These 3 Steps Can Help Boost Margins & Increase your Cashflow

April 12, 20240

 

Your inventory shipment has finally arrived in the US!

Everyone’s excited until…

You’ve received the amount owing for….. (brace yourself) duties.

Before selling a single unit, you owe thousands of dollars and up to 35% of your landed costs.

There must be a better way.

We’ve collected the 3 steps to help your business boost your profit margins & increase your cashflow.

Step 1: Outsource Fulfillment to a Canadian 3PL

One of the most effective steps you can take to boost your profit margins and improve cashflow is to outsource your fulfillment to a Canadian Third-Party Logistics (3PL) company. But what makes this such a game-changer?

Firstly, it’s all about location. Canada’s geographical proximity to the United States is a significant advantage. Many major U.S. ports and carriers are just a stone’s throw away from the Canadian border. This means that by partnering with a Canadian 3PL, your products can be strategically positioned for quick and cost-effective distribution to U.S. customers.

Imagine the time and cost savings when your inventory is located near major ports and carriers, reducing transit times and shipping expenses. It not only ensures faster delivery to your customers but also lowers your operational costs, ultimately boosting your profit margins.

Step 2: Section 321 – Say Goodbye to Duties for Orders Under $800 USD

Now, let’s delve into the magic of Section 321. Section 321 of the U.S. customs regulations allows you to import goods duty-free if the shipment’s total value is under $800 USD. This exemption can be a game-changer for retailers looking to optimize their cashflow.

By leveraging Section 321, you can stop paying duties for orders under the $800 threshold. This is particularly advantageous for small to medium-sized businesses, as it eliminates the financial burden of customs duties and taxes for these orders.

When combined with the strategic location of your Canadian 3PL, you can streamline your fulfillment process further. Goods can be stored and processed in Canada’s Free Trade Zones (FTZs), taking full advantage of Section 321’s duty exemption. It’s a win-win situation that not only reduces your costs but also helps you serve your U.S. customers more efficiently.

Step 3: Free Trade Zone – A Cashflow Boost Without Duty Drawbacks

Last but certainly not least, let’s talk about Free Trade Zones (FTZs) and how they can supercharge your cashflow. Traditional duty drawbacks, where you recover customs duties and taxes paid on imported goods, can be a slow and cumbersome process. Your money remains tied up until you receive the reimbursement, affecting your cashflow.

However, by operating within a Free Trade Zone, you can defer the payment of customs duties and taxes until your products are withdrawn from the zone for U.S. consumption. This means that your working capital is no longer held hostage by customs duties, freeing up your cash for more critical business needs.

The FTZ advantage extends beyond cashflow. It simplifies your logistics and ensures that your products are strategically positioned for efficient distribution. Combined with the benefits of Section 321 and outsourcing to a Canadian 3PL, it creates a trifecta of advantages that significantly improve your profit margins and cashflow.

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