Introduction
As small and medium-sized businesses (SMBs) expand into international markets, navigating the complexities of import compliance becomes a critical challenge – 95% of the world’s consumers are outside of the United States, and over 85% of the world’s buying power is outside of Europe.
From product classification to proper documentation, staying on top of ever-changing regulatory requirements across multiple countries can feel overwhelming. However, with the right strategies and tools, SMBs can streamline these processes and ensure smooth, compliant transactions across borders.
Below are key strategies to help SMBs manage import compliance effectively, safeguarding their operations while positioning themselves for global growth.
1. Automate Compliance Processes to Minimize Errors
Import compliance involves numerous steps, from customs paperwork to country-specific regulations. Manually managing these tasks increases the likelihood of costly errors. Automation is an effective way to reduce common mistakes, allowing you to save both time and money.
“Reducing human error is crucial,” explains Hugo Pakula, CEO of Tru Identity. “One small misstep—such as a typo or a misclassification—can lead to delays at customs, or worse, seizure of goods. Automation helps ensure that these details are handled accurately.”
Automated import compliance tools not only aid in correct product classification and documentation, but also help your business keep up with evolving regulations, freeing up resources to focus on growth.
2. Understand Your Role as the Importer of Record
When shipping products internationally, the importer of record (IoR) holds the responsibility for compliance. This includes ensuring goods meet the destination country’s regulations, including correct product classification, documentation requirements, and all required licenses.
“It’s not just about getting your product across the border,” Pakula emphasizes. “As the importer of record, you are legally responsible for documentation, customs declarations, and duties. Even if you’re working with a customs broker, the responsibility ultimately lies with you.”
To minimize potential risks, SMBs need to ensure all required documentation is in place—such as HTS codes, certificates of origin, and any necessary product licenses—before shipping overseas.
3. Master HS Code Classification for Seamless Customs Clearance
The Harmonized System (HS) Code is an essential element of international trade. It is used to classify goods and determine applicable duties. Assigning the correct HS code is crucial not only for compliance but also for determining if your product can enter a given country.
These codes are also country specific, in which case they are referred to as HTS codes. The HTS code will begin with the same digits as the HS code, however the HTS code will contain additional digits to help the specific country of import correctly identify the product upon arrival.
“You can’t underestimate the importance of getting HTS codes right,” Pakula advises. “An incorrect classification could result in fines, shipment rejections, or goods being held at customs.”
Source: https://truregister.com/blogs/guide-to-hs-codes
Staying current on HS and HTS code changes is also critical, as they are frequently updated. Implementing an automated system to track updates helps businesses avoid unexpected supply chain disruptions.
With each country having its own rules for HTS code allocation and even their own HTS descriptions (as depicted above), understanding your product risk and maintaining an accurate and up-to-date catalog of compliance information has never been more important.
4. Vet Your Suppliers for a Smoother Import Process
Compliance responsibilities don’t end with your business. Ensuring that your suppliers are trustworthy and capable of meeting international standards is just as important.
“Knowing where your goods come from and ensuring that your suppliers are properly vetted has never been more important,” says Pakula. “If your suppliers can’t provide proper documentation, like certificates of origin or organic certifications, your goods could be delayed or rejected at customs.”
Building strong relationships with vetted suppliers and using a reputable sourcing platform that verifies credentials can help avoid these complications.
5. Stay Ahead of Changing Regulations
International trade regulations are constantly evolving, and you must stay informed to avoid compliance issues. From import laws to product safety standards, the rules can change multiple times a year, depending on the country.
“In 2023 alone, the U.S. revised its Harmonized Tariff Schedule eight times through August,” Pakula notes. “If you’re not actively monitoring these updates, you could easily be caught off guard.” When you have to monitor for every country you sell into, this only increases the chance of costly errors.
Leveraging compliance tools that automatically track regulatory updates is a proactive way to ensure that your business stays compliant without dedicating unnecessary time and resources to manual monitoring.
6. Make Compliance a Strategic Component of Your Business
Compliance isn’t just about following the rules—it should be a core part of your overall business strategy. Proper compliance management can have a significant impact on costs, customer satisfaction, and brand reputation, especially when it comes to on-time deliveries and avoiding penalties.
Pakula stresses that compliance should be seen as an opportunity rather than a hurdle. “Mastering compliance isn’t just about avoiding fines; it’s about ensuring smoother transactions and building trust with your international partners.”
By integrating compliance into your business strategy, you can turn a regulatory challenge into a competitive advantage, setting your company up for long-term success.
Conclusion
For SMBs looking to grow internationally, mastering import compliance is essential to their success. By automating processes, ensuring proper documentation, vetting suppliers, and staying ahead of regulatory changes, businesses can simplify the complexities of global trade and thrive in international markets.
To explore these topics further and hear real-world examples of how businesses are navigating import compliance challenges, you can watch our recent webinar featuring insights from industry experts like Hugo Pakula.
To leverage some of the benefits discussed here, check out TruRegister.com.
