Trade knowledge / Relying on Reactive Export Procedures
Date: 2016-10-20
Relying on Reactive Export Procedures
Sometimes things go wrong. You miss a delivery date because a shipment didn't go out the door on time. A shipment is held up by customs in the country you're shipping to because they say you need some additional forms or certificates. Your payment is delayed because the bank says your export documents don't satisfy the terms in a letter of credit.
Solving problems is part of business. Heck, it's part of life. But if you are spending most of every day putting out fires with your export shipments rather than focusing on your normal job responsibilities, your company is heading nowhere fast. It's impossible to grow a sustainable business if your day is dictated by others.
Being reactive instead of proactive means you may miss cheaper ways to ship your goods to your international customers. It may mean you miss opportunities to take advantage of free trade agreements that could lower the costs of your goods (and make them more competitive) while also making them more profitable. And it may lead to the types of errors that result in export compliance violations that could cost your company thousands of dollars in fines, potential loss of export privileges, and, in the worst cases, jail time.
Recommendations
Companies that take the time to create an Export Management and Compliance Program (EMCP) take charge of their export process. A written EMCP helps ensure that the entire company is on the same page from upper management to sales and marketing to shipping and logistics.
By taking the proactive step of creating an EMCP, companies may find new markets for their goods, new efficiencies that could save time and money, and new assurances that they are following current export regulations. (For help creating an EMCP for your company, download the free white paper, How to Create and Implement an Export Management and Compliance Program.)
Keep in mind that a formal EMCP cannot be a static document. Your products, and the parts they use and where they are sourced, can change. As I mentioned earlier, product classifications change at least once a year. Markets for your products can grow or contract, and the conditions within those markets can change. Export documents and document requirements can and do change. And export regulations can change including the organizations and people who appear on government denied party lists.
It's important to document that your export and compliance procedures are being followed for every export shipment. This allows you to ensure all employees understand and follow procedures. If that's not happening, it can help you to identify the parts of your export procedures that may need to be reviewed and refined, or identify areas and employees who need further training.
It's also important to document that your company is following its EMCP in case you ever get audited by the Office of Export Enforcement, the FBI, or some other agency that has jurisdiction over exporting. Being able to demonstrate that your company is doing its due diligence in its exports could be a "strong mitigating factor against penalties" if certain export violations are found.
Of course, a written EMCP and shipment log that demonstrates it's being followed won't help a company knowingly and criminally violating export regulations, but it can be a lifesaver for companies doing their best to comply. It's particularly important for small- and medium-sized companies that export, because they would have a difficult time recovering from significant export penalties and the resulting loss of its reputation.
Shipping Solutions Professional export documentation and compliance software not only includes important export procedures like restricted party screening and export license determination, it features a shipment log that makes it easy to document that each step in your company's export process is being followed.
Take Charge of Your Exports
If you are currently involved in your company's export process, you are probably already overwhelmed by your job responsibilities. Even if you recognize the need to take control of your company's export procedures, it's natural to want to wait until you have the time to address these issues. But, unfortunately, that time will probably never come. There's always one more fire that needs to be put out.
Instead, too many companies wait until a crisis forces their hand. An export shipment goes badly wrong, and an international opportunity that promised to result in large profits for the company turns into a big loss that puts a company and its employees at risk.
Or a compliance officer with a badge and a gun comes to the door informing you of serious and significant potential export violations that, at best, disrupt your entire company as they seize your records and audit your exports, or, at worst, result in thousands of dollars in penalties, restrictions on future exports, and maybe even jail time. (For examples of what can go wrong, download Don't Let This Happen to You!)
Don't rely on luck and crisis management as the guiding principals of your export process. By taking the time to invest in your export efforts and procedures now, you'll be setting up your company for strong, sustainable and responsible growth in your international markets.
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