“What could possibly go wrong?”
I cringe every time I hear someone make that statement. It seems like a guarantee for trouble, especially when it comes to exporting.
The truth is, a lot can go wrong if you’re not expecting it and taking steps to prevent it. Funny enough, by anticipating the mishaps that might occur, you’re actually setting yourself up for greater chances at success. As the old saying goes, “When you know better, you can do better.”
With that in mind, we’ve come up with six things that can go wrong when creating exporting documents. Take a look, learn from these mistakes, and then don’t let them happen to you.
1. Wrong Contact, Packing and Payment Information
If you provide the wrong contact, packing or payment information for your export documents, your goods might be delivered to the incorrect address.
- If you have the wrong contact name or if you don’t have a contact’s name and phone number listed for your shipments and there are problems en route, your goods may arrive late or not arrive at all. The wrong contact information will delay shipments, so make sure you’ve checked with all parties and verified their contact information before you start your paperwork (and again before you send your goods on their way).
- If you have the wrong address on a waybill, your goods could be delivered to the wrong location. The container may end up sitting in a warehouse, and you will be stuck paying fees to store it while you’re getting it straightened out.
- Creating inaccurate packing lists. If customs wants to review your goods—and the goods are incorrectly labeled—officials may have to tear apart your entire shipment in order to find and examine what they’re looking for.
- Wrong information on bank draft: If your bank draft form isn’t filled out correctly, you may not get paid on time. (You can download a free bank draft here.)
2. Wrong Classification of Goods
Schedule B vs. HTS Codes
There are potentially expensive consequences for misclassifying your goods, so it’s crucial to get your product classification correct. You can classify your products by using either the Schedule B or Harmonized System (HS) codes. To understand the subtle differences between the two, check out our article, What's the Difference between HS, HTS and Schedule B Codes?
Regardless of which set of codes you use to classify your goods, you want to make sure you are using all 10 digits on your export paperwork. For documents that are used internationally, you will typically list only the first six digits of the codes, since these are the same in almost every country.
(Some exporters prefer not to include any HS code on any paperwork that will be used to facilitate the import of the goods, particularly the commercial invoice. I address that in our article, Why You Shouldn’t Include HS Numbers on a Commercial Invoice.)
Automated Export System (AES)
Your product classification doesn’t appear on just your export documents. You are required to file the proper 10-digit codes when filing your electronic export information (EEI) through AESDirect. That includes using the correct quantity and units of measure for your goods as defined in the Schedule B and HTS Codes.
Whether you’re relying on your freight forwarder to file through AES for you or you’re doing it yourself, if you’re not submitting the correct unit of measure and quantity, you will run into problems:
- AES may reject your misclassified filing.
- If AES doesn’t reject your filing and the transaction continues, you’re committing fraud, and you could face fines and other penalties.
Export Control Classification Number (ECCN)
In addition to classifying your products with the proper Schedule B or HTS code, you need to determine whether or not your products require an export license before you ship them. The first step of this process is determining who has jurisdiction over your goods.
Once you’ve determined jurisdiction, you need to identify whether or not your products have a classification number under the International Traffic in Arms Regulations (ITAR) or the Export Administration Regulations (EAR). Most products fall under the jurisdiction of the EAR, and most items don’t require an export license. But you should never just make that assumption.
Download and review the Shipping Solutions white paper, How to Determine if You Need an Export License, for a detailed explanation of this process.
For help with finding the correct Schedule B code, Harmonized Tariff Schedule code, ECCN or United States Munitions List (USML) code, request a free trial subscription to the Shipping Solutions Product Classification Wizard.
After you’ve created your commercial invoice, you may have a customer who requests you change its value to allow them to save money on import duties. Don’t do it! This is one situation where the customer isn’t right.
If you create export documents where the value of your goods is wrong, you could be committing fraud. From our article, Export Compliance: Using the Proper Value on a Commercial Invoice:
“At best, your compliance can cost you and your company your reputation. At worst, your ‘adjustment’ can lead to fines and penalties.”
4. Wrong Product Description
Avoid using a product description that doesn’t match your letter of credit. The product descriptions and other fields must match how your good is described on the letter of credit. Discrepancies could lead to delays in shipments and delays in payment.
There are seven common mishaps that happen in letters of credit. You can read more about them in our article, 7 Common Mistakes When Preparing Letters of Credit.
5. Having the Wrong Person Fill Out Dangerous Goods Forms
To put it plainly, there are potential disastrous consequences if you mislabel your dangerous goods. The easiest way to avoid these consequences is to make sure the right person is filling out these forms.
Depending on the size of your company, you may be the only person who should complete this paperwork, or you could have a small number of trained employees who are responsible for the job. We think (and the government agrees) that it’s critical to be properly trained in handling and dealing with these types of goods before you fill out these forms.
There are excellent resources available for training—companies like CARGOPak can help you make sure you’re receiving the hazmat and dangerous goods training you need. They offer on-site DOT Hazardous Materials (hazmat) compliance training classes, as well as live instructor-led webinars.
6. Wrongly Assuming Your Goods Qualify for Preferential Rates
When you use free trade agreements, you are certifying that your goods qualify for duty-free treatment under very specific rules, and you can prove it if you are audited. There’s no room to assume your goods qualify. If they don’t qualify under the rules of origin, you’re committing fraud and you could be fined.
The consequences of your assumptions don’t affect just you. Your customers may be forced to pay substantial penalties if the goods don’t qualify for the reduced duty rate.
Our International Trade Blog has a Free Trade Agreements section has three dozen articles to help you understand these agreements and determine if your goods qualify for preferential rates.
Whether these mishaps occur because of carelessness, a lack of knowledge of rules and regulations, or just simple typos, it’s important to realize that it doesn’t matter how big your company is. If you make a mistake when creating your export documents, you’re responsible for it. Without the correct paperwork, you’ll delay your shipments and ultimately delaying getting paid.
The good news? You can avoid much of this frustration. There’s an easier way to create export documents.
Shipping Solutions export software allows you to create accurate export paperwork up to five-times faster than more manual methods. It let's you file your EEI through AESDirect on the Automated Commercial Environment (ACE) with the click of a button. And it makes it easy to stay compliant with export regulations.
Let us show you how Shipping Solutions can help your company. Sign up for a free online demo of the software. Or call us at (888) 890-7447. There's no obligation.
This article was first published in September 2015 and has been updated to include current information and formatting.