International trade is an important part of the British economy. About 28% of all goods produced in the UK are sold abroad, while 30% come from other countries.
Being internationally trade compliant is a vital component of global business. It is what determines a company’s good practice from bad practice, and in the end, allows for overall brand positioning and customer loyalty.
The use of compliance tools is imperative for keeping up with regulations and overall task simplifications. In the end, it will save businesses copious amounts of time and money by efficiently managing their supply chain.
Let’s take a closer look at trade compliance and its importance.
What is international trade compliance?
International trade is a system of international commodity-money relations that consists of foreign trade of all countries of the world.
International trade compliance (or global trade compliance) is the operation of commerce between different countries, while abiding by each of the parties' rules and regulations and trade agreements. It guarantees security and ethical practices, keeping in mind that every country has a different treaty and regulations, according to the type and the origin of the merchandise.
This best practice is incorporated in every multinational company as an imperative function of handling trade. Every one of these corporations has a team just for their logistics in the supply chain, due to the heavy weight this area carries for assuring product or service delivery. This has become the entry point into what is called international business, crucial for commercial expansion.
What is import/export compliance?
The commercial activity of importing/exporting goods and services from one country to another, as part of a supply chain strategy, while abiding by each party's laws and regulations.
Its main goal is to optimize a company’s commercial practices by expanding internationally for better product positioning or outsourcing, while complying with each country's rules and treaties.
Why is trade compliance important?
Because nowadays any person is vulnerable to external factors, such as illegal substances, weapons, epidemies, etc., countries establish many regulations for import/export control, services and people entering their territory.
It enables businesses to minimize :
- risks of fines,
- shipment delays, etc.
If a company does not abide by customs regulations, this can be subjected to risks that can be incredibly damaging to the company.
Risks of not being international trade compliant
When companies don't comply with regulations, it is called trading bad practice. This occurs when businesses are not well managed and are not up to date with countries’ laws and requisites.
Not ensuring correct compliance with international regulations can bring many repercussions to a company's practice, that can evolve into irreparable damages, from customer loss to eventual bankruptcy.
Some of these risks include:
- civil penalties,
- financial sanctions,
- shipment delays,
- lost merchandise,
- over taxation,
- criminal offenses,
- customs hold.
Remember that trade compliance programs are useful for minimizing noncompliance risks, and overall helps correct management of international trade by:
- automating processes,
- simplifying functions,
- real-time tracking of goods processing,
- optimising costs, while effectively estimating delivery.
Advantages of being trade compliant
Businesses engaged in international trade compliance increase production efficiency by stimulating the movement of resources.
Advantages for the country:
- creation of opportunities for the emergence and development of mass production,
- export revenues are a source of capital accumulation aimed at industrial development,
- increased equipment utilisation and increased efficiency in the introduction of new technologies.
- increase in export supplies leads to an increase in employment.
Advantages for businesses:
- Minimised risks
Not abiding correctly with countries' rules can bring many risks to companies' overall management. By guaranteeing correct compliance, companies reduce the risks of sanctions, penalties, and overall profit loss.
- Customer satisfaction
If companies minimise risks, they can ensure correct and timely delivery, thus increasing brand loyalty and overall profitability.
This type of customer relations management is what primarily separates companies from their competition, by offering an added value to their proposition that makes customers spend extra money if it means they’ll get quality service.
- Increased competitiveness
By minimizing risks, guaranteeing customer satisfaction, and exercising an overall proactive approach to regulations, companies develop an advantage over competitors due to them ensuring :
- product placement,
- and optimizing profits through an overall efficient supply chain management.
When regularly trading and maintaining a clean report on incidents, customs authorities tend to process goods in a rapid manner, because of the frequency of the trade; allowing companies to be more efficient and ensure faster delivery of goods.
Tools for better trading
Tools such as TRADE.EASY allow companies to be proactive by:
- managing overall trading functionalities,
- monitoring key indicators through an intelligent dashboard for easy tracking and decision-making,
- better manage their orders tracking while saving money and time by guaranteeing product delivery.
This type of tool is imperative for the correct management of your imports/exports, because it offers you a complete platform where users can track and process their contacts, products, orders, documents, and actions through automated tools.
Do you need to be trade compliant?
Following Brexit, the UK will quit the EU trade agreement after 31 December 2020 (if not extended), and will have its own regulations regarding international trade.
For businesses, not being trade compliant can mean loss of reputation, clients, and therefore business continuity. More and more companies are turning to experts like customs brokers especially in cases of external audits such as governmental trade compliance audits. This ensures compliance of UK companies and keeps businesses proactive.
Don’t wait for tomorrow to be international trade compliant, act now!