Mastering Duty Payment Options: ACH and PMS
Customs duties are a part of daily life as an importer, but their impact on company operations can be significant. This impact is becoming more severe with recent tariff increases amid the U.S. trade war with China. As a result, freight forwarders and customs brokers are becoming less likely to outlay duties on an importers behalf. Therefore, it’s important to understand how U.S. Customs’ programs like Automatic Customs House (ACH) and Periodic Monthly Statements (PMS) can not only lessen the effect on your AP but can improve your cash flow.
Starting with the Basics: ACH and PMS Defined
The Automated Clearing House is an electronic payment system. Once you’ve completed the application and a payer unit number is assigned, you can use the ACH to pay taxes, duties, and other fees with a single electronic payment.
When you use the ACH system, you can sign up for Periodic Monthly Statement processing. This feature lets you take the duties and fees from your periodic daily statements and consolidate them into a single monthly statement that you only pay once a month.
PMS Processing Gives you up to 45 days of Credit
One of the major benefits of using PMS is that you have up to 45 days of credit on the duties and taxes you owe to U.S. Customs and Border Protection. Here’s how it works: You import a shipment, and when you pay using PMS, duties, and fees are due on the fifteenth business day of the following month. If your good clear customs on the first of June, for instance, then your fees would be due July 15. This effectively gives you up to 45 days of interest-free credit with U.S. Customs.
Setting up ACH/PMS is relatively simple with the help of your freight forwarder or customs broker. Request the one-page ACH Debit application from your provider. They can walk you through any questions as well as help filling out the Broker/Filer Information section.
After the application has been submitted and processed, your Customs Broker can enroll you in PMS.
Understanding how duties and taxes impact your cash flow is necessary for any importer. If you have questions or would like to receive more information about managing your duty payments, contact us today.