments.
If customs duty errors have been highlighted, you must take prompt action to correct them. This is why reconciliation and review processes need to be conducted. Should any errors come to light, the customs authorities need to be notified within 90 days to avoid getting penalized.
10. Records and Updates
It helps to maintain all the customs records – for import and export – for the preceding seven years at least.
Your business should maintain an organized database for documents trailing the entire procurement chain from initiation of request to payment of the invoice. This helps the audit department do its job quickly and efficiently as well.
A digital customs compliance system can help you automatically maintain and organize your customs books and keep the data accessible across devices.
The Significance of Staying Customs Compliant
Ensuring that your business stays customs compliant help you get quicker import clearances and savings on duty brings better visibility into supply chain costs and reduces regulatory risks on your business.
All international traders need to stay abreast of the rules and regulations that govern the import and export of the goods your business needs.
Staying compliant with customs laws and regulations helps protect the country’s economy by imposing taxes whenever goods travel between borders. It also regulates the movement of illicit items across borders.
If your business isn’t complying with international trade laws, it may be hindering the control measures that have been put in place to protect citizens, commerce, and the environment.
For businesses that have a high traffic of international goods going through their systems, the tips outlined above can help bring a little more order to the chaos.
A robust, dedicatedly architectured digital platform like Customs City can be of tremendous advantage to such businesses.
The platform contains critical features like a CBP Electronic In-Bond System that helps businesses expedite the electronic submission of in-bond exports, arrivals, status queries, and post diversions without hassle or paperwork.
Several other features of the platform make it ideal for businesses seeking customs compliance solutions:
- eCommerce clearance service
- ACE Air Manifest
- CBP Freight Status Notification System
- Importer Security Filing
- Entry Type 86
- Section 321
…and much more. To know more about Customs City, get in touch with us.
Frequently Asked Questions
Who is a Customs Compliance Specialist?
Customs Compliance Specialists ensure that all the federal and international regulatory laws are met whenever an item is imported or exported into or from the country’s borders.
These professionals typically work for the government, but sometimes private companies may also hire them.
What are the types of Customs Duties?
By regulating the flow of goods in and out of the country, the government aims to protect the economy, jobs, environment, and citizens by imposing customs import and export duties.
In the USA, shippers should be aware of the following three types of customs import duties:
- Basic Customs Duty (BCD)
- Countervailing Customs Duty (CVD)
- Anti-Dumping Duty (AD)
Is there a penalty for not paying Customs Duty on imports?
Yes. If you fail to comply with customs regulations, the consequences can be severe. CBP may seize the concerned goods and liquidate them.
You may be charged with either civil or criminal penalties for not paying customs duty – criminal penalties may be as high as twice the value of the goods, in addition to prison time.