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Avoid Trade Compliance Pitfalls

Few businesses would willingly trade with criminal enterprises or terrorists. Remaining compliant with a variety of domestic and international regulations can seem an onerous task. In this QAD Precision Report we look at how to establish a trade compliance program.

The Importance of Ongoing Trade Compliance 

There is no doubt the world in which we do business is changing. Globalization is increasing both the opportunity for businesses and the complexity of commerce on a large stage. With that increased opportunity comes international competition and pressures to be bigger, better and faster on a global scale. Furthermore, the trend toward world markets also introduces complicating factors for businesses such as the influence of volatile international politics and the growing threat of criminal activity and terrorism around the world. 

Governments across the globe use regulation as a primary means to limit the impact of these complicating factors. Nevertheless, while most would agree that preventing crime and acts of terrorism is a worthwhile goal, its pursuit comes with increased burden of trade compliance for businesses moving goods throughout their country and abroad. 

In the United States, for example, businesses contend with multiple government agencies, each with a different set of regulations. These include the International Traffic in Arms Regulations (ITAR) from the Department of State, Export Administration Regulations (EAR) from the Department of Commerce, regulations from the Office of Foreign Asset Control (OFAC) under the Department of the Treasury, and even partnership agreements like the Customs-Trade Partnership Against Terrorism (C-TPAT) in coordination with US Customs and Border Protection. 

In addition, if you’re an exporter, you must also maintain compliance with country-specific regulations for the geographies into which you transport your goods. As a result, managing the compliance landscape can seem a formidable undertaking.

So how can your company continue to meet the demands of our ever-changing global economy and avoid compliance pitfalls?


The first step in avoiding compliance pitfalls is to establish a compliance program. While compliance itself is the standard of enforcement, there is a significant difference in the penalty between cases of “willful” non-compliance and “negligent” non-compliance. Therefore, due diligence in crafting and maintaining a trade compliance program will go a long way to ensure any missteps fall into the latter category. 

When crafting your program, you should also pay particular attention to parcel shipments. Parcels, as opposed to production shipments, are often handled by less trained office staff or floor personnel. This increases the risk of compliance mistakes, especially if staff do checks manually.


Once you have established a trade compliance program, the next step is systematizing its processes. Reduce or eliminate manual compliance checks that require human diligence or regulatory interpretation. There are item and material codes that can be easily matched to regulation, license and corporate policy databases to automatically check compliance requirements throughout material movement – from shipment planning, to manifesting, to customs clearance. 


Putting those automated compliance checks in-line with standard logistical workflows becomes a far easier task when you have the right technology in place. Use trade compliance software to automate the process as domestic or export shipments are created. 

Similarly, comprehensive transportation execution software can automatically build and maintain an audit trail for all shipping and compliance documentation associated with your operations. Furthermore, electronic storage and retrieval of this information will be more efficient, and far more accurate than rows of filing cabinets or manual data entry into a separate database. 

Lastly, consider syncing your transportation management and compliance data with other key business systems to provide better business intelligence for decision-making. If you have to be compliant, you might as well get something in return.

When evaluating a global trade compliance solution ensure it offers the following features:

  • Automatic updates to trade compliance content and regulation changes

  • Intelligent screening of trading partners, countries, restricted parties and more

  • Smart ‘white listing’

  • Embargoed country screening

  • License determination and management

  • Data integrity and product-related compliance checks

  • Trade partnership questionnaires

  • Easy to use compliance management console

  • Management by exception

  • Audit trail and reporting

About QAD Precision – Trusted Global Trade and Transportation Execution

QAD Precision (Precision Software), a division of QAD Inc., provides industry-leading global trade management, transportation execution and multi carrier shipping software solutions from a single, integrated platform. Preeminent industry leaders in every region of the world rely on QAD Precision’s global support centers to leverage thousands of carriers and manage millions of shipping transactions every day. Our open architecture easily integrates with Enterprise Resource Planning, Warehouse Management Systems and legacy solutions. An ISO-certified company, QAD Precision assists companies to minimize shipping costs, optimize first mile and last mile deliveries, automate free trade agreement compliance, avoid customs delays and mitigate the risks associated with dynamic trading environments to maximize their competitive advantage. QAD Precision’s customers span multiple industries including banking and finance, life sciences, high technology, retail, industrial, automotive, higher education and public sector as well as logistics providers. For more information about QAD Precision, visit www.qadprecision.com.


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