3 Important Questions to Ask Your Customs Broker
Hiring a Customs Broker can be a very confusing process for an importer, especially if they are new to international trade. The following are three important questions to ask your Customs Broker.
When participating in international trade, most companies rely on their Customs Broker to guide them through the process and help them avoid the pitfalls. Although this relationship becomes very important to the success of your company, many businesses don’t properly vet their Broker during the hiring process. This can lead to difficulty throughout the importing process and ultimately end up costing a company more money.
What are Customs Brokers and What Do They Do?
Customs brokers are private individuals, partnerships, associations or corporations licensed, regulated and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting Federal requirements governing imports and exports. Brokers submit necessary information and appropriate payments to CBP on behalf of their clients and charge them a fee for this service.
Brokers must have expertise in the entry procedures, admissibility requirements, classification, valuation, and the rates of duty and applicable taxes and fees for imported merchandise.
The text above is the official definition of a Customs Broker. However, the important details to note are that Customs Brokers are:
- Licensed via rigorous exam by government
- Experts on Customs documentation & processes
- Important liaison between an Importer and Customs
There are approximately 11,000 active licensed Customs Brokers in the United States. Meaning that if we approximate the active number of U.S. Importers that hold continuous Customs Bonds to be between 250,000 to 300,000, we find that there are between 22 to 27 Importers for every 1 Customs Broker.
Regardless of these responsibilities, an importer must remember that the Importer of Record, not the Customs Broker working on their behalf, will be held accountable for all goods entered into the U.S.
The Top 3 Questions to Ask Your Customs Broker
- How will you help my company ensure proper compliance with Customs regulations?
When selecting a Customs Broker for your business, you want to make sure that they have a finger on the pulse of U.S. Customs and Border Protection. Get the details behind how they are monitoring new compliance protocols being released by CBP and if they are part of any key trade compliance organizations. For example, International Compliance Professionals Associations (ICPA) or National Customs Brokers & Forwards Association of America (NCBFAA).
- Do you have any pending lawsuits, violations, and/or have you been sanctioned by Customs?
As you can imagine you probably wouldn’t want to work with a Customs Broker who has pending lawsuits or violations. Additionally, if they have ever been sanctioned by Customs and Border Protection that means they have to make cash deposits to CBP which effectively eliminates payment by other means and severely limits their capabilities. If a Broker has been sanctioned by CBP it is a big deal and continues to follow them throughout the years. Remember that when you work with a Customs Broker, you give them a lot of control over your business practices. So being extra sure that they have a clean record and are not in the middle of any legal proceedings is the best way for you to protect your business.
- How much do you cost?
This may seem like an obvious one, but it is important to know how much your Customs Broker is going to charge you and, specifically, asking for a breakdown of fees. Understanding all the line items included on a Broker’s invoice can be overwhelming, so try to establish an understanding of what the invoice will include before it is time to pay.
The following are a few things you may see on an invoice:
- ISF Filing
- Entry Filing
- Warehouse Entry
- Partner Government Agency (PGA) Entry
- U.S. Customs Bond
Now, many of you may already be aware, but the Customs Bond can be sourced directly from an insurance agency like TRG. And remember, there are roughly 11,000 Customs Brokers out there, so don’t feel like you are stuck with one. By all means, do a cost comparison between your favorite options before making a final selection.