Every bit of cost savings you can manage is important in today’s business environment. Money that goes back into the bank helps create healthy profit margins. That’s why companies participate in duty drawback programs from US Customs and Border Protection (CBP). Duty drawback is a refund of eligible duties, fees, and taxes — in other words, real savings for your company on goods you’ve already purchased. What business wouldn’t want that?
The real question isn’t whether your business should participate in duty drawback programs. It’s whether you should try to handle it yourself or find a trusted partner to outsource your duty drawback processes. And there’s a good case to be made for duty drawback outsourcing. The right drawback service provider can streamline the process and find more opportunities for savings. Here’s what you need to know about doing duty drawback in-house vs. outsourcing your recovery operations.
What Is Duty Drawback Outsourcing and What Are the Advantages?
Duty drawback outsourcing occurs when a company entrusts an external service provider responsible for handling the entire duty drawback process.
Given the complexity of CBP policies and federal government regulations, there’s an excellent case to be made for letting an experienced firm take care of the duty drawback process for you. Qualified drawback service providers offer their expertise with claim preparation, regulatory compliance, and documentation, ensuring your company gets everything it’s entitled to within the boundaries of the law.
You might outsource to a duty drawback provider for the same reasons you seek legal help from a licensed attorney or have a CPA handle your company’s taxes. Outsourcing gives you access to specialized expertise, with in-depth knowledge of the claims submission process and ever-changing regulations. Time savings and freed-up internal resources are among the top advantages of duty drawback outsourcing.
Of course, you shouldn’t rush into an outsourcing agreement. First, perform a duty drawback cost analysis to ensure that outsourcing will save your business time and money despite the added costs. Carefully evaluate the outsourcing provider’s qualifications just as you would for any professional representing your company.
Duty Drawback In-House Operations: Is It Worth It?
So, what does it take to manage duty drawback claims in-house? You’ll need an internal team to do the process effectively. Your team will also need the knowledge required to submit claims and successfully manage inquiries from the CBP.
Indeed, there are some advantages to building up an in-house duty drawback team if you have the resources. With your own team, you’ll have complete control over the process and can tailor the procedures to your company’s workflow. On the other hand, hiring, training, and keeping employees with specialized knowledge and expertise can be expensive. First, you’ll have to purchase software that’s compatible with submitting claims to the CBP. You’ll need to designate personnel to use this software, provide adequate training, and incur the expense of maintaining enterprise-grade software.
If your business is an importer, you’ll also need to set up the Automated Broker Interface (ABI). This is another software component that allows duty drawback participants to electronically submit data to the CBP and receive transmissions from the Automated Commercial Environment (ACE) or any other CBP-authorized electronic data interchange system. Again, this will require investments in technology, staff, training, and other recurring expenses.
The training is especially important because whoever submits claims on behalf of your company must be familiar with all of the data elements required for different types of drawbacks. An incorrect filing can even trigger penalties. That’s because there are incentives in place to dissuade companies from making incomplete or otherwise unsatisfactory claims, whether done intentionally or not. 19 USC Section 1313 provides that any person who knowingly and willfully files any false or fraudulent entry or claim for the payment of drawback is subject to criminal penalties.
Also, any person who seeks, induces, or affects the payment of drawback by fraud or negligence or attempts to do so is subject to civil penalties, which can also be very substantial. Considering all these requirements, many businesses find starting and maintaining an in-house duty drawback program challenging. Qualified staff and technology are one thing, but keeping them up-to-date with regulatory changes and managing complex claims is another thing altogether.
Comparing Duty Drawback Outsourcing vs. In-House Operations
Costs are often a significant factor when deciding between outsourcing vs. in-house operations. Some of the direct costs of an in-house team include salaries, training, and systems to interface with those of the CBP and other federal agencies. Meanwhile, the direct costs of outsourcing are typically just contract fees, although you might spend more for extra services like compliance audits.
When it comes to expertise and knowledge, it’s hard to beat an outsourced provider. Duty drawback service providers offer highly specialized skills and stay updated on the latest regulatory changes. You’ll likely find that outsourcing is far more cost-effective for complex claims or working through disputes with the CBP.
J.M. Rodgers: Cost-Effective Duty Drawback Outsourcing
J.M. Rodgers Company, Inc. offers all duty drawback clients an entire team of highly qualified experts, including licensed customs brokers. We understand the cost-benefit analysis your company will perform when considering in-house operations versus outsourcing, and we tailor our services to be cost-effective for businesses of all types.
Our outsourcing duty drawback services offer the following advantages:
- Risk-free: Our clients pay no upfront fees. You pay only after you receive your duty drawback refund check from the US Treasury Department.
- Reasonable fees: Our clients only pay us a small percentage of the money we recover for them.
- Updated knowledge: You’ll benefit from our investment in people and technology, which will help you get the biggest duty drawback refund at no extra charge.
- Audit protection: Again, for no extra charge, our staff is present for all drawback audits your company might have to go through.
- Peace of mind: J.M. Rodgers is insured for $1,000,000 against the unlikely event of errors and omissions in the drawback claims we prepare for you. If any money from your refund must be returned to the CBP, we’ll refund the applicable portion of our fee.
Combined with our custom-programmed software packages, J.M. Rodgers is the cost-effective solution for duty drawback outsourcing. To learn more, contact us today.
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