Audit of 87 export contracts before the doctrine change
We reviewed the machine parts manufacturer's contract portfolio. We found 6 gaps that could have exposed the company to financial sanctions.
In 5 weeks, we checked the trade documentation of a local construction machinery parts manufacturer. We focused on identifying risks related to new sanction lists and changes in customs regulations.
The challenge
Mech-Lub-Serwis is a facility employing 12 people, shipping components to recipients outside the European Union. In August 2023, regulations changed so rapidly that the owner was unsure if his current contracts were legal. There was a risk that 14 shipments worth PLN 142,000 would be halted at the border in Dorohusk. Previous agreements were written 4 years ago and did not include clauses regarding the final destination of the goods, which is now required. Lack of proper paperwork could mean a financial penalty reaching 23% of each invoice value.
Our approach
Our team, including two customs audit specialists, spent 4 business days at the client's headquarters. We physically analyzed 87 contract files. We checked every CN code of the goods against new export restrictions. We spoke directly with Ms. Beata from the logistics department to understand how the document flow actually looks. We also contacted the customs office to confirm the interpretation of regulations for 3 specific hydraulic subassemblies.
The solution
We prepared new statement templates for contractors that protect the company from liability for the further resale of goods. We introduced a simple 3-step customer verification system before issuing a proforma invoice. We wrote a 14-page manual for employees explaining how to describe spare parts so that customs officers have no doubts about their intended use. We removed 6 dead clauses in contracts that could suggest cooperation with entities subject to trade bans.
Results
Thanks to the audit, the company safely shipped all contracted goods without a single downtime at the border. The owner now has clear procedures that allow him to sleep soundly during any tax audit.
Timeline
-
September 2023Initial segregation of 87 contracts and CN code analysis
-
September 2023Verification of contractors in sanction registers
-
October 2023Development of new safety clauses
-
October 2023Logistics training and manual implementation
"I was afraid that due to legal changes, we would lose financial liquidity. Lublin Union pointed out exactly where our paperwork errors were. The numbers don't lie; we avoided penalties and stress at the border."