Trade compliance is a dynamic goal that can be challenging to master. However, a dedication to following trade laws and a well-designed internal compliance program can help businesses at all levels start down the path to compliance mastery.
Let us review a few trade compliance tips that every trading business should know.
10 Best trade compliance tips
Follow the tips listed below to ensure trade compliance:
1. Assigning responsibilities
The first step you must take towards an effective compliance system is to appoint a compliance officer or an entire team who will be in charge of developing compliance procedures and overseeing their implementation across departments. The team is also responsible for carrying out risk assessments for your business to mitigate the potential risks.
2. Adhering to trade rules and regulations
The main goal of a compliance program is to ensure compliance with trade laws. Keep in mind that there is no one-size-fits-all approach; every region and business is subject to different rules and regulations.
In order to comply with the rules, you must research and make sure to follow the rules created by different organisations, such as:
- US Customs and Border Protection (CBP)
- World Customs Organisation (WCO)
- US Department of Commerce Bureau of Industry and Security (BIS)
3. Effectively classifying goods
A precise product classification is critical for determining appropriate authorisations, assessing tariffs and duties, and ensuring compliance. Notably, there are various product classification schemes in use worldwide; some are applicable to imports and others to exports. Traders need to know how to properly classify their products and which product classification system to use.
4. Conduct thorough audits
Businesses should keep organised records of all pertinent documents, such as:
- Commercial invoices
- Packing lists
- Shipping documents
- Customs declarations
Centralising document storage and making it accessible can help businesses streamline the audit process. Furthermore, maintaining open lines of communication with customs authorities and proactively addressing any potential issues can help to speed up audit procedures.
5. Incorporate tax and duty minimisation strategies
Businesses need to work on duty minimisation strategies by collaborating with trade experts and customs brokers. Businesses can maximise tax savings while adhering to relevant regulations by taking advantage of available programs, exemptions, and preferential trade agreements.
For instance, duty minimisation strategies are:
- Duty Drawback programs
- Free Trade Agreements
- Customs Duty Deferral Schemes
- Bonded Warehouse Facilities
6. Ongoing compliance training
You should make sure to conduct ongoing compliance training in your organisation, and your compliance expert should supervise it. The rest of your departments will learn to be compliance-conscious under the direction of the compliance officer.
Aftrade, a global supplier of raw materials and ingredients, states that:
“Regular participation in industry-related seminars and workshops can boost knowledge, create networking opportunities, and encourage conversations on best practices and new solutions."
To promote an internal compliance culture, take advantage of compliance training possibilities.
7. Pay attention to red flags
Keep an eye out for any anomalies that might indicate an issue, particularly if they imply that the final use of the goods you are importing or exporting would be prohibited. Ignorance will not shield your business from liability; it can make the problem worse.
Among the warning signs are:
- The address or name of the client resembles one on a Denied Party List.
- The buyer is mysterious about how they plan to use the things they have bought.
- The purchased items are not in line with the business. For instance, a small bakery is purchasing cutting-edge electronics.
8. Stay updated
Every trade and compliance law is subject to change. Changes are frequent, particularly in the intricate system that oversees global trade.
Depending on the current political and economic climate, the laws governing import and export may be modified, amended, or expired. Knowing where to look for information and keeping up with current events is essential to staying updated.
Keep an eye on government databases for updates to stay informed. For instance, reading the Federal Register parts that pertain to your industry is beneficial while working with the United States.
9. Use compliance software
Traders may prioritise compliance at every stage of the import-export lifecycle by using trade compliance software. With compliance software, traders can automate labour-intensive administrative tasks, conduct more comprehensive audits and screens, apply for licences, handle shipping and logistics, categorise products, build blockchains, and much more. The software can be used by businesses to leverage data and gain insightful knowledge about compliance requirements, which offers a road map for increasing compliance.
10. Get help from the experts
It costs a business a lot of resources to comprehend and implement the many complexities of trade law. Most people can not even keep up with the daily changes in trade policy in one country. Many businesses worldwide rely on OCR's Global Trade Management specialists to help them with or oversee their trade compliance initiatives. The days of manually recording crucial trade compliance information in spreadsheets are long gone!
The bottom line
Ensuring trade compliance is crucial for the success of your business. You can follow the tips listed in this article to make sure the compliance process goes smoothly and precisely.
Author Bio: Freya Jane is a seasoned writer and customs expert who works with iCustoms. She is passionate about crafting engaging content and has expertise in creating informative content on a variety of topics, including technology and business.
