PRESS COVERAGE

Software clears customs hassles

Report on Business
The Globe and Mail

COMPANIES have traditionally paid brokers to clear their goods through customs when importing products into Canada. Owner-managers seem to have been happy letting someone else fill out the bevy of baffling forms.

Now, some entrepreneurs have discovered that clearing goods through Canada Customs isn't all that difficult especially if you've got software that walks you through the process. Moreover, it's cheaper than a broker.

Until two years ago, RCC Electronics, a "Toronto importer of electronic scopes and meters, was paying $2,000 a month to customs brokers to clear its goods as they came across the border.

But in 1993, the 30-person company went the do-it-yourself route and obtained self-clearance software from MSR Inc. of 'Toronto, a software company that specializes in import and export solutions.

RCC acquired the software on a lease-to-own basis, paying $1,100 a month about half what it previously paid to brokers.

Next month, the two-year lease will be up, and the package will be paid for. "That's when we're really going to benefit," says Carl Hewitt, RCC's controller.

Mr. Hewitt says no extra staff members were needed to look after the self-clearance software, which runs on a standard personal 'computer. "We already had a person spending a lot of time checking the work of our customs broker," he says. "It seemed like two people had been doing the same job now we just have one."

MSR's president, Raj Manucha, says little computer business expertise is needed to operate his company's system. "It requires just an average employee with an average knowledge of his company."

The software asks users to describe their products, then finds the appropriate import duties. Companies can print out the paperwork and put it in the mail to the federal government, or if the documents electronically. Ottawa even picks up the tab for the modem and the line charges. That's because the feds save a good deal of money if documents are sent electronically.

Jantzen Canada Inc. of Vancouver, a maker of swimwear, also saved money by using self-clearance software. Jantzen had been importing $8-million worth of clothing annually, and paid hefty brokerage fees. Last year, it started using the new technology and says it saved $50,000 in brokerage fees.

Mr. Hewitt of RCC says there are additional benefits to using a computerized self-clearance system. First, there are fewer mistakes made in the paperwork. The forms are filled out by employees who understand the details of a particular business, rather than by outside brokers who deal with any number of clients and goods.

In some cases, outside brokers unintentionally give goods the wrong classification, which can mean paying higher duties. "It was aggravating," Mr. Hewitt says. "We'd look at the work of the brokers, shake our heads and say, we've just lost money."

Often, RCC wouldn't bother applying for a refund from the federal government because the process could take months, or even years.

Ironically, RCC had been spending a lot of time training its brokers about the electronics business, and some still put products into wrong the categories. "A lot of knowledge is needed to clear our products, so the brokers were calling us for information," Mr. Hewitt says. "It was just another reason for doing it ourselves."

Self-clearance software, however, doesn't completely eliminate the need for customs brokers. Someone is still needed at the border to fill out release papers, which send the goods on their way. And companies still make use of brokers' consulting services.

Nevertheless, entrepreneurs can dramatically lower their brokerage costs by using software, and they stand to pay lower duties through more accurate classification of goods.

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