What does FTZ software do?

Foreign Trade Zone (FTZ) management has a reputation for being complex, especially regarding inventory management. US Customs and Border Protection (CBP) requires precise inventory recordkeeping and control. Companies operating in an FTZ must track all inventory entering and exiting the zone. Failing to do so can result in fines and, in some cases, losing the ability to operate within a zone. Fears of this complexity have kept some companies from using the program. However, with concerns about a recession and thinning margins top of mind for many leaders, companies are taking a second look at this tried and tested solution for minimizing duties, fees and supply chain costs.

To manage FTZs, companies are legally obliged to have software systems to help them manage their FTZ operations. While you might have heard of the benefits of FTZs, and that there is software available to help with ongoing management, you might still need to figure out what exactly FTZ software does. That’s what we’ll be answering today. 

Tracking inventory

FTZ software arose as an answer to the question, “how can we keep track of FTZ inventory and stay in compliance with CBP requirements without spending excessive administrative time?” Thus, FTZ software focuses on inventory management and is a specialized form of inventory control and recordkeeping system (ICRS). 

FTZ software tracks the following aspects of all inventory in the zone at a given time:

• Location of merchandise

• Zone status

• Cost or value of the merchandise

• Beginning balance, cumulative receipts and removals, adjustments, and the current balance on hand by date and quantity

• Destruction of merchandise

• Scrap, waste, and by-products 

Integrating with ACE

CBP has created an Automated Commercial Environment system, better known as ACE. When operating in an FTZ, companies must report all imports and exports in ACE so that CBP can determine admissibility. If a company tracks its inventory manually, it must duplicate effort by separately inputting this data in ACE. FTZ software can integrate with ACE, streamlining the process and avoiding duplicate work. Furthermore, this integration ensures that critical customs data is automatically updated, such as LACEY Act declarations, currency conversion rates, country codes, and HTSUS updates. 

Creating annual reports

Companies operating within an FTZ must prepare an annual reconciliation report. This report must contain the following information for all zone inventory: 

• Quantity on hand at the beginning of the year 

• Cumulative receipts and transfers (by unit) 

• Quantity on hand at the end of the year

• Cumulative positive and negative adjustments (by unit) made during the year

Companies must prepare this report within 90 days of the end of the year, and then the zone operator must send a certification of its completion to CBP within ten days of preparing the report. At any point in the year, CBP retains the right to do an audit and request the report. 

For companies using advanced FTZ software, not only is all this information tracked by the system throughout the year, but the software also automatically creates the report. In that case, with a clean paper trail in hand, audits become a breeze. 

Ensuring compliance

The above points all add up to compliance. FTZs help companies achieve significant savings, but those savings depend on remaining compliant. Not only does FTZ software streamline management, but it gives companies peace of mind. They know their inventory recordkeeping is always compliant and their savings are safe for years to come. Furthermore, FTZ software can proactively notify operators of upcoming deadlines, weekly entry estimate status, and more to ensure that the relevant parties are always one step ahead. 

Delivering analytics

In addition to ensuring compliance, FTZ software also helps companies leverage data for business goals. The role of data in the supply chain has rapidly changed in the last decade. Companies are collecting more data than ever. Now, the challenge is knowing what to do with it. 

Collecting and tracking inventory data is just one part of FTZ software. FTZ software with advanced analytics capabilities delivers greater value by turning this data into actionable insights. These insights empower operators to quickly view the current inventory flow status and optimize operations for continuous improvement. 

Learn More about QAD FTZ ICRS

When it comes to available solutions, no FTZ software can compare with the track record of QAD FTZ ICRS. Our solution was tailor-made in conjunction with FTZ operators to solve the felt needs of those working within a zone. This industry expertise is why it continues to be the go-to solution for global enterprises. To date, our senior FTZ consultants have overseen over 1,000 FTZ projects. Yours could be next. 

To learn more about QAD FTZ ICRS, schedule a consultation with our FTZ experts.