Pay now, or Pay later

Pay now, or Pay later    During tough economic times, there's the tendency for companies to cut costs by reducing head count.
      The news these days is loaded with reports of major corporations announcing significant layoffs, and surely numerous small and medium-sized firms, which go largely unnoticed in the media, are doing the same.
      Eliminating staff to save money risks the danger of suffering incalculable loss of institutional knowledge in key operational functions, especially compliance with federal import and export regulations.
      While the engine of international commerce has slowed, goods are still moving across borders, and some U.S.-made products and technologies that continue to be shipped are subject to strict regulatory oversight by agencies such as the Homeland Security Department's Customs and Border Protection and the Commerce Department's Bureau of Industry and Security.
      Freight intermediaries, such as customs brokers and freight forwarders, offer shippers some protection against committing violations. However, the responsibility to follow the laws and regulations ultimately rests on the shoulders of the shipper.
      A company's regulatory compliance personnel should be viewed as 'an insurance policy for ensuring risk avoidance,' as U.S. export compliance consultant Paul DiVecchio put it recently to American Shipper.
      The challenges that U.S. companies face today in the area of import and export compliance are heightened by the fact that the regulations are constantly changing and seemingly open to interpretation.
      Even if corporate compliance officers are spared layoffs, there's the risk of reduced time available for dedicating to actual compliance work as these employees suddenly assume additional responsibilities outside their former scope of duties due to the head count reductions. Furthermore, budget cuts for compliance training and education add to a company's vulnerability to lack of due diligence in decision making, resulting in higher risk of regulatory violations.
      The reality is that enforcement agencies are not sympathetic to companies that argue they simply cannot comply with regulations due to downsizing. The government continues to expect companies to dedicate the necessary personnel and tools for compliance.
      Chief financial officers must find ways to ensure that compliance is not sacrificed in the name of short-term cost savings. Firms that fail to maintain these investments will inevitably be haunted by the knock of federal agents at their door, imposition of hefty fines and penalties, and public relations nightmares.