Customs Duties & Cost Reductions Report, and Financial Analysis
A report by the Institute for Government highlights the international customs issues facing the United Kingdom as Brexit looms (Institute for Government, 2017). The data cited from this summary is from their report. The original “Day 1” date of March 29, 2019 has already passed and the uncertainty of regulations regarding UK trade continues to grow. The current EU summits suggest Britain may remain a member of the EU until as late as October 31s t, 2019 (FT, 2019).
A prime example of the problems and inefficiencies supply chains are facing can be found in the UK leaving the European Single Market and the EU Customs Union. Traders who are used to moving goods freely to the EU will need to adapt. They will have new requirements for paperwork and their goods could face significant checks at the EU border. Supply chains that are optimized for speed and fluidity will need to find the space and time for customs authorities to carry out checks and inspections.
The introduction of border checks between the UK and the EU could happen overnight. As the Government has recognized, customs is a cliff-edge issue that could be a disaster for supply chains. Preparing for day one requires government to orchestrate change across over 30 government departments and public bodies, with more than 100 local authority organizations affected.
There are 180,000 traders who will need to make customs declarations for the first time after exit; many of whom will be small and medium-sized enterprises (SMEs). They will need to manage increased administration and incur the cost of doing so. The introduction of customs declarations alone could end up costing traders in the region of £4 billion (bn) a year.
This report details the use of the UNISOT ERP-integrated business network to enable more efficient, faster and secure data interchanges. UNISOT employs fully regulated and legally binding smart contracts to enable a host of features such as automated order procurement and invoicing as well as end-to-end supply chain tracking and faster payments.
The data interchanges that will be identified and analyzed in this report are international customs declarations and logistics bill-of-ladens resulting in labor hours reductions. Financial models in this report were created to demonstrate the low barrier to entry and positive cashflow benefits of participating in the UNISOT network. Cash flow will be the primary factor analyzed however working capital, or accounts receivable and payable, will also be analyzed to highlight the cash flow benefits of faster payment settlements.
Brexit is highlighted as an example of the complexities and issues facing supply chains and customs authorities such as UK Her Majesty’s Revenue & Customs (HMRC). The larger a supply chain the more it exponentially benefits from leveraging the UNISOT ‘central database’ via the blockchain. UNISOT is committed to providing a robust system that scales to demand with tamperproof regulated data interchanges for organizations of all sizes.
Read the whole report on UNISOT´s Customs Duties and Cost Reductions.
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