Delinquent Customs Liability Limits Your Growth Opportunity?
Summary of the Deal:
- The client requires shuttles to fulfill government contracts in Australia and 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.
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’s 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 on 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 slip up…
The goods arrived at the port and he was taken in with a huge customs bill. The client did not realize that he did not have adequate resources to clear the goods from customs.
With the contract running down and the demurral costs, the client was in a deadlock. It 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 will be massive.
The Customs Act placidly puts the value of the compensation (Sec 122Q (1) to be exact) for destroyed or damaged goods as if an individual’s property is damaged as a result of an exercise of a power under this division, the individual is entitled to compensation of a reasonable amount payable by the Commonwealth for the damage. From an operational perspective, not only does this weigh heavily on the client’s projects, but also a huge amount of loss.
AR Cash Flow quickly assessed the requirements and the client’s need for a swift resolution. The client had a concrete 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 aspects we quickly structured a deal for the client. We paid out the client’s customs bill and got the bus cleared from customs in no time. We also got the deal to finance the other shuttles that will be arriving.
The prompt solution has extremely helped the client. Not only has this helped him meet his contract obligations, but also helped him secure trade finance for the other shuttles that are to arrive.
With AR Cash Flow‘s help, the client was able to take the product out to the customer and meet an extremely profitable business.
If you have a similar situation please contact Daniel Dunsford on 0432 822 949, (02 8074 2674) or email him at email@example.com.