Making way for the goods: Pre-clearance .......................................
After a product is classified, the import process begins. An importer or buyer
creates a purchase order inside an order management system. The importer
sends the purchase order to the exporter, who arranges for the items to be
transferred to a port to get shipped or flown out of the country. At the same
time, the exporter sends an Advanced Shipping Notice (ASN) to the importer
or to the broker the importer has hired to guide the import process. The ASN
lists the items and their value so the importer can calculate the duty and pre-
pare the proper import documents.
The whole idea is to finish all this paperwork before the goods arrive, so they
can speed through customs to get to your store or factory.
Making it through: Clearing Customs ..............................................
The next step is clearing goods through customs. Most companies outsource
this task to a customs broker, but a few larger companies, such as Wal-Mart,
handle it in house. Most companies rely on a broker because the process is
complex and requires a special license to clear items through customs. For
U.S. Customs, the two key documents that must be filed are forms 3461 and
7501, which tell Customs what the importer is bringing into the country. This
is known as making an entry. As mentioned earlier, U.S. Customs now requires
these items to be filed electronically. Most companies use the data from the
purchase order to populate these forms, which are then sent to the customs
broker. If the importer is a self-filer, the forms are filed directly with Customs’
Automated Broker Interface. When the documentation is completed, the
goods are trucked (also known as drayage) to a warehouse and then distrib-
uted to the importer’s store or factory.
Reconciling value: The step most often missed .............................
One of the most important steps in the importing process is one that many
companies never take: reconciling the product values they declared in their
backend systems with the actual value customs assigned to the items. This
value is known as the Customs Declared Value and it can be very different
from the value the importer originally listed. The difference between these
values represents an unreconciled inconsistency in the accounting system.
The issue of proper reconciliation has become especially important because
the Sarbanes Oxley Act requires that company officials verify the accuracy of
financial statements, of which import values are a critical part.