Business Has Changed, It’s Time For Trade Compliance To Change, Too
As the business world adapts to face masks, Zoom calls and social distancing, the trade compliance community is also re-evaluating the way it does business.
While a lot has changed in your business, one thing that is certain to change – and, in fact, already has changed – is the ubiquitous trade compliance assessment. You might ask: “Are we really doing these online now?”
The answer is, emphatically – “Yes.”
And for more reasons than just catching the coronavirus.
Here’s a quick story to help illustrate my point: A few weeks ago, I was conducting a video call with a client and asked a question about their trade compliance.
Before I could even finish my question, the department manager on my screen began to energetically shake his head “no.” I saw this long before he spoke, and the nonverbal communication was clear: “No, we don’t do it this way. We’ve never done it this way. We never will do it this way.”
All of that was communicated, nonverbally, in a few seconds’ time – the same way as if I’d been seated across the conference table from him during an onsite visit. The difference was, this was all communicated from 1,300 miles away.
It occurred without me traveling eight hours in airports, planes, and Uber rides … exposing myself to who-knows-what. It occurred without me invoicing this company thousands of dollars for airfare, hotels, per diems, and the like.
It occurred virtually – instantly – at a time that was convenient for both of us.
To be clear, there’s nothing unique about my example above.
Video conferencing has been around for years. What’s new is the focus and attention this is going to get (in fact, already is getting) in a COVID-19 world. And to be clear, the importance is not driven just by health and safety alone, but also cost-cutting as companies of all sizes look to save money during the worst “recession” since The Great Depression.
Welcome to the virtual compliance audit or assessment.
What Is A Virtual Trade Compliance Audit?
In the old days (i.e., “about two months ago”), a typical trade compliance assessment would consist of some pre-visit work to analyze documentation, select sample shipments, plan an agenda, and schedule interviews with key personnel across the organization.
This activity was followed by booking travel – usually, several thousand dollars’ worth of expenses, not to mention all the waiting in airports, layovers, delays, and arriving the night before at the client’s location. (More on that later.)
Then, the trade compliance consultant would spend a period of time onsite at the client’s facility (usually 1-2 days, although sometimes longer depending on the complexity of the business and what activities were being assessed – import, export or both).
During the onsite visit, various managers and key personnel would be pulled away from their jobs to participate in interviews, where a consultant like us is trying to determine current practices, assess risk and identify vulnerabilities in the company’s compliance system. Think of these interviews as one part “testing knowledge,” one part “understanding processes” and one part “looking for potential problem areas with past activity.”
After the interviews, our audit team would debrief management on key findings and then spend another day – and thousands of more dollars – flying back home.
From there, we will write draft assessment reports identifying key findings, reviewing these with the client, finalizing all of the reports and developing a compliance improvement plan to address any deficiencies.
A virtual trade compliance assessment is all of the things mentioned above, minus the extra travel costs and lost productivity.
What Are The Pros Of Virtual Trade Compliance Assessments?
There are many benefits to conducting your next trade compliance audit or assessment remotely. These include:
- Cost Savings: Your company will gain the exact same expertise, analysis and recommendations from a virtual audit for significantly less cost. (For example, travel expenses can range anywhere from 25-30% of the total cost of a compliance audit.)
- Time Savings: Conducting interviews and analysis remotely increases flexibility for both parties. You won’t need to worry about tying up your key personnel for 1-3 days’ time while our auditors do their work. Also, the overall project can usually be completed faster because we are not working around travel schedules and other meetings.
- Safety & Security: As some local governments continue with lockdowns, while others approach phased re-openings, everyone will still be practicing social distancing for the foreseeable future. Virtual audits keep your team (and ours) safe from coronavirus.
- Regulatory Changes: While the world adjusts to the global pandemic, there has been zero decreases in the number of regulatory changes on both the import and export side. From recent new restrictions and embargoes, a complex and tightening sanctions landscape, to the USMCA free trade agreement and more, the trade compliance regulatory environment is changing – fast. It is more important than ever to make sure your company is complying with these governmental rules and regulations.
These are just a few reasons why a remote trade compliance assessment might make sense for your business.
What Are The Cons Of Doing Audits Virtually?
Let’s not pretend that everything is perfect with a virtual audit. There can be some drawbacks and limitations, such as:
- Technology Failure: As much as we love our gadgets, they do not always work. Remote meeting software can be tricky for some users to navigate. (We’ve all been on that call with the annoying echo of our own voice in the background, right?) Screens freeze. Calls drop. Emails go to spam by mistake. These technology issues – whether driven by software or user error – can add a layer of frustration during an import/export compliance assessment. That’s why we always try to test connections/software and go the extra mile to make sure everyone is comfortable with the audit plan before beginning.
- Lack of Engagement: In general, people tend to be more engaged when they’re sitting across from each other in an office vs. thousands of miles apart on a screen. During a trade compliance audit, focus is important. Our auditors need accurate, timely, relevant information from your personnel, in order to construct the best picture of your compliance efforts and identify your risks. We work hard to keep our clients focused by scheduling brief meetings, sending questions in advance and following up as much as necessary to get the information we need.
- Face-to-Face: It’s difficult to quantify, but there is a certain amount of “virtual fatigue” that can set-in when you’re not interacting face-to-face. Some people just work better when they have a live person to meet with and a deadline ahead. So, although virtual assessments are gaining in popularity, it doesn’t seem likely they will entirely go away once the global pandemic of coronavirus begins to pass.
How can Export Solutions help with my virtual trade compliance audit?
For more than 10 years, we’ve been helping companies of all sizes evaluate and improve their compliance to U.S. and international import/export regulations.
Our team is adept at recognizing vulnerabilities in a supply chain or compliance program, and then developing customized solutions to keep your business operating in a compliant manner.
Unlike some other trade compliance consulting firms, we’ve never had a brick-and-mortar office location. Our team has been working remotely from the start, long before “COVID-19” was a household name.
Let our expertise and background help your company understand its risk and implement plans to comply. Schedule a no-charge consultation to discuss your next trade compliance assessment today.
Tom Reynolds is the President of Export Solutions, a consultancy firm which specializes in helping companies with import/export compliance.