Here Are The Red Flags You Must Look For When Choosing A Trade Compliance Consulting Firm
From a robust compliance program to consistent risk management practices, you go to great lengths to keep your operations compliant when importing or exporting goods, technology, or information for your business.
The U.S. government demands that your company comply with the appropriate laws and regulatory requirements to avoid costly fines and penalties.
Your company’s track record must remain intact to prevent disruptions that can impact your bottom line, and violations can diminish your brand’s reputation and harm future business prospects.
Keeping up with changing trade compliance regulations can be difficult for anyone. Between risk management and ongoing updates to export laws, regulations and sanctions policies, it may be overwhelming for existing staff members to keep up with the workload and their other responsibilities.
So what can you do to ensure ongoing compliance without stretching your employees thin?
A great choice that many companies turn to in these situations is hiring a compliance management consulting firm. This choice allows companies like yours to gain access to a team of compliance professionals and their resources while maintaining your existing compliance staff.
So, what are compliance consulting services, the benefits, and what qualities do you need to look for to ensure you find the right team for your company? Let’s find out.
What Are Trade Compliance Consulting Services?
Trade compliance consulting services are provided by trade professionals who work closely with companies that export/import goods, services, and data.
They assist in regulating, tracking, monitoring, and auditing all import/export actions across your business operations. This allows companies to focus on other business areas while the experts handle some or all of their compliance monitoring.
Trade compliance services, like the ones offered at Export Solutions, help businesses operate within the regulations, sanctions, and laws governing their unique products. Compliance services are crucial for any company or organization that:
- Manufactures defense articles: A company that manufactures defense articles produces items such as military equipment, weapons, vehicles, and aircraft for use by military and defense agencies. These items can range from small firearms to large military aircraft, and can be designed for a variety of purposes, such as defense, surveillance, or reconnaissance.
- Exports technical data or controlled technology: Technical data refers to information that is needed to design, develop, produce, or use a defense article. Other types of technology may also be controlled under the Export Administration Regulations (EAR). This can include specifications, engineering data, blueprints, manuals, and other technical information. Exporting technical data/technology can be a complex process that requires complying with various regulations, including obtaining licenses from the relevant authorities.
- Performs defense services: Defense services can encompass a wide range of activities, such as training military personnel, providing logistics support, performing maintenance and repairs on military equipment, and offering technical assistance. Companies that perform defense services may work directly with military and defense agencies, or they may subcontract to other defense contractors.
- Brokers defense articles or services: Defense brokers act as intermediaries between buyers and sellers of defense articles or services. They help match up companies that are looking to sell defense articles or services with potential buyers, which can include foreign governments, defense agencies, and private military contractors. Brokers must comply with various regulations and licensing requirements when dealing with defense articles or services.
Any company that works with goods, services, or digital items with compliance requirements will benefit from working with a compliance consultancy team since these services provide an affordable option to remain compliant throughout the year.
And with so much riding on your compliance program, you must hire the right team for the job.
Eight Signs To Look For When Searching For Compliance Solutions
You put a lot of work into ensuring your compliance program is efficient and thorough.
So it’s no surprise that many business owners express some concerns with outsourced trade compliance. The main worry is that delegating essential compliance tasks to an external team reduces the company’s compliance control.
The good news is that partnering with an external compliance consultancy firm doesn’t take away your control. It allows you to access an entire team of trade compliance experts at a fraction of the cost of hiring a full-time employee with benefits.
However, choosing the right firm can be challenging, especially if you aren’t sure what to look for. Let’s look at eight red flags you need to look out for when choosing the right compliance solutions team for your business.
1. The Consultants Are Unable To Answer Specific Questions About Import/Export Regulations
When you’re considering a compliance consultancy team, it’s crucial that they can answer your questions and explain any information needed to address your inquiry fully.
Additionally, they should be able to distill this information into laymen’s terms and ensure you understand the answer completely.
That being said, sometimes having the correct answer depends on many variables about your situation, such as trade item, end-user, destinations, and end-use.
Since there aren’t many straightforward answers regarding trade compliance, it’s ok if the consultant needs more information to answer your question correctly. A willingness to find answers to your specific questions is a great sign, and you should steer clear of consulting firms that are not willing to “go the extra mile” for you and your company.
2. They Have Minimal Consulting Experience
The profitability and operations of your business is not something that you can gamble on. If you want to ensure that your business is compliant at all times, then you want a consulting firm with experience guiding businesses like yours through the compliance process.
If they have experience overseeing export compliance or have worked closely with regulatory agencies like DDTC or BIS, you’ll want to snag their service immediately.
It’s essential for compliance consultants to have many years of experience and a wealth of knowledge that spans several fields to help your business. This experience can bring lots of value to your team and help steer you away from violations to keep your company moving forward.
