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Duty Drawback Newsletter - January 2010

New Year's Resolutions

As we begin a New Year and a new decade, many people try to make resolutions and promises that simply cannot be kept.  Most involve good intentions but require more willpower than we possess.  Favorites are: "I'm going to lose 30 pounds"... or "I'm going to put half my paycheck into savings".... all very admirable, but not very realistic.

We'd like to offer some suggestions for resolutions that a drawback claimant should make.  These are not just practical and attainable, but also extremely prudent and beneficial.

Resolution #1 - Keep my drawback campaign current

We all know that it takes time to assemble all of the supporting import, export and manufacturing documentation (when applicable) required for the preparation of a complete, accurate drawback claim.  Even in the best of situations, it probably takes 3 to 6 months after an export to accumulate the required data and prepare and file a claim.  Using this as a guide, your drawback program is not up to date unless you are filing claims today on exports dated mid-2009.  The benefits of keeping a drawback campaign current are obvious - records are more accessible and therefore easier to research and retrieve, cash flows quicker, and bosses are much happier!

Resolution #2 - Make my drawback program compliant

There is a time-honored saying that really is nothing more than a tribute to inertia - "If it ain't broke, don't fix it".  In other words, if the drawback program is working, however badly, then we should leave it alone since I have too much other stuff to do.  Although this is a very convenient and popular position to take, it is wrong on so many fronts. 

If you have not identified and considered changes in sourcing, manufacturing processes, record keeping systems, corporate alliances, acquisitions, mergers, name changes, and divestitures, then your drawback program at best is probably inefficient and ineffective.  At worst, your drawback program may not be in compliance with the regulations or your own approvals. 

A drawback program should be constantly evolving to recognize and incorporate changes in your company and capitalize on those opportunities. It should never be allowed to just run unattended.

Resolution #3 - Make my drawback program more comprehensive

When companies first begin a drawback program it is usually because they have identified a large drawback opportunity that is just too good to ignore.  Everyone gets excited about it, resources are commandeered to bring the program into existence, and then everyone goes off smiling about the good work that has been done. 

Actually, such an initial effort is only the beginning of a viable, profitable drawback program.  Capturing the obvious "low hanging fruit" is quick gratification, and there is nothing wrong with starting there, but it is often the expansions of a drawback program that make the real money. 

In our global economy a company rarely imports and exports everything themselves.  Raw materials are procured from a variety of sources - domestic suppliers, related foreign entities, and direct imports.  If you haven't inquired as to whether the material you purchase domestically was originally imported or made from imported merchandise, then your firm may be missing out on substantial amounts of drawback.

A comprehensive survey of your corporation's drawback potential is necessary to identify all opportunities and maximize your drawback potential.  It's worth the time, effort, and resources to identify and pursue all of the drawback available to your firm.  

Resolution #4 - Keep my drawback specialist informed

Drawback is unique in that it spans every aspect of your business - purchasing, accounts payable, receiving, inventory management, record keeping, manufacturing, finished goods inventory, sales, accounts receivable, logistics, shipping, legal, and R&D.  One change in any one of these disciplines can and often does have an effect on a company's drawback program. 

As your drawback specialist, we can only adjust for these changes when we are aware of them.  Procedures should be established to inform us of changes in any of these aspects of your business. Only then can we maintain a compliant, comprehensive drawback program for your company. 

Even if you have already broken all of your other New Year's Resolutions, we encourage you to keep these 4 involving drawback.  They may not make you fit into a smaller size wardrobe, but they will definitely increase the size of your drawback returns, and that's money in the bank!