How Does Customs Compliance Impact Your Supply Chain?

The impact of customs compliance is far more than meets the eye – it’s not just about the customs duties you pay. Why? There are operational costs of customs routines as well as the extra work and risks related to non-compliance.

Once you look beneath the surface, you might uncover new and previously unknown issues, which is why understanding the areas below will help optimise fees, increase operational efficiency, strengthen regulatory compliance and improve trading opportunities. 

Customs Compliance vs. Your Supply Chain

Operational Efficiency

Efficient day-to-day operations can have a significant impact on your operational costs – today, coordination, automation and digitisation of the processes comprise the way forward. Larger volumes and increased complexity in your supply chain increase the requirements for efficient customs compliance, helping you to plan, manage and follow up your operations, end-to-end.

The larger the operation, the greater the need for improved system support – end-to-end digital solutions that increase visibility ensure the right data is at the correct stage, creating a more centralised customs management. Improved system support means you have the control to harmonise your processes, create better conditions for predictive and efficient goods flows as well as lower total customs costs.

It may also be worth evaluating the possibilities of using a One Broker Concept with a digital process solution, enabling greater transparency, control and cost optimisation.

Control & Risk Mitigation

Involvement in international trade means dealing with risks on a daily basis. Whether they are compliance risks or ones with direct economic impact, all of this has to be controlled and mitigated through a structured and partly automated digitised approach.

Successful customs compliance management includes: being able to orchestrate and monitor the entire customs value chain as well as to detect potential risks and manage them preventively. At a strategic level (in the planning phase and daily operations) is about managing:

  • Classification
  • Origin
  • Valuation
  • Terms of trade
  • Export control 
  • Partner screening

It is important that you ensure you have the right organisation, with the knowledge, the routines and the systems that enable this.

Trade Performance

Trade performance is a complex environment with many stakeholders involved. Often it takes years to get there, requiring dedicated management with focus and engagement. Key customs opportunities that can improve your trade performance (and ultimately, customs compliance) include the use of trusted trader programmes.

For example, our AI cloud-based platform allows you to keep track of shipments in real-time, retrieve information quickly and save money as well as contribute to shorter lead times and reduced costs, thanks to simplifications, predictability and efficiency.

Duty Optimisation

By optimising duties paid, you can increase your competitiveness whilst reducing the risk of unexpected costs. From a cost perspective, the duties might only be a portion of the total cost of your customs management, but excessive duties still affect your margins and at the same time, paying insufficient duties can lead to penalties and fines.

Understanding Free Trade Agreements and the benefit of local Origin can save your company £1000’s in duties. As well as this, understanding your Terms of sale (Incoterms) and who is responsible for the movement of your goods is effective for duty optimisation – keeping routines and knowledge in place during day-to-day business will keep duties down whilst ensuring customs compliance

It’s always cheaper to have the correct classification from the start because the earlier you control this the better. Classification management (such as utilising free trade agreements) and taking advantage of available customs procedures (such as a bonded warehouse and inward processing) is a great way to reduce duty costs and avoid compliance risk.

Understanding preference vs. non-preference when trading internationally is critical for customs compliance. Similarly, setting up a compliance manual covering old and new import and export procedures ensures staff are following guidelines as well as unwanted delays at borders. Digitising your process with an appropriate IT system could be a solution worth looking into as it streamlines workflows.

Customs Compliance Made Simple

At KlearNow, we want to simplify your lives as we understand that customs compliance is complex in this archaic logistics industry. Our Logistics as a Service (LaaS) platform enables customs brokers and transporters to deliver unprecedented real-time visibility needs of importers, exporters, and freight forwarders with zero IT costs and integration fees.

The KlearNow platform offers all documents in one place and is fully visible, saving time on different filing systems for compliance record keeping. We can make customs compliance easier for you, no questions asked. If you want to know more you can request a demo or simply contact us.