The Top 3 Keys to a Successful Corporate Trade Compliance Department (In Spite of the “Status Quo Police”)

When it comes to developing an effective Corporate Trade Compliance Department (CTCD), one of the foremost challenges is dealing with the “Status Quo Police.”  This thought sparked into my mind as I read Adam Hartung’s article in the September 8, 2010 issue of Forbes.com entitled, “Fire The Status Quo Police.”

Hartung describes how a senior executive philosophy within a company can exist that will resist change and create an immense debilitating effect on the financial and operational performance.  It’s important to keep this in mind if you are working to build or develop a CTCD within your company.  After all, the CTCD is not a profit center, so it tends to become an easy target for the refusal of resources to meet their commitments.  However, if you focus your approach on three key areas, your ability to achieve the best results will be heightened.

1.     Work to obtain CEO buy-in of the Trade Compliance Department.  The more convinced the CEO is of the importance of the trade compliance area to the company, the more he or she will support the necessary initiatives.  Develop presentations that highlight how compliance can reduce business risk, enhance corporate ethics, and improve the supply chain operations.  Stress the importance not just for CEO buy-in of the program but for all levels below the CEO as well.  Vertical support within an organization is a critical component of a CTCD, especially when you are undergoing a formal review by Customs and Border Protection or other government agencies.

2.     Develop strong controls and systems support.  Solid financial and accounting controls are necessary to ensure that all import and export transactions submitted to the government are accurate.  Written procedure manuals are a must, and self audit reviews should be enacted on a regular basis.  Maintaining proper documentation is highly important, as well as adhering to a document retention policy.  Credible information systems are essential to ensure proper financial reconciliations and data management.

3.     Ensure regulatory compliance.  An effective CTCD understands the importance of complying with import and export regulations and government security programs.  The management staff within the CTCD should be well versed on trade regulations as they affect their business.  Keep yourself well educated on the dynamic area of government compliance and maintain an ongoing training and development program for company associates.  Most importantly, develop and foster a comfortable relationship with an external legal counsel firm that specializes in international trade.

Developing a successful trade compliance area is not an insurmountable task, and it is highly important to a company engaging in international trade.  Starting at the top to partner with the CEO is the first step to eliminating the “Status Quo Police.”