An importer of record plays a critical role when importing to a new country, especially where you’re yet to establish an entity.
New importers delve into the international shipping business with a long list of goals to meet yet forget the most crucial part – choosing the right importer of record.
Well, new importers at least have a glimpse of what to look for when choosing an importer of record.
If you need a better understanding, we put sufficient information regarding what to consider when choosing an importer of record in this guide. From having the expertise and experience in importing to having an entity representation in the destination country.
But there’s more to look for in an importer of record besides customs clearance and a successful importation.
So, do you ever wonder what mistakes you could make when choosing an IOR? This article discusses the five common mistakes you should avoid when choosing an importer of record. You will also learn the challenges importers face and things that could go wrong during importation.
Five mistakes to avoid when choosing an importer of record
Partnering with an importer of records is one of the significant considerations when importing goods across borders.
Various reasons necessitate the need for an importer of record for your business. But you must be careful to reap the most benefits by choosing the right importer of record.
Here are the five common mistakes you should avoid when choosing an importer of record for your business.
1. Overlooking geographical coverage and local entity of the IOR
Some countries have complex restrictions and regulations that make customs compliance a hard nut to crack.
An IOR with a local entity and office in the destination country understands the local regulations and customs and has established a relationship with local authorities. Hence, the IOR can easily navigate the customs clearance procedure.
Also, choose an IOR with a vast geographical coverage. You don’t want to keep looking for an IOR whenever you want to ship to a different destination. Choosing an IOR with global coverage and a local representation in most countries supports your business expansion in the long term, as you can ship to any destination with their help.
2. Failing to conduct due diligence on the IOR
There is a wide range of IORs all over the world. And it can be challenging to identify the IOR best suited for your needs without due diligence.
Research and vet the IORs, establishing their reputation, customer testimonials, track record and relevant certifications.
Additionally, establish how long they keep your import documents for auditing and compliance.
3. Assuming IOR’s responsibilities
Assume the scope of your IORs services can cause confusion and unmet expectations. You must understand the roles and responsibilities they handle and what you should handle for a seamless importation.
Generally, an IOR that leaves most of the tasks to you should be avoided. You need an IOR who handles every aspect of the importation procedure, from customs compliance to settling duties and taxes.
Handling logistics, including freight forwarding in the destination country, is also advantageous.
4. Choosing an IOR solely based on cost
While there may be IORs that are cheap, you must consider other aspects, such as experience, expertise, scope of services etc.
Essentially, consider the value attached to the IORs charges. See if it’s worth the value the IOR is bringing to your business.
5. Ignoring expertise and experience
Experience in cross-border shipping is invaluable, and so is the expertise. An experienced IOR has identified the complexities in most destinations and figured out how to overcome them.
Expertise ensures excellent importation management, from transportation to compliance with local customs and regulations.
Hence, prioritise IORs who have experience handling similar goods and industries. Industry-specific expertise and accreditations are ways of determining the IOR’s expertise.
Challenges facing importers during importation
The importation procedure for some countries is already enough of a hassle for new importers. This is because of the import regulations and requirements that some countries have in place.
And there are various other challenges that every importer should know before initiating an import transaction.
Here are the challenges necessitating the services of an IOR.
Negotiating high initial import quantities
When shipping a new product for the first time, it is best practice to initially ship small amounts to test the waters. This ensures you only ship large quantities when you have established the product demand in the destination country.
Also, if the product proves unfavourable in the market abroad, you can suspend the importation without much loss.
However, some manufacturers and suppliers may insist on high initial amounts, considering the cost of importation.
With an IOR, you can ship your small consignment alongside other imports, sparing you unnecessary importation costs.
Shipping and logistics challenges
Successful transportation entails the proper packaging with the most effective mode of transportation. This ensures goods are delivered in the right quantities and good quality.
However, it can be challenging for importers to navigate the logistics for their importation, even the packaging. This can lead to delayed delivery due to missing paperwork or mishandling of goods, causing damage.
IOR’s experience and expertise in supply chain management and logistics ensure safe packaging and transportation to the final destination.
Quality management
Quality remains critical once you have established the demand for your goods and realised you need more imported goods. You want to ensure that your customers are satisfied with the quality you showcased from day one.
Hence, you must nurture relationships with the suppliers to ensure consistent quality for your business success. This can be challenging, especially if you manage it from a distance.
Hence, you must develop a clearly defined Service Level Agreement with the suppliers and ensure they are quality assured by the governing authorities, including ISO certification and BRC accreditation (food safety) if importing food products.
Tariff classification
Tariff classification entails assigning your goods the correct Harmonised Systems (HS) code number (usually a 6-10 digit). The classification helps the customs officials to identify your good’s category, composition, characteristics and intended use.
Assigning the correct tariff code is essential as it also helps in the following:
- Determining the applicable duties, taxes and regulations
- Acquiring an import or export license
- Determining if your goods are eligible for reduced rates or a refund
- Determining if your goods are subject to quotas
- Monitoring and controlling the movement of goods across borders to prevent illegal trade.
Assigning the wrong code to your goods may lead to delayed delivery, penalties, or your goods being seized at the border.
For some goods, tariff classification can be straightforward, while others can be complex.
Here are the common challenges during tariff classification:
- It can be challenging to determine the correct classification as some products have overlapping or ambiguous descriptions
- Due to the fast-paced technological advancements, new products may have their codes yet to be assigned in the harmonised system
- Customs authorities and individuals may interpret the product characteristics differently, leading to discrepancies
- Classification errors may occur due to translation to different languages, deviating from the originally intended meaning.
Established IORs compile varied tariff classification databases to ensure codes of new items are added. They also update changes in the tariff language as soon as they are made.
Customs valuation
Customs valuation involves determining the customs value for imported goods. It is the basis of establishing the customs duties and taxes to ensure fair trade and revenue collection.
Customs valuations are determined based on the transaction value. This involves all the expenses incurred in the importation process, from packaging and transportation to the import destination’s customs clearance and logistics charges.
Undervaluation and overvaluation are everyday experiences in customs valuation, bearing in mind some hidden costs such as VAT.
Hence, identifying tax requirements and regulations and related hidden costs before shipping is essential. Working with an experienced IOR is also helpful as they can relate the cost with previous importations to similar destinations.
Things that could go wrong when importing
There’s a wide range of things that could go wrong during importation. Here’s a summary of the common failures and consequences of the importation process:
- Failure to comply with some of the customs regulations and document requirements may lead to delayed customs clearance, penalties, or rejection of your goods. Be sure to adhere to all import regulations.
- Assigning your goods the wrong tariff code may lead to incorrect valuation, tax and duties, and potential penalities. Ensure your goods are accurately identified.
- Your shipment can be lost or delayed, and goods damaged during transit. So, it’s essential to use a reliable shipping and logistics partner to ensure shipments and track them in real time.
- Abrupt changes in tariffs, import regulations and trade agreements can occur, causing increased costs and delays. Even long after successfully importing, regulations can change, requiring you to comply.
Ensure you stay updated with regulatory changes, regularly review trade policies and be flexible in your supply chain strategy. - Every shipment has associated payment risks, from currency fluctuations to changes in tax charges and delayed payments.
Monitor currency exchange rates and identify payment requirements in the destination requirements. For instance, you must establish a local bank registration in some import destinations to pay for your goods.
Ace the Importation Complexities with Blackthorne
A problem is only a problem until it finds the experts and so is the importation procedure. The complexities of importation are valid and seemingly impossible to overcome, especially if you are new to international shipping. However, working with an established IOR such as Blackthorne lifts the burden off your shoulders.
With 20+ years of experience and over 225 local entity representations, Blackthorne remains the go-to IOR for your business needs.
We have partnered with the best logistics partners for goods’ safety in transit and the destination country. Additionally, we are globally recognised with industry-specific accreditations.
Hence, let us know if you want to import and need help with the importation procedure. You can also explore our rich range of import and export services that you enjoy by partnering with us.
