How Duty Drawback Brokers Improve Compliance and Maximize Savings
December 12, 2023
Many companies choose to partner with a duty drawback broker to help enhance their compliance while increasing their savings. If you’re a compliance leader who is considering whether you need a drawback broker, there’s a variety of factors to consider. In this blog post, we’ll cover not only what a duty drawback broker does but also help you understand how you can find the best partner for your business.
Duty Drawback Explained
Before digging into what a duty drawback broker does, it’s important to first understand what duty drawback is.
Duty drawback is the refund of certain import duties, taxes, and fees when goods are subsequently exported or destroyed. There are various types of duty drawback, including but certainly not limited to, Unused Drawback, Manufacturing Drawback, Multi-Party Drawback (also called Supply Chain Drawback), and Drawback Trading.
If you’re new to duty drawback and want to learn more about the basics, we encourage you to check out this page for more information.
What is a Duty Drawback Broker?
While the phrase may lead you to believe it is one person, drawback brokers are companies that have an entire team of compliance experts. Yes, you’ll typically have one key point of contact who will manage your account, but a duty drawback broker is far bigger than just one individual.
Duty drawback brokers are companies that are hired to handle the strategy and the day-to-day activities to ensure your duty drawback program is not only compliant but supports your company’s goals.
The best drawback brokers specialize specifically in duty drawback. They are commonly also customs brokers and occasionally can be freight forwarders too. However, it’s very important to note that not all customs brokers and freight forwarders are duty drawback brokers.
At Charter Brokerage, we’re proud to be the largest duty drawback filer, by dollar, in the United States. We’ve helped our clients recover billions of dollars in duty drawback claims.
What Does a Duty Drawback Broker Do?
Duty drawback companies help customers identify drawback opportunities, manage drawback filings, and develop strategies to maximize savings. Among many other things, drawback brokers help their clients:
- Prepare duty drawback claims
- Navigate desk reviews and customs audits
- Make process and structural recommendations to improve a company’s compliance
- Provide in-depth reporting and analysis capabilities
- Advise on document retention best practices
- Evaluate the impact to potential sourcing changes
- Offer customs liaison, training, and education
- Navigate FTAs (Free Trade Agreements) and FTZs (Free Trade Zones)
At Charter Brokerage, we go above and beyond to support our clients across all of these activities. Our commitment to premium service has allowed us to consistently achieve a 99%+ customer retention rate.
Why Hire a Duty Drawback Customs Broker?
Companies choose to partner with drawback brokers for a variety of reasons. Some want to alleviate the stress of the unknown while others want to engage an expert to free up internal bandwidth. Some of the most common reasons include:
Drawback brokers are the experts when it comes to navigating duty drawback laws and regulations. It’s their full time job to stay up-to-date on the latest changes which can become overwhelming for internal resources who are busy managing the company’s import and export activities.
Drawback brokers make sure drawback filings are submitted in a timely fashion which helps keep your company in compliance and avoid costly fines. They’re also experts at desk reviews and audits which can be a big relief to internal compliance resources who may not have recently – or ever – been involved with desk reviews and audits in the past.
The best drawback brokers also have legal resources on staff that specialize in international trade, giving their clients access to legal advice when the need arises.
Many companies choose to partner with a drawback services company to uncover additional savings within their supply chain. Drawback brokers have the knowledge, expertise, and creativity that can help companies get more money back.
When it comes to savings, drawback brokers can help companies understand the trade offs between different drawback strategies. For example, maybe you want to get refunds more quickly, even if this means you’ll get less back overall. Other times companies want to look more long term and choose a strategy that means they’ll have to wait longer for their refund but get more back. Brokers help companies evaluate all of their drawback filing options and find a solution that fits the financial needs of the company – both in the short and long term.
Another reason to engage a broker is that it can create tremendous time savings for internal resources. It’s not uncommon for internal compliance teams to be lean with most of their focus being on the day-to-day work of managing imports and exports. This doesn’t leave much time to focus on duty drawback. Many companies can’t justify adding headcount to focus solely on duty drawback, whereas a drawback broker can be a great supplement to an internal compliance team.
Better Technology & Data
Drawback brokers also have technology that most companies don’t. Instead of managing a drawback program via countless spreadsheets, brokers have powerful technology that’s easy-to-use for analysis work.
By consolidating everything into one system, data is systematically collected and analyzed, making it possible to identify small adjustments that can have a big impact. Not all drawback technology is created equal though. Some in the space use the same off-the-shelf base technology, but that doesn’t provide room for customization. Each supply chain is unique so choosing a drawback broker that has a customizable technology that can integrate with your systems could be well worth it.
What Types of Companies Benefit Most from a Duty Drawback Broker?
Nearly every company could benefit from engaging a drawback broker, however, there are some specific scenarios where brokers can especially help.
Complex Supply Chain
Those with a complex supply chain typically won’t have the time or expertise to navigate drawback amidst the day-to-day chaos. Complexity can look different for different companies. Sometimes that means having an extensive product list or many manufacturing points. It may also mean the utilization of a Free Trade Zone or Free Trade Agreement.
Small Compliance Team
Small compliance teams typically just don’t have the time or bandwidth to focus on drawback strategies. With time being consumed by managing shipments and internal initiatives, drawback is commonly left on the back burner for the day when things slow down.
New to Duty Drawback
Internal compliance teams that haven’t had prior exposure to drawback in their career will likely struggle as it is a highly technical process. Many companies have started recruiting recent compliance graduates which means they typically won’t have had the specialized training to effectively manage drawback.
At Charter Brokerage, we help a variety of customers including those with complex supply chains, small compliance teams, and those that are new to duty drawback.
Factors to Consider When Selecting a Duty Drawback Broker
There are countless factors to consider when you’re selecting a partner, especially one as important as a drawback broker. While selection criteria will depend on your specific business, there are a few key components that should be top of mind:
Duty drawback is complicated and highly technical. Look for a broker that specializes specifically in duty drawback, not just a freight forwarder that offers duty drawback as one of their various service offerings. With drawback companies, you’ll get access to highly specialized experts with far more experience.
Duty drawback strategies can be customized to fit unique business needs so look for a broker who will strategize with you on your filings – whether that be to maximize your refunds long term or to expedite the liquidation process in the short term. Great drawback brokers will also help prepare you for supply chain changes such as new products, origins, destinations, Free Trade Agreements, and more.
As mentioned earlier, technology can vary in the space and a data-driven drawback approach is best. Look for a broker who has technology that can handle large data sets from various sources and provide near real-time metrics. Customizable automation and robust reporting are also key things to look for before selecting a partner. Always keep compliance with all laws and regulations top of mind when considering a broker for your drawback services.
When selecting a drawback broker, know that pricing structures can vary across the industry. Some will charge per individual service while others will take an all-in approach by charging a flat percentage of savings.
At Charter Brokerage, our duty drawback expertise, strategic approach, and technology allow us to recover more duties, taxes, and fees than all other U.S. service providers. Additionally, our complete suite of drawback services, from analytics and consulting to compliance and audit support, is available to all of our clients with our all inclusive rate structure.
Why Charter Brokerage?
Charter Brokerage is the premier duty-drawback and customs brokerage services company in the United States and Canada. Established in 1994 by two international trade attorneys, Charter Brokerage’s commitment to compliance and client success is deeply ingrained in its culture and operations.
Our duty drawback services have a proven track record, recovering more duties, taxes, and fees than any other U.S. service provider. In addition to duty drawback services, we also offer comprehensive, compliance-focused customs services, including import, export, merchandise clearance, FTZ, Superfund Credits and related services. With over 25 years of experience, our expertise, consulting, and legal services are unmatched in the industry.
Our sophisticated in-house duty-drawback technology is called “Hamilton,” named after the first Secretary of the Treasury who oversaw the very first drawback law in the United States. Hamilton incorporates innovative technologies and, when combined with our duty-drawback experts, provides clients with optimized drawback programs. This dynamic drawback module is used to process complex analytics accurately and efficiently, so Charter’s drawback experts can produce superior drawback claims.
We’d be thrilled to talk to you about your duty drawback program. Connect with our team by emailing: Inquiries@charterbrokerage.net.