Since compliance is very technical, a lack of knowledge could harm your company’s trade compliance. So ask about their previous experience to ensure they have a track record of success to support your business goals.
3. The Consultants are Overly Optimistic Rather Than Realistic
Compliance is serious business. Never choose a compliance consultancy that tells you what you want to hear rather than giving an honest picture of how things are going.
To remain competitive, you must choose consultants who will do everything possible to keep your compliance on the correct path with the U.S. government and whichever countries you trade with.
Present them with a real or imagined compliance issue and ask them how they would handle it. Make sure they take the time to explain the problem, a solution, and why they made that choice.
4. They’ve Never Guided Anyone Through A Voluntary Disclosure
Voluntary disclosures are the self-reporting of potential violations or oversights to mitigate a fine or penalty or even avoid it altogether. This is a tool at your disposal that you can use to inform the government about any violations that you found before the government finds out first.
Ask about the consultant’s experience with handling voluntary disclosures for other clients. If your potential compliance consultant has never guided anyone through this process or is unsure how to answer the question, you’ll want to keep looking.
5. They Are Unaware Of The Latest Regulatory Updates
Since export laws and regulations are constantly changing, you need a consultant who can navigate this complex process and react to the situations accurately.
The consultancy should be able to tell you what they do to keep their employees up to date.
Find out how the trade compliance consultants stay updated with the latest regulatory updates. Do they receive regular training? Do they follow specific trade compliance blogs?
6. The Consultancy Has Few References
Since you have high expectations for professionalism and compliance services, minimal references may be a red flag you want to consider before hiring the consultants.
References are a great way to see how previous clients have felt about the trade compliance consultant’s services.
Like any other consultancy, compliance consultants depend on their company reputation to speak volumes to attract new clients. Ask to see their references. The compliance firm should be able to produce them rather quickly.
Read through each and look for the qualities you want in a trade consultant.
7. They Are Focused On Upselling More Than Compliance
Sometimes, you may encounter compliance companies that focus on selling you software or other tools. Or they’ll tell you how much you “need” a lot of different services – filling up their to-do list while adding zeros to your next invoice.
These things may be helpful, but the right trade compliance consultancy will offer more than product suggestions or excuses to run-up the bill.
The right trade consultants will provide a clear pathway to compliance that fits your company’s needs. They will also outline the tools, policies, procedures, software, and resources they believe best suit your unique situation.
So yes, your compliance consultants may recommend programs or software solutions. Still, the focus should be on your company and the plan to ensure compliance at every turn.
8. They Have One (Or More) Misunderstandings About The Industry
Trade compliance is complicated. So the consultancy you work with must clearly understand what the industry entails.
This means knowing the ins and outs of each unique set of laws and regulations and how to interact with each regulatory authority.
For instance, if the consultants you are interviewing claim to have specific partnerships with trade authorities like BIS and DDTC, they are mistaken. Government agencies do not participate in such partnerships.
The right trade compliance consultancy will also have real-world experience in research labs, warehouses, and company operations. This means they will have spent time in the field learning how compliance affects companies rather than just behind a desk.
What Are The Benefits Of Trade Compliance Consulting?
Your company already does its due diligence to ensure that all compliance requirements are met. However, businesses of all sizes can benefit from working with an external team that excels in risk and compliance.
Let’s look at the benefits you can expect from collaborating with a team of compliance consultants.
- Improved compliance training: You’ll receive assistance designing and implementing your compliance training. This will ensure your training materials are always up to date.
- A team of seasoned experts: When you work with compliance consultants, you’ll gain access to years of experience to help guide you through the compliance process.
- Violation prevention: Your compliance team will run regular audits to identify risks that could lead to compliance violations.
- Real-time updates to laws and regulations: A compliance consultancy firm will help you remain current with all relevant export laws and regulation updates to prevent issues.
- Disclosure support: You can expect assistance with submitting voluntary disclosures in case of a potential or proven violation. This helps to avoid fines and penalties for issues that may have slipped through the cracks.
Partnering with a compliance consulting firm is a cost-effective way for companies to work with a team of compliance professionals.
Be sure to clarify what trade consulting services you will receive before you sign a contract. The clearer the expectations, the more benefits you will receive from the partnership.
Ask The Right Questions To Choose The Right Compliance Consultancy Firm
Not all compliance consultancy firms are on the same level. You need a team that’s worked with hundreds of international organizations and has decades of combined experience.
Export Solutions can help you develop a compliance program to mitigate risks and streamline operations. We also provide outsourced services to help manage your compliance day-to-day.
Our cost-effective solutions will help you avoid unnecessary compliance issues so you and your team can focus your efforts on other essential tasks.
Contact us today for more information on how our consultancy services can help your company’s trade compliance.
Tom Reynolds is the President of Export Solutions, a consultancy firm which specializes in helping companies with import/export compliance.