Nowadays, organizations do business domestically and globally. The supply chain depends on several factors, such as tariff classification, international trade regulations, and free trade agreements.
Large organizations have trade compliance managers or teams. However, many companies still suffer from export and import trade violations. They have to face hefty fines and penalties for failure to comply with trade regulations. With international business being complex, companies need to have an updated and clear understanding of the laws governing export control and customs duty.
If your business is in global trade, it is crucial to have a comprehensive understating of trade laws, and implementing them as per laws is what trade compliance is all about.
What are Trade Compliance Services?
With customs and trade regulations changing frequently, it is difficult for organizations to keep tabs on them and manage their import and export compliance programs. Regulatory Compliance Consulting Services manage international trade processes on behalf of clients. Many consulting firms have trained and qualified individual and licensed customs brokers in their team who have expertise in international trade. Their main objective is to provide tailor-made customer services to meet their client's diverse needs.
They provide Customs Compliance Solutions that cover a wide range of services of import and export compliances, manage specific clients' projects, and ensure compliance programs of their clients are adhered to on a day-to-day basis and avoid penalties. Many organizations outsource their entire trade compliance program to service providers, where some take assistance on specific projects.
Areas of Focus for Trade compliance functions
Performance and priorities
One of the primary functions is to reduce costs including duty. Other measures focused on are reducing interest costs, penalties, and accurate import declarations. Accurate and timely submission of declarations is significant to all organizations with huge annual turnover. One area where organizations are giving less importance is the expense towards external service providers in terms of performance measurement.
Visibility and Accountability
Lack of visibility of duty costs hampers many companies. Developing systems and processes to oversee global trade compliance data is one area where many organizations are working on. Developing an integrated global trade support system helps compliance managers to understand the duty payments across specific products in different locations. Many trade compliance functions have regional indirect tax functions. For direct tax functions, trade compliance reports them through supply chain functions, or procurement officers report them through finance reports.
Many trade compliance functions lack the knowledge of risks associated with different regions. To make the risk control process effective, many organizations increasingly use internal and external audits to ensure that controls are effectively designed and deployed.
Compliance models evolution
Trade functions have compliance models that are predominately local. The focus is to shift it more to centralized models using shared services.
Investment in Technology and resources
Technology tops the list in the next few years for organizations having large annual turnovers. Global trade management software is not used extensively. The focus is on putting such solutions in a place where data quality and efficiency will be achieved in operational processes, such as import valuations, import and export classification, and free trade agreements.
Looking ahead, it is expected that more organizations will move towards external service providers for trade compliance management. Companies can exploit the investment in technology by third-party service providers and, in the process, add value and focus more on strategic pursuits.