5 good reasons to invest in customs product codes
Everyone knows that commodity codes play a key role in customs declaration. But have you ever stopped to think about how little information the codes actually contain?
Commodity codes are always accumulative data; they do not provide much detailed information on the product, and indeed the same commodity code can be used for a rather wide range of products. The commodity code itself does not specify e.g. the country of origin, manufacturer, or even the product material or unit price in some cases. It does, however, broadly specify the type of commodity and any restrictions or conditions that apply. And of course, it conveys the most important piece of information: the amount of customs duties levied on the product by Finnish Customs.
Commodity codes are good, but product codes are even better
A product code that identifies a specific product is a more detailed source of information than a commodity code. It provides all of the essential information about a product that commodity codes do not contain. The commodity code itself can also be included in the product code.
1. Product codes help to explain the actual cost of the product when imported to Finland.
2. Product codes allow for precise import and export monitoring.
3. Product codes enable customs correction reporting.
4. Product codes can help to monitor various statistics about quantities of imported products and any applicable procedures.
5. Product codes make it possible to monitor changes to customs costs for products.
Utilising product codes in reporting
Companies can choose whether to use a commodity code as an independent identifier or as part of a product code. Choose the latter if you want to make the most of the benefits listed above and take advantage of them in your operations.
A good product code can convey large amounts of information. It must, however, be based on a correct and valid commodity code. This will also be important in the future, and that’s why it’s important to focus and invest on this.
We at SA-TU Logistics are able to combine product code customs declaration with comprehensive, thorough and itemised customs reporting. This levels up customs security and monitoring, along with the associated benefits, for companies.
Would you like to hear more about the concrete benefits that product codes could provide for your company? Get in touch and we’d be happy to tell you more: sales@sa-tu.com
Coronavirus has driven people out of the office to work from home
People are strange in that we only make changes happen quickly if we are compelled to do so. This spring, people all over the world have been telecommuting. Telecommuting, or working from home, has been a hot topic recently. Although previously used in some industries to varying degrees of extent, huge numbers of people have now begun working from home as a result of the coronavirus outbreak. Many companies who did not previously use telecommuting now find themselves in a situation where external factors have rendered telecommuting compulsory within a rather short time frame. The situation certainly caused a headache for both employees and employers trying to figure out how to manage work from employees’ home offices.
To begin with, working from home probably felt strange to many, and was the topic of much discussion. The media reported on sightings of “underwear dads” appearing in their boxer shorts in video meetings. Home offices built on the kitchen table are not to everyone’s liking, and ergonomic sacrifices have had to be made. After the initial shock and teething problems, people adapted to working from home and soon became familiar with video meetings and the related netiquette. Video meetings have grown in popularity as they are concise and mostly stick to the topics at hand. Of course, they have also been used to maintain social interaction with colleagues holding shared lunches and coffee breaks.
Breaks are easily forgotten when no-one disturbs you
For me, one important aspect of working from home is spreading work out over the course of the working day. As I had not previously worked from home, I noticed after a few weeks that I sometimes sat in front of the computer for the entire day without taking any breaks. This caused me to have muscle aches and pains. The working day can also stretch long into the afternoon as there is no familiar end to the workday as there was back when I could physically leave the office. These weeks have taught me to pace my work throughout the day so that I have clear breaks to give my mind and body a rest.
Luckily, some of us were more familiar with working from home, so the sudden change did not have a huge impact on our work. In a way, we have been preparing for this for years by moving to an almost paperless office and by developing tools and programs for employees that can be used regardless of location. In many tasks, telecommuting is more effective than normal office work. There are no external distractions, which makes it easier to concentrate on your work. Of course, this doesn’t necessarily apply to parents with children who are distance learning or who are in distance day-care. They have famously had to multitask and act as a teacher and chef, all while working as usual. One positive thing has been the commute, or lack thereof. Normally it can easily take two hours a day to travel between home and the office in the capital city region, but now we have been able to use this free time on other things besides sitting in a car or on public transport.
Hopefully, the future will be a nice mix of remote and on-site work
Working from home is not for everyone, at least not quite this much. Most people, including myself, feel a need for real contact with others and a social life. Once the coronavirus outbreak eases, it will be a true pleasure to see my colleagues and customers in person, and perhaps even shake their hands.
Telecommuting is largely based on a mutual understanding between the employer and employee. As there is mutual trust, work can be carried out in any location. I believe that in the future, telecommuting will become more common, and this will have an impact on premises for many companies. It may not be necessary to have a workstation for every employee, and premises may be optimised depending on the number of employees working at home and on-site. These will become hybrid spaces, used by many people at different times. In addition, lots of work will become digitized and develop in a direction that means that in the future, work will increasingly be location-independent and less bound to a fixed place.
Finnish customs, aim high!
In just a few years, the EU will transition to centralised customs and it will be possible to declare customs on goods imported to and exported from the EU in any EU country. But is this a threat or an opportunity?
