Leveraging the Customs Broker
Relationship to Maximize Import Efficiencies
and Meet Compliance Objectives
KristinF.Wood,Es...
The Customs Broker Relationship
Brokers are Agents
• Hiring a broker helps demonstrate reasonable
care
• A broker is your agent
• Importers are liable for...
Reasonable Care
• Importers are required to use reasonable
care to ensure that all entries comply with
the law
• Reasonabl...
Leveraging the Customs Broker Relationship
• What does “leveraging” mean?
 The ability to profit utilizing resources that...
Relationships
Leveraging the Customs Broker Relationship
Expertise
Systems
Experience
Licenses
Expectations
Procedures
Met...
Importer Liability
• A thorough broker management program will help
control and reduce liability for acts of a broker
• Pr...
Communicating Expectations
Broker Contracts
Power of Attorney
• Powers of Attorney must be executed for a broker to
operate on your behalf
• Avoid using standard lang...
Broker Contracts
• Broker contracts are an opportunity to outline
expectations of the relationship
• Avoid standard contra...
Broker Contracts
Contracts should cover the following:
Cost Structure
Services included
Accuracy Expectations
Timing Expec...
Directing Action
Standard Operating Procedures
Standard Operating Procedures
• SOPs or Business Rules direct the broker on how to
act on your behalf
• These should be sp...
You can’t manage what you don’t measure
Audits and Metrics
Audits
• Auditing is a good practice to demonstrate reasonable
care
• Post-entry audits should be conducted to ensure
comp...
Audits
• Audits should include the following:
Entry summary correctly completed and timely filed
Entry documentation packe...
Metrics
• Metrics are the visual results of audits and the measure
of the operation’s performance
• Metrics are a form of ...
Accountability and Continued Improvement
Broker Scorecard
Broker Scorecards
• Broker scorecards are a method of rating the broker’s
performance
• A scorecard gives specific and qua...
Broker Scorecards
• Scorecards could include some of the following:
Timeliness of Entry Filing
Timeliness of Communication...
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Leveraging the Customs Broker Relationship

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Steps you can take to ensure your Customs broker is adding value to your company

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Leveraging the Customs Broker Relationship

  1. 1. Leveraging the Customs Broker Relationship to Maximize Import Efficiencies and Meet Compliance Objectives KristinF.Wood,Esq. www.oldnycustomhouse.gov
  2. 2. The Customs Broker Relationship
  3. 3. Brokers are Agents • Hiring a broker helps demonstrate reasonable care • A broker is your agent • Importers are liable for the acts of its agent • Thus the following are critical to the relationship:  Select an experienced, licensed, and reputable broker  Ensure brokers are acting in compliance with all laws and regulations  Ensure brokers follow the importer’s direction
  4. 4. Reasonable Care • Importers are required to use reasonable care to ensure that all entries comply with the law • Reasonable care is defined as the care a reasonably prudent person would use under similar circumstances • Since brokers act on behalf of the importer, importers must use reasonable to care to ensure the broker is acting in accordance with the law • If a broker errs in making an entry, the importer is liable for the consequences of those errors
  5. 5. Leveraging the Customs Broker Relationship • What does “leveraging” mean?  The ability to profit utilizing resources that are available to reach a goal, whether that be profit, growth, increased efficiencies, etc.  Taking advantage of a strength  Magnifying the impact of an investment • So importers should take advantage of the investment in brokerage resources to profit by reducing the burden of the entry filing process, speeding the Customs clearance process, enhancing shipment tracking, increasing compliance rates, and gaining access to a broad knowledge base.
  6. 6. Relationships Leveraging the Customs Broker Relationship Expertise Systems Experience Licenses Expectations Procedures Metrics Importer Profits
  7. 7. Importer Liability • A thorough broker management program will help control and reduce liability for acts of a broker • Proper management of the relationship includes the following:  Broker Contracts that Communicate Expectations  Standard Operating Procedures or Business Rules  Audits to produce metrics that indicate performance and compliance levels  Scorecards to rate broker performance and demonstrate where improvement is expected
  8. 8. Communicating Expectations Broker Contracts
  9. 9. Power of Attorney • Powers of Attorney must be executed for a broker to operate on your behalf • Avoid using standard language powers of attorney that may include exculpatory clauses, limitations of damages, and other language that is contrary to your company’s best interest • Develop a power of attorney that serves your needs and limits the brokers actions to only what you desire • Be wary of unlimited powers of attorney
  10. 10. Broker Contracts • Broker contracts are an opportunity to outline expectations of the relationship • Avoid standard contract language and develop a contract that protects the company’s interest and meets your needs • Incorporate the other controlling documents (POA, SOP, etc.) into the contract • The contract should be a clear and specific agreement of the parties to avoid issues down the road
  11. 11. Broker Contracts Contracts should cover the following: Cost Structure Services included Accuracy Expectations Timing Expectations Communication Expectations Employee Training Expectations Recordkeeping Requirements
  12. 12. Directing Action Standard Operating Procedures
  13. 13. Standard Operating Procedures • SOPs or Business Rules direct the broker on how to act on your behalf • These should be specific to the importer’s business operations • A few topics the SOP should include: Process for filing an entry Process for communicating entry issues Process for Customs and OGA inquiries Recordkeeping process
  14. 14. You can’t manage what you don’t measure Audits and Metrics
  15. 15. Audits • Auditing is a good practice to demonstrate reasonable care • Post-entry audits should be conducted to ensure compliance with Customs’ requirements • If issues are found, importers can proactively address them through various means to limit or avoid liability • Audits should also be used to ensure that brokers are meeting service expectations • An added benefit of incorporating an audit program is that they often highlight costly problems in the entry process
  16. 16. Audits • Audits should include the following: Entry summary correctly completed and timely filed Entry documentation packet is complete Other government agency requirements fulfilled (example: forms, permits, declarations) Release timing Communicate issues timely Recordkeeping
  17. 17. Metrics • Metrics are the visual results of audits and the measure of the operation’s performance • Metrics are a form of business intelligence • Metrics are used to discover different trends in the data to help importers and their brokers make improvements
  18. 18. Accountability and Continued Improvement Broker Scorecard
  19. 19. Broker Scorecards • Broker scorecards are a method of rating the broker’s performance • A scorecard gives specific and quantifiable performance results and goals for improvement • Scorecards should consist of ratings based on the agreed upon services and expectations • The scoring system used should be clearly defined so that the broker knows why it received the score and how to improve the score • The ratings should correlate with the audit and metrics
  20. 20. Broker Scorecards • Scorecards could include some of the following: Timeliness of Entry Filing Timeliness of Communication Error Rates Recordkeeping Errors Support Internal Training Systems and Technology

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