Frustrated when goods are locked up in customs as you haven’t paid the duty yet?

 In Uncategorized

Unpaid Customs Duty hinders your growth opportunity?

This client now has one less reason to worry!

Summary of Scenario:

 

  • The client requires shuttles to fulfill government contracts in Australia.
  • The client did not have the funds to clear customs.
  • Goods stuck in customs for a long time, putting pressure on the client.
  • AR Cash Flow helped clear goods from customs.
  • The shuttle will help the client fulfill his contractual obligation.

 

The Details of the Transaction:

 

With the ever-increasing prices of petrol and diesel, people are steadily turning towards Electric Vehicles (EV). With climate change at the forefront of everyone’s thoughts, EV’s have caught up like a storm. We were introduced to a client who is an authorized dealer for a company that pioneers in the production of Electric vehicles and self-driving shuttles. The client had secured a lucrative government contract for the renting of self-driving shuttles. The client had agreed terms with the manufacturer abroad for the supply of shuttles. It was a rolling contract and the client even had the first of the shuttles shipped by the manufacturer. All the tools were in place for a successful business.

But for one tiny (read huge) miscalculation.

The goods arrived at the port and he was welcomed with a huge customs bill. Much to the client’s chagrin, he realized that he did not have adequate resources to clear the goods from customs. With the contract running down and the demurrage costs, increasing the client was under the enormous pressure of clearing the goods as soon as possible. The client was in a deadlock. This was holding up his contractual obligations as well as further orders that were to be shipped. Customs clearance could take anywhere between twenty minutes to several weeks. It is also worth noting that millions of dollars of goods are either destroyed or depreciate to almost half the value while they are waiting for customs clearance. Without taking into consideration the opportunity costs involved, the loss to the business is humungous.

The Customs Act placidly puts the value of the compensation (Sec 122Q (1) to be exact) for destroyed or damaged goods as ‘If a person’s property is damaged as a result of an exercise of a power under this Division, the person is entitled to compensation of a reasonable amount payable by the Commonwealth for the damage.’ What is a reasonable amount is a subject of much debate and several months of court proceedings. From an operational perspective, not only does this weigh heavily on the client’s plans, but also digs a huge hole in his pockets.

AR Cash Flow quickly assessed the requirements and the client’s need for a quick solution. The client had a solid contract for the supply of shuttles from a reputable manufacturer abroad. Clearing this good from the customs would be vital for the client and his future deals. Based on the above factors we quickly structured a deal for the client. We paid out the client’s customs bill and got the bus cleared from customs in real quick time. We also got the deal to finance the other shuttles that will be arriving.

The quick solution has helped the client enormously. Not only has this helped him meet his contract obligations, but has also helped him secure Trade Finance for the other shuttles that are to arrive.

This transaction was structured by Leigh Dunsford at Stak. If you have a similar situation on your hands, please call Leigh on 0402383949.

You could also contact us directly by emailing lalaine@arcashflow.com.au and we will setup a quick chat.

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