Why finance cannot ignore customs data

In international trade, customs is often viewed as a specialist domain managed by logistics or compliance teams. For finance, it can feel too far removed, too technical, or too operational. Yet the data captured in customs declarations feeds directly into VAT, duