In Focus Collections Navigating the waters
Changing times will mean changing demands for the commercial credit industry
April Versace Credit and collections manager, John A. Steer Company
asa.associates@
virgin.net
The current trade climate is volatile, to say the least. In early 2019, a series of tariffs actually brought the total amount of goods flowing between the US and China that are subject to duties up to $106bn and further escalated the trade war between the two countries. Additionally, the Trump administration
announced its plan to place tariffs on $11bn worth of European Union (EU) imports as a consequence for the EU’s subsidies for aircraft manufacturer Airbus. The WTO approved the new tariff rate, which went into effect on 18 October.
Consumers What does this mean for consumers? Economists expect the tariffs to result in a modest drag on US economic growth, especially around a usually profitable holiday season.
Businesses What does this mean for businesses? The tariffs will dramatically increase the cost of production. To handle this increase, companies will either be forced to downsize or move its operations outside of the US.
Credit manager What does this mean as a credit manager? As a customs broker, we have historically outlaid duty to CBP, on behalf of our importers, on the tenth day following cargo release, and offered an extended repayment term. We, as a credit industry, can no longer sustain our businesses in this manner.
Cashflow To preserve cashflow, and mitigate lending risk, consider placing your importers on periodic monthly statement (PMS). PMS
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consolidates entry summaries for goods that are released during the month and allowing them to be paid as late as the fifteenth working day of the following month. PMS is a self-filer and broker filer option. However, it is not without limitations.
The Trump administration announced its plan to place tariffs on $11bn worth of European Union (EU) imports as a consequence for the EU's subsidies for aircraft manufacturer Airbus. The WTO approved the new tariff rate, which went into effect on 18 October
Those entries ineligible for PMS include: l NAFTA duty deferral. l Reconciliation entries. l IR tax class entries including wine, spirits, and tobacco products. l Further reduce your risk, by offering ACH to those ineligible importers. l Automated clearing house (ACH) debit or credit process. ACH debit allows the filer to voluntarily
select to authorise the Treasury-designated ACH processor to electronically debit the payer’s bank account; ACH credit is an optional payment method that allows the payer to transmit statement processing payments through its financial institution, on the tenth day following release, directly to the CBP account maintained by the Department of the Treasury. Our services as clearing house are critical, our services as a lender are not. CCR
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