Andy Martin - YRC Logistics EU

I attended a prospect appointment with one of our Global Development Managers and during the call it became apparent that the prospect did not have a deferment account, but used their current freight forwarders instead. All through the call the prospect kept informing us that due to the current economy they needed to reduce their expenditure on freight by at least 10% and could not waste money by needlessly using airfreight.

When we asked the prospect how much Duty and VAT they put through the Deferment account and we were surprised to hear it was approximately £500,000 per month, their current forwarder charges 4% so this was costing him £20K per month.

We explained to the client that our International Trade Department could help them set up a deferment account and authorise them for SIVA which will also remove the need to guarantee the account for the VAT element reducing their costs even further.

It is interesting that this prospect was focusing so hard on the freight rate, but was leaving £240,000 on the table. It just goes to show that there are many areas in the supply chain that can add extra profit and quite a few of them get missed!

Labels: Deferment Account, Duty, VAT

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It has been 13 days since my last post; I think this is the longest I have gone without a making a post. Please accept my sincere apologies, but the last 14 days have been the busiest I can remember for February. But I promise that I will start next week to continue talking about how importers and exporters can increase profits by looking at areas in the supply chain that are often overlooked.

During these uncertain economic times most companies are looking at their expenditure and ensuring that any major expenses are reduced. However, one area that is often overlooked is International Trade Compliance and namely the duty and tax they pay on imported goods!

Most people know that duty is calculated on the CIF value: -

• Cost of Goods
• Insurance
• Freight costs

 Importers can ensure that they do not overpay duty by: -

• Understanding the correct build up for duty and VAT.
• Knowing what must be added?
• Knowing what can be deducted?
• Checking that the goods are correctly classified.
• Knowing what happens to the goods after import.

When we ask a prospective client who is responsible for their International Trade Compliance? The most common answer we hear is "Our Freight Forwarder takes care of that". However, importers should be aware that it is their responsibility to be and remain customs compliant. Not only could they be non compliant by relying upon their forwarder, but they could also be spending money unnecessarily. 

Importers can reduce the risk of non compliance or incorrect duty payments by: -

• Ensure that any compliance instructions are followed by your forwarder
• Check that insurance is always declared?
• Check that all the supplier invoices declared?
• Check the right currency used?
• Asking if the duty/VAT entry value build-up reflect the terms of sales?
• Check that the correct entry procedure is used?
• Check that any multiple origins are declared?
• Make sure your forwarder does not use a ‘catch all’ classification?

Over the coming weeks I hope to share some other areas of the supply chain that are normally overlooked when importers are looking to increase profits by reducing unnecessary costs. In the meantime, if anyone would like to know more about our International Trade Compliance services, please feel to email me directly.

Labels: Customs Compliance, Global Trade Management, International Trade Compliance