Customs bonds are very important for almost any international trade and business transaction—but many people are unfamiliar with them. So what is a customs bond, and why is it important? Keep reading to take a close look at these essential tools.
A bond is a contract which is used to ensure that a party will perform their obligations. A person, group, of business that is unsure another party will fulfil their obligations asks a bond or surety company to ensure the action is performed. If the obligated party fails to perform the action, the surety bond company will reimburse the first party.
A customs bond involves an importing country asking a surety company to ensure that importers pay all import taxes, fees, and customs duties, and that they obey all rules, laws, and regulations. In the United States, customs bonds are required for almost any import situation; this ensures that the Treasury gets paid what it’s due. An importer buys a customs bond, and then if they fail to pay fines or fees the surety company will pay for them.
Although customs bonds may not seem to benefit companies directly, they prevent greater problems down the road, and they are a must for almost any large trading transaction. Purchasing a customs bond is a good way to keep a company compliant with import and export regulations.