As a business owner, you’ve probably heard of a bonded warehouse. But do you really understand what it is or how it could benefit your company? The basic definition of a bonded warehouse is somewhere that you can store imported goods, without them actually entering the UK market.
Approved by the HMRC and tightly regulated by customs, quite simply, they are a duty-free zone. A place where import duty and VAT only has to be paid, if and when the goods are sold and delivered.
Two types of bonded warehouse are currently available in the UK, including; wet warehouses, which are approved for the storage of tobacco-based and alcoholic products, and dry warehouses, which allow the storage of almost all other imported goods. With constant pressure to cut costs, improve operations, and increase profit margins within your business, bonded warehouses – such as that offered here at the John K. Philips Group – are definitely something to consider.
Here we explore the top 5 reasons why your business could benefit from this type of warehouse:
If You Regularly Import Goods from Non-EU Countries
For businesses that regularly import goods from countries outside of Europe, bonded warehouses are a fantastic way to increase your company cash flow. Import duty and VAT payments are effectively deferred, paid only when your products physically leave the warehouse and are sold within the UK. This deferment has a number of obvious benefits. Hefty initial outlays can be avoided, and company money isn’t tied up by having to pay these charges immediately and in full. They are simply paid as and when required and you are left with more ready-to-use cash in your pocket.
If You Plan to Re-Export Goods
Bonded warehouses are a safe space for imported non-EU goods, particularly if you plan to re-export them at some point in the future. If the goods are simply held in the warehouse until they are exported (i.e. not actually sold within the UK), HMRC will not expect you to pay any UK import duty or VAT at all. Of course, you may need to pay these charges in the final country of destination, but at least by using a bonded warehouse in the UK, you can avoid any unnecessary double charges.
If You Like to Stock Up on Supply
If you’re the type of business that likes to stay ahead of the game, ensuring that you always have enough supply to meet demand, bonded warehouses are a hugely beneficial option. Effectively, you can bulk buy non-EU products and store them in the UK, without having to worry that initial HMRC charges will empty your bank account. When peak season comes around, you can rest assured, the goods are there and ready for order fulfilment. There will be no delays in order fulfilment or delivery and you will be able to uphold a fantastic level of customer service all-year-round.
There is usually no limit on how long imported goods can be stored in a bonded warehouse, meaning there’s no rush to make a sale. Any pressure is alleviated. You can stock up until your heart is content, take full advantage of the delayed HMRC payments, and sell items at your own pace.
If You Like to Take Advantage of Exchange Rates
In a similar vein to the previous point, bonded warehouses allow you to stock up on goods when it suits you – perhaps taking advantage of favourable exchange rates, months before your products come into season. Take for example the sale of sunglasses, a product that is much more likely to sell in the summer months. If exchange rates are better during the winter, you could bulk buy sunglasses and store them in a UK bonded warehouse. When the sun does make an appearance, you have the stock ready to supply demand and this tactic will help lead to a much better profit margin.
If Your Require Onward Transportation
Often, you will find that bonded warehouses are run by a logistics and transportation company, such as the John K. Philips Group. If at some point in the future, you do plan to sell and deliver imported goods within the UK, a fully integrated warehousing and transportation process could be highly beneficial for your company – saving you time, money, and a whole lot of effort!
Our dedicated team of staff at the John K. Philips Group can take care of everything on your behalf – from warehousing imported stock and liaising with HMRC to the successful onward transportation and distribution of goods. And thanks to our advanced computer systems and modern technology, you can accurately track the entire process, staying informed at all times about your overall stock levels, HMRC payments, and subsequent deliveries.
Bonded Warehousing at John K. Philips
Here at the John K. Philips group, we have over 40 years’ experience in the warehousing and distribution industry and we believe that almost all commercial businesses could benefit from a bonded warehouse. If you’d like to find out more about our bonded warehouse services and how we can help you, why not get in touch? Give us a call on 01744 75100 or send a message via the online contact form. One of our knowledgeable members of staff will respond as soon as possible.