Why is an Importer of Record Important?

The definition of Importer of Record:

An Importer of Record is an entity (typically a business) responsible for ensuring that the goods you’re looking to import comply with all customs, tariffs, and legal requirements of the country you’re shipping into. Depending on the specifics of your shipment (including where you’re shipping from, where you’re shipping to, and what you’re shipping), you have options on who can be the IOR.

In the logistics industry, Importer of Record services are important because they help companies import into countries where they don’t operate a business entity or possess the required import licenses. Importer of Record services are important not just because they solve logistical problems, but because they can be used to overcome various business challenges as well.

For example, most of our clients aren’t just looking for an import solution when using our Importer of Record services. What they are looking for is a way to set-up their new offices internationally, support their global data-centers, sell a turnkey international hardware solution to their customers, etc. and they use Importer of Record services to do so.

To help you identify various problems your company can solve by using Importer of Record & Trade Services, we’ve organized the following list by the most common business challenges we see our clients face:

• Multinational firms tasked with supporting international offices and data centers

• MSPs and Cloud Providers expanding into new markets, where they may not yet operate a local business entity

• VARs looking to provide their clients with white glove, turnkey international deployment solution

• Freight companies unfamiliar with international it hardware import compliance

Multinational Firms and Cloud Providers Tasked With Supporting International Offices and Data Centers

Multinational Firms

A simple way for multinational firms to support their global offices is to ship equipment to their international locations. When it comes to shipping into “open markets” like the US, Canada, and European Union (EU), multinational firms don’t need to hire an Importer of Record because they typically operate business entities in those markets. So, to deliver the equipment internationally, they just need to hire a technology shipper to arrange for the logistics, customs clearance, and last mile delivery.

However, in “closed markets”, having an office or business entity isn’t enough to successfully execute an import. To act as the importer in many of the world’s markets, you need to obtain specific import authorizations and licenses. In fact, many multinational firms are not even allowed to be the importers in many markets due the nature of their business and local country regulations (think Mexico, Russia, China, etc.)

Importer of Record services enable IT managers and procurement teams at multinational firms to purchase their hardware in the US, and then ship it out to their international offices without worrying about the local requirements, regulations, and their business eligibility.

We’ve coined the model of “purchasing equipment in the US and shipping international,” Centralized Procurement. The reason we gave it its own name is so we can convey to others that “purchasing equipment in the US and shipping international” is different from how most companies currently support their international infrastructures.

In our experience, companies usually support their international offices by purchasing from an in-market VAR or through the VAR-VAR network – which is more expensive, more inefficient, and less secure than Centralized Procurement. In this post we also discuss why companies should leverage Centralized Procurement and how they execute this model.

Cloud Service Providers

Large cloud providers and MSP’s have customer bases all around the world, and thus need to support data centers worldwide. Similar to multinational firms, cloud providers want to be able to ship hardware from their domestic hardware staging locations to international POPs and data centers. But unlike multinational firms, cloud providers generally don’t operate business entities in those countries.

So, more often than not, cloud providers cannot act as the Importer of Record, even in “open markets.” We’ve seen cloud providers try to circumvent this by using the data center’s name to act as the Importer of Record – only to learn they can’t. Data centers generally don’t allow companies to use their name on the import paperwork simply because they aren’t setup to be importers.

Importer of Record services enable MSPs and cloud providers to expand into new markets seamless and offer the supply chain flexibility needed to support their large and growing customer base globally.

Freight Companies Unfamiliar with International IT Hardware Compliance

Logistics companies generally understand how to physically get equipment from one place to another. But moving technology equipment into an international location is more complicated than just understanding the physical component. That being said, if you’re tasked with shipping to Europe, you may be able to manage without an Importer of Record.

But if you’re shipping to a country outside the few “open markets”, an Importer of Record provider can help you navigate through the document preparation and customs clearance parts of the deployment. Depending on the IOR provider, you may also be able to manage your own freight into the destination country, and then hand-off responsibility to the Importer of Record. If you are managing your own freight, pay very close attention to every single detail and instruction advised by the IOR provider. Any mistakes in shipment preparation, labeling, or documentation can cause delays in customs.

VAR’s Looking to Provide Their Clients with White Glove, Turnkey International Deployment Solutions

We’ve seen this category explode in growth in the recent years. More and more sales reps are frustrated that they can’t fulfill their client’s international orders and earn commission on international deals. US-only VAR’s are also realizing that they’re missing out on millions of dollars by not being able to fully support their client’s international needs.

But by using the Centralized Procurement model, VAR’s can support their client’s international requests:

1. Sell their clients the hardware in the US (like a domestic order)

2. Hire FGX to ship the hardware internationally using Importer of Record services

Furthermore, even with the combined cost to purchase the hardware in the US and ship it internationally, the Centralized Procurement model is actually cheaper than the customer going through an in-market VAR.

But of course, you don’t want to just provide your customer a cost-efficient solution; you want to provide them a no-hassle solution that works. Luckily, using our Importer of Record and Logistics services – we can provide our VAR partners an international shipping solution that is completely turnkey and no-hassle.

What else?

The three buckets we covered are the typical scenarios where we see Importer of Record services come in handy. That being said, there are definitely other uses for Importer of Record services that we haven’t come across.