10 Apr How Well Are You Managing Your Export Licenses?
In global trade, complexity has a way of multiplying. As national and supranational regulations change, as trade agreements are negotiated and renegotiated, and as products fall in and out of regulatory regimes, it becomes more and more of a challenge to keep track.
As you expand to more markets, understanding which products need which licenses and where it becomes an increasingly complex challenge. That’s a potential threat, since multiple export licenses are a source of risk and liability. Any violation can hamper a company. Multiple violations can cripple it. This is why export license management is one of the most important tasks for any company involved in global markets.
Managing the Risks of Multiple Export Licenses
SAP GTS can help manage your licenses and minimize the risk of violation, if it is used correctly. That’s why so many companies partner with a Global Trade Compliance Consultant (GTCC) as part of the conversion from error prone manual processes. They help reduce the risk of violations when implementing SAP GTS software. They bring human intelligence to a network of issues, concerns, and requirements while offering solutions. Thus, in doing so, help you take control of your export license management.
You likely know that not every product needs licenses for every port. That is a good thing. However, as globalization and trade requirements increase it is a greater export license management challenge—you have to know what requires an export license and why. There are rules for such things, and non-compliance means delays and the opportunity costs that go with them.
Risks at Every Step
Obtain License from National Authorities
National agencies are the authority over their export licenses. All licenses have to be obtained through them. It is vitally important to know that SAP GTS doesn’t do any of the reaching out. This is not an automated process. You still have to reach out to the agency.
Assign License to Exported Products
Any of your exported products needing licenses must have them properly applied before exporting. Simply obtaining a license isn’t enough, the golden rule is “Know Your Product”.
Report Regularly to Authorities
This is where the SAP GTS software really excels. Required reporting such as EU Intrastat Declarations, can be time consuming. SAP GTS can help you keep track of proper submissions to relevant authorities, telling you when and where. Remember though that it doesn’t actually do any direct submission. You’ll still have to submit the required reporting at every port and to the right agencies.
Provide Audit Trail
This is another area where SAP GTS comes in handy if you work with a GTCC. It automates all your documentation to help you sail through any audits.
It is important to remember that there are added complexities for different transactions. Complexities arrive from two different avenues:
- The country from which you are exporting
- The goods you are exporting
Some goods might require a license in some countries, but not in others. Agencies have different ideas of what is a controlled product.. It is up to the company to do due diligence on their products. And that’s why SAP GTS is so important.
Global Trade Software can help with the following:
- Analyze value, quantity, and the validity date of products
- Automatically decrement quantity and value from Individual Validated Licenses
- Establish automation to help reduce human errors
- Establish an audit trail
- Monitors quantity and value in your license to understand when you need additional license
- Helps keep business orders moving.
- Removes bottleneck.
It handles everything that might fall through the cracks, and the penalty for letting paperwork slip can be incredibly damaging.
The Penalties of Poor Export License Management
There is no place in the world where it is good to have penalties on your exports. Penalties vary from country to country and from product to product, but they all have a chance at doing both short and long-term damage to your business.
In the United States, administrative monetary penalties can easily reach $11,000 per normal violation, and $120,000 per violation in cases involving items controlled for national security reasons. These can continue to spiral up.
Your personal life could also be turned upside down. You could potentially face civil or even criminal liabilities. In some cases, you could go to jail. And no company enjoys being visited by the FBI.
Additionally, you can very easily have a temporary or even permanent denial of licenses, keeping you from having anything to do with exports. This can be on an individual level, which is bad enough, or company-wide.
Good intentions don’t matter. Saying that you had some problems with staff doesn’t fly in court. What matters is keeping your export licenses managed, and that means reducing human errors with SAP GTS.
Use a GTCC To Help WIth Your SAP GTS
Export license management is incredibly important. Having a central location for all your licenses, regardless of the global scope of your company, helps keep everything under control. Proper license management, centralized through an SAP GTS system, helps you:
- Protect against human error & license misuse
- Produce automatic reports, keeping you on top of your business
- Facilitate a smoother, more efficient workflow throughout your company
A GTCC has the expertise to understand your regulatory trade compliance requirements, and create a framework for that compliance. They help you implement that framework. They understand how regulations apply to your very specific business activities and goals, and turn those into efficient, repeatable processes. A GTCC helps you stay compliant, ahead of paperwork, and on time. They’ll help you manage your export licenses, and bring competent calm and understanding to the complexity.
Aurum Terra, Inc. uses GTCCs when identifying, planning, and implementing your trade compliance requirements in SAP GTS. Your system will remain accurate, flexible, and efficient as trade complexity rises. Do you need help or have questions about your export licenses, then Contact Aurum Terra now.