Is a Delivery Duty Paid Agreement the right way to go?

Up until a little while ago, the answer to this question for retailers and wholesalers based in Australia who were importing their goods from overseas seemed relatively straightforward. However, things have now changed slightly and now might be the time to consider working with an end-to-end import services provider who can advise you appropriately.

But first, let us look at what has changed and how this might affect small businesses in particular.

Delivery Duty Paid (DPP) is an international agreement, whereby the seller of the product takes on the responsibility for the paying of any import or customs duties that are due. For the importer, this makes sense as it reduces their costs and allows them to pass those savings onto their customers. However, what happens when the value of the goods is, for whatever reasons, underestimated by the supplier?

This is what happened in one case back in 2014 and Australian Customs didn’t release the goods until full payment was made by the importer. Whatever the rights and wrongs of the case you can certainly see it from Australian Customs point of view as it is far easier to obtain money from an Australian business (importer) than it is from an overseas supplier, and in their view, it is the goods that customs duty is charged on and it is not imposed on any one individual.

The decision was challenged by the importer in question but the Administrative Appeals Tribunal found in favour of Australian Customs which means a precedent has now been set for the future.

It is not our intention to say whether the decision is right or wrong but what it does throw up is just one of the challenges facing importers in Australia. A simple human error, like the underpaying of customs duty, can have a big impact on a small businesses cash-flow if they then have to find the money to release the stock they need.

Sure, it is possible that the importing firm could seek reimbursement from the overseas supplier but if that takes time to come through, then what position is the business left in? Most small businesses work on very small margins and unbudgeted bills such as this could have huge ramifications for the business.

It is for reasons like this that we would always recommend any business talks to experts like ourselves before purchasing goods from overseas. We can help facilitate payments and ensure that any problems can be solved before they arise. Sure, handing over control of part of your supply chain but might be a little difficult at first, but when you consider the advantages Forward Express can bring to the process, then, in the long run, it makes a lot more financial sense.