Customs management automation: Why should your business consider it?

For a long time, customs management has been a critical but often cumbersome aspect of international trade for businesses. The ever-evolving global trade regulations and tariffs make it increasingly difficult to stay compliant. Rules and customs systems can differ per country or jurisdiction, which adds complexity for organisations that import and export to multiple countries.

In the last year, the EU has placed massive sanctions against Russia in response to the invasion of Ukraine, including targeted restrictive measures, economic sanctions, and visa tightening measures. These have significantly disrupted global supply chains, leading to additional complexities in customs processes.

The manual handling of customs documentation is time-consuming, involving classification, tax and duty assessments, and collating the necessary certificates and licenses. This necessitates dedicated human staff, which not only increases labor costs but also carries the risk of human error. Research has found that just a 10 percent increase in the time that customs procedures add to the transit time between the origin and the destination results in a 1.8 percent decline in the export growth rate. Additionally, the lack of visibility into the customs clearance process can disrupt supply chain operations, causing delays, stockouts, and customer dissatisfaction. Such impacts can lead to revenue losses and harm a company’s financial health and its reputation.

To help them navigate the extensive regulations and paperwork, many businesses enlist the assistance of a customs broker. These experts in international trade compliance and customs procedures help ensure a smooth flow of goods across borders by taking on tasks like shipment tracking, filing customs entries, and paying duties and fees. Reliance on brokers, however, can also become a substantial expense for businesses, with each shipment costing many thousands of dollars depending on its size and the work required. Communication is also rarely streamlined, with a lot of tedious back and forth via phone, email, and Excel.

. Research has found that just a 10 percent increase in the time that customs procedures add to the transit time between the origin and the destination results in a 1.8 percent decline in the export growth rate. Source: Shutterstock

But there is another option available that can work out to be more cost-effective: automated customs management. By automating tasks like data entry, classification, and document preparation, companies can significantly minimize the chances of human error and associated delays.

Consistent customs processes enhance a company’s reputation by delivering reliable and efficient international trade services. This boosts customer satisfaction while safeguarding the business’s financial well-being in the face of complex global trade dynamics. The software also comes at a fraction of the cost of a broker in the long term.

Advanced customs management platforms enable businesses to gain better control over their customs processes, enhancing precision and compliance. They often provide real-time updates on trade regulations, ensuring businesses stay up-to-date with the latest legislative changes and avoid costly non-compliance penalties.

One of the key advantages of automated customs management is its ability to go beyond mere compliance, giving organizations the power to structure and visualize large volumes of data across various systems and countries. This data can be automatically shared with customs authorities, suppliers, logistics service providers, and customers to keep the flow of goods and information moving efficiently.

Advanced customs management platforms enable businesses to gain better control over their customs processes, enhancing precision and compliance. Source: Shutterstock

Automation not only simplifies customs management but also helps businesses make the most of cost-saving opportunities, like Special Procedures. These procedures, which include Inward Processing (IP), Outward Processing (OP), and Customs Warehousing (CW), allow businesses to store, temporarily use, process, or repair goods and get either suspension, partial, or complete relief from import duties and VAT. They are designed to streamline trade movements across borders, ultimately promoting international trade and foreign investment.

Businesses can enhance cash flow and reduce costs by strategically handling customs duties through Special Procedures in international trade. But without an experienced customs broker, this is challenging. Special Procedures’ rules vary globally, leading to compliance risks, penalties, and delays. Staying updated with evolving procedures is time-consuming. To gain a Special Procedures authorization, firms must report their customs movements, which is complex without specialized tools.

Customs brokers save time and ensure compliance, but they might not cover all required countries, leading to a complex network of contacts. Recent automation advancements offer a preferable alternative. It’s also crucial for companies to remember that, despite using brokers, they remain ultimately liable for any errors related to their declarations, which could result in costly penalties.

Customs technology has the advanced administrative capabilities required to generate essential reports and declarations to demonstrate compliance with Special Procedures. It can be integrated with the company’s ERP or WMS solution to compile real-time stock records and process product information. Customs management platforms can suggest suitable customs procedures and initiate declarations. They also optimize operations by automating the selection of duty-advantaged or bonded goods, freeing up cash flow and increasing profits.

Customs4Trade’s Special Procedures module monitors inventory and produces the reports and declarations required to demonstrate compliance. Source: Shutterstock

This technology can provide extra visibility on where declarations are in the customs process, for example, if they have been released or selected for document or physical check. This allows the business to act upon any customs errors very quickly and easily, ultimately ensuring efficient customs compliance. What’s more, automation capabilities and integration with the ERP or WMS remove the need to manually type in information, further reducing instances of errors.

A leading cloud-based customs clearance platform is the Customs Accounting System, or CAS, from Customs4trade (C4T). It allows businesses to file export declarations in the country of departure and create import declarations in the destination country simultaneously, significantly reducing the administrative burden. It also has a dedicated Special Procedures module which monitors inventory and produces the reports and declarations required to demonstrate compliance. The Special Procedures module supports Customs Warehouse, Inward Processing, Outward Processing, Temporary Admission, Returned Goods Relief and soon Excise and Tax Warehouse too. C4T’s partners confirm this complete offering is truly unique in the market.

With built-in compliance and adherence to global standards set by the World Customs Organization and the Union Customs Code, CAS keeps customs management up-to-date and secure from legislative changes, taking over any reputational risk and liabilities in case of penalties. Additionally, its powerful visibility and analytics tools provide real-time insights into customs compliance data, empowering businesses with informed decision-making.

Are you ready to streamline your customs management and grow your international trade operations? Get started now by scheduling a CAS demo with Customs4trade.