With the fast-paced technological advancements, almost every business stands an opportunity to make their business visible to international markets. It could be via social media posts, your website or advertising services.
Imagine having potential suppliers abroad and finally closing that deal for your products. From seeking supplier information and reaching out to the supplier to closing that deal, all can be achieved online. And it’s all exciting until it’s time to have your products imported.
Then, your supplier suggests that the best way to process the transaction is by working with an IOR. At this point, you will have innumerable questions. Why do we need an IOR? When is an IOR required? What will the IOR help us with? Is it worth it? How about the cost?
Whether you are just curious to understand or are looking forward to importing goods, this simplified guide explains what an IOR is, the services of an IOR, and why you need an IOR. You will also learn how to import with the help of an IOR successfully.
Let’s dive in.
What is IOR?
An IOR (Importer of Record) is a designated individual or company that is responsible for ensuring a successful importation transaction.
The IOR does so by complying with import customs, procedures and legal requirements, identifying and mitigating risks, and ensuring goods are delivered to the desired destination and in good condition.
Why do you need an IOR? [Situations in which IOR is essential]
Importing goods has a wide range of benefits, including establishing yourself as a leader in your industry, acquiring quality products, cutting costs and diversifying products in your industry.
However, importing merchandise for the first time can be a challenging process. Even the most experienced importers can still find the process challenges depending on the type of goods, country of origin, and destination country. But why?
Importing goods is quite complex, mainly because of the activities involved in ensuring your goods are shipped to the desired destination successfully.
Some of the most challenging processes include ensuring compliance with legal and customs compliance. Other procedures include acquiring necessary licenses (if any), ensuring the security of goods and analyzing and settling expenses and fees associated with the transaction.
Considering the challenges highlighted, here’s why you need the services of an IOR:
#1 You don’t want to act as the IOR
By default, the importer of goods should act as the IOR. And depending on the shipping incoterm you choose, you have a level of responsibility to fulfill.
For instance, if you are using the DAP or DAT incoterms, you are responsible for clearing the goods of import customs for transportation to your final destination.
But if you are unaware of the requirements, find the process complex or don’t have the time to follow up with the goods, you may not want to act as the IOR. In this case, you need the services of an expert IOR.
#2 You don’t specialize in international trade
Anyone can be involved in international trade as a seller and or a buyer. But specializing in the importation and exportation of goods is a business on its own.
Hence, if you are importing goods but do not understand the procedures to ship them successfully, the service of an IOR is invaluable.
#3 You need help with changing international trade requirements
Legal and customs requirements keep changing, and it can be challenging to ensure compliance every time they change. Established IORs stay ahead of changes in regulations and can help you comply in case of any changes.
Note: Any failure to comply with import regulations can lead to penalties and fines. Even worse, your goods may be detained or put on hold until all the customs and legal requirements are met.
Hence, understanding why your business needs the services of an IOR is paramount.
What is the purpose of an IOR?
We have discussed situations in which you may need an importer of record. But what makes an importer of record significant in those situations? What can they do to help you?
The purpose of an importer of record can be summarized in three key terms:
- Safety of goods during transit
- Convenience of the buyer and seller
- Return on Investment (ROI) for the buyer and seller
Let’s dig deeper.
#1 Safety of goods during transit
Your goods are considered safe when they move from the source to the destination country within the shortest time possible and in good condition.
An importer of record achieves this mandate by:
- Ensuring accurate product valuation and classification
- Ensuring compliance with import regulations
- Identifying and mitigating risks
- Clearing imported goods of customs
#2 Convenience of the buyer and seller
As earlier mentioned, as a buyer, you may not want to be the importer of record. It could be because of your unavailability.
You must not wait until it’s too late for the seller to ship those goods. Suppose they were on a limited offer!
The importer of record relieves you of the importation hassles and works hand in hand with the seller to ensure goods are delivered at the time of your convenience. Which also aids the convenience of the seller.
#3 Return on Investment (ROI)
The motivation of every business owner is ROI, which you can always go right with when working with an established IOR.
Come to think of this. What would make you lose rather than gain when doing international shipping? Hidden costs such as VAT, unpredictable supply chain expenses, damage of goods, detainment, etc. Right?
An importer of record takes care of all these, ensuring you gain optimum ROI for your goods.
IOR Responsibilities
If you are looking for the services of an importer of record, it’s essential you understand the scope of their services.
Here are the roles and responsibilities of an importer of record:
- Ensuring accurate valuation and classification of imported goods
- Assessing the expenses of the importation process, including tariffs, duties and fees
- Identifying and presenting all necessary documentation required by the customs to authorize an entry.
- Ensuring compliance with customs and legal regulations
- Representing the buyer during the importation process
An IOR or a customs broker? [Which one do I choose?]
The difference between an IOR and a customs broker lies in the scope of their responsibilities. A customs broker assumes the responsibility of an IOR only at the point of receiving imported goods.
For that case, a Power of Attorney (POA) is required for the customs broker to perform customs duty on behalf of the buyer.
However, an IOR is responsible for the entire importation procedure, from packaging to import clearance.
You can learn more about the difference between an IOR and a Customs broker so you can make an informed decision in your next importation.
FAQs
1. Who can act as an IOR?
By default, the buyer (owner, purchaser) acts as the IOR. However, the buyer may not always be able to assume the role of an IOR.
In that case, the buyer can consider the IOR services of an established agent, business or legal entity such as a consignee or a customs broker.
2. Can the shipper be the importer of record?
Only in some countries the shipper or seller can be the IOR if they are entitled to the imported goods.
Assume you have a business in the US. You have established your presence in the UK with staff residing there. You want to ship some products to your business in the UK. In this case, you are the shipper and can be the IOR.
3. Who is the importer of record in DDP shipping?
In DDP terms, the seller takes responsibility for 90% of the importation procedures.
In this case, the seller acts as the importer of record, but only if they have a physical presence in the destination country. Otherwise, the seller can acquire the services of an established IOR.
4. What is the difference between consignee and importer of record?
A consignee is a legally authorized entity who agrees to act as an importer of record during importation.
The person or entity represents the buyer till the goods have been delivered. After which, the consignment ends, and the buyer assumes ownership of imported goods.
For more information on Blackthorne’s IOR services please get in touch now – sales@blackthorneit.com