It is good, at least, in that importers can receive goods delivered directly to their door without any customs delays, even in this remote north-eastern corner of the EU, far from large ports and air freight hubs. Labour also is a little more affordable in a few other EU countries. Nevertheless, it is worth remembering that importers and exporters are responsible for the accuracy of their declarations, no matter who submits the declaration or where the declaration is made.
I would like to make Finland the centre of the EU’s centralised customs, and encourage the idea that customs declarations should be made where the customs and systems work best. Finnish customs actually works very well. No-one is perfect, but Finnish customs is excellent at both collaboration with companies and customs declarations processing. Importers and exporters can participate in the development of the authority’s operations and make their voices heard in various work groups. Customs declarations requests are processed smoothly and decisions are made in a relatively short timeframe. In some other EU countries, the situation is very different. The fact that Finland is a single customs area makes customs declarations easier and saves costs in logistics. In many EU countries, including in western Europe, internal transit from one customs point to another is required in order to carry out customs declarations.
Finnish customs could aim high and fight for its spot as the EU’s top customs. Wouldn’t it be great if your partner in centralised customs declarations were efficient authority, and if service and customs declarations and decisions were available in several languages – perhaps even in Finnish?
Fewer invoices, more time for the things that matter – sound interesting?
Invoices – those mandatory formalities. Without them, business would be nothing. The more invoices the better; at least, that’s the case for the seller if the number of invoices correlates directly to services delivered. For the buyer however, invoices are often less enjoyable as they cause administrative work and costs. Some calculations estimate it takes around half an hour to manually process a single invoice, which costs the buyer just over 20 euros.
All of you who made it to adulthood in the 90s remember all too well how mobile phone providers charged for each phone call made and for each text message sent. You also paid your Internet provider for the precise amount of time you spent online. Today it would be unthinkable to use a contract with no fixed monthly fee. You simply choose a suitable package and pay the same amount each month. I believe that a fixed monthly price gives the buyer more bang for their buck than pricing based on actual use.
Could an invoicing model with a fixed monthly price be applied to logistics services? I believe that it could, and the first bold few have most likely already done so. It’s just a matter of time for companies’ interest to really begin to pique. With our services in mind, it would be easiest to begin with customs declarations. As the buyer is very familiar with their own business operations and knows their precise customs needs, we could charge a fixed monthly price, or alternatively design service packages that contain a certain number of commissions. We would know how many commissions are coming in and the buyer would know how much customs declarations will cost per month. Processing a single invoice per month frees up a huge amount of time and money in both the buyer’s and the seller’s organizations. I would even dare to say that the buyer would benefit the most. In addition, a decrease in even electronic invoices would reduce the burden on the environment.
What do you think; would you prefer to receive a single invoice rather than many, and would you like to know how much the invoice will cost in advance, without having to comb through accounts row-by-row?
Could a blockchain in the logistics industry one day become a reality?
I’ve often wondered why the logistics industry doesn’t put more effort into developing or even discussing blockchains. We actors in the industry hold a vast amount of data on goods subject to international trade, but the information is not loaned to others – which also means that it is not obtained from others. Sharing data would facilitate operations for everyone involved, and I’m not just talking about an exchange between one or two parties.
How does the following sound? You’re an importer and you are expecting an extremely important and expensive spare part from China. Your colleague on the other side of the country is already waiting for the part so that it can be installed. You log in to a system implemented using blockchain technology, where all of the consignment data is visible to every single actor in their own block, or folder. The system already contains data input by the shipping company, freight forwarder, port operator, the party responsible for declaring customs, and the domestic logistics company. You can see that the party responsible for declaring customs has not received a commercial invoice and the port operator would like to know who will pay the invoice. You input the data and the bot shows a green light: OK! You can follow the invoice’s progress as it is transmitted to the party responsible for declaring customs and the port operator sends their thanks for the information. It works! The shipping company can send information on arrival, the port operator sends information on cargo release, and the party responsible for declaring customs sends information on customs clearance. The domestic logistics company confirms that the consignment has been picked up from the terminal and estimates an arrival time.
All of this without five different websites and tracking services. What’s more, no phone calls or printouts necessary! You simply download the entire log into your own electronic archive and move on to your next task.
How long will it take for this to become routine?
What position do you play?
I’m a footballer. I love the game, which conveniently provides me with friends, challenges, exercise and therapy all at once, both on and off the pitch. A while ago, talk on the pitch turned to an old teammate, who always gave the defenders hell if her team lost. There was little room for improvement in her own performance, however. As you have probably guessed, she didn’t play defence. As I thought about her, I noticed how different people play different positions in games. One might keep their head down and work hard, while another might be a flamboyant goal-scorer. The game is just a game, but the person is the same – and the same applies at work. Workplaces are like football pitches and the employees are the players. Management are the coaches, who are supposed to get the best possible performance out of their players.
There is only one aim: to win the game. The winner is the team that plays the most skilfully together, plays the best defence, and gets the ball in the back of the net more often than their opponent. Preparing for a game is important and this requires strategy and a coach.
But what about the players? The goalie, a reliable guy that you can pass behind to and know that he’s always got your back. Centre-backs. Have you ever seen a centre-back who walks around patting themselves on the back and bragging about their performance? No, because they aren’t like that. Centre-backs are key defenders who graft for the good of the team but rarely receive special thanks for their work. Wingers run back and forth on the edges of the pitch and build the game. They are quick and skilled, but prefer to remain near the touchlines. The central mid-field is the team’s engine, responsible for keeping the machine going. Midfielders share the opportunity for success with others. What about the forwards? The striker has a special gift for finishing off a goal. It is a true gift that only few players possess. To be in the right place at the right time. The striker’s finishing touches are what wins the game, and for that reason they often receive the most praise, even though they don’t always need to do anything other than put their foot in a slightly different position.
A team requires all of its players to win, and it is in the best interest of the team for everyone to improve their skills on the pitch. The same goes for work – everyone has their own task which, when completed, brings the company closer to its vision. Familiarization and quiet knowledge-sharing make the most skilled employees.
According to an old proverb, a team is only as strong as its weakest player. One excellent example of a strong team is Finland’s successful world championship men’s ice hockey team. The guys on the team, who looked rather unassuming on paper, showed what can be achieved when a team’s players put their heads down and work together towards a clear goal. A good workplace, too, is one where employees support one another and share knowledge and skills with colleagues.
What position do you play, and do you recognise anyone on the pitch?
The death of a customs broker?
A few decades ago, a forwarder providing brokering services was one of the most prestigious positions in a logistics company. Forwarders wore a suit to the office and had assistants helping them. Customs clearance was performed manually with SAD forms and could take several hours or even days to complete. The customs broker was responsible for the use of correct commodity codes and procedures, and interpreted sales invoices and freight information. Landlines and fax machines were vital, cutting-edge tools of the trade up until the 1990s. Despite the advances in communications technology, customs papers had to be physically taken to a customs office to be stamped. This was usually done by a designated courier who carried documents from one place to another.
After Finland joined the European Union in 1995, the number of customs clearances collapsed and the ranks of customs brokers began to thin out. Of course, goods still had to be transported, and the duties of a forwarder shifted towards freight management. The emergence of electronic customs clearance revolutionised the industry in the early 2000s and instantly halved the time required per case. Systems development and the acquisition of new systems imposed costs, and in many logistics companies the idea of concentrating on transport management and outsourcing customs clearance services started to take root.
Over the last 20 years the world has changed even more rapidly. One clearance can take just a few minutes to complete. Robotics and artificial intelligence have become an integral part of a normal working day. Robots do not make human mistakes, which has reduced slip-ups caused by faulty information. Customs brokers have become data verification rather than data entry specialists. Today’s brokers are expected to have expertise that can only be obtained by passing information from one person to another or attending Customs’ own training. The best way to learn is to have knowledgeable colleagues. A broker must be aware of changing EU laws, national regulations, evolving procedures, commodity codes and special circumstances. Clearance is economy at its essence – customs technology solutions have a direct positive impact on the returns of companies, while an incorrectly cleared product results in unnecessary costs and impedes the free movement of goods within the EU. Customs clearance is becoming a narrower field of expertise with increasing demands and expectations. As a result, more and more logistics companies and declarants are opting to outsource related services to industry professionals.
Skilled customs clearance brokers are regarded highly now and will continue to be regarded highly in the future. The broker will never die.
Still breathing even after the change to VAT on imported goods
This year one of the hottest topics in the world of customs clearance has undeniably been the change to VAT on imported goods and its impact on customs clearance. Discussion was already brewing last year on the impact of the change and the problems it would bring with it. There was far less mention of what opportunities the change might bring.
Our western neighbours made the transition to a corresponding VAT practice slightly earlier than us, and by monitoring them, we can quite accurately predict the things we should pay attention to in the transition process, and what kind of pitfalls or problems we might expect. Finland has traditionally followed its western neighbours closely.
The new year came and went, customs clearance was carried out, and messages were sent just as they always have been. Something had changed, but customs clearance itself was going smoothly. Challenges began to appear when we started to think about how batches subject to VAT are handled and declared forward. Luckily our neighbours had already encountered this, too, and so we were able to prepare. Nevertheless, the declaration of information kept us rather busy, with update after update. The change to VAT on imported goods also caused clear process changes in the industry. The number of invoices subject to VAT decreased significantly, even though the legislation itself had not changed.
For importers, the change went far deeper than it did for people completing customs declarations. Previously, importers received VAT deduction information conveniently from customs clearance decisions, but now VAT is no longer found on decisions. In addition, logistics sector actors have each had their own interpretation of the legislation, which can be seen in invoices.
The honeymoon stage of the change to VAT on imported goods is nearing its end, and things are beginning to settle. The same was true for our neighbours; there too, it took time for things to settle down. Nevertheless, our neighbours are still encountering issues and challenges for which they have yet to find a permanent solution.
Once we have VAT matters up and running, we will begin to see new challenges arriving with the EU’s customs reform. That will give us something else to think about for a while.
Before that, we will still have the Russian customs’ green line, electrical installations in Customs’ warehousing, and UTU – the launch of Customs’ new customs system – to deal with. This all keeps the mind active, however, which is purely a positive thing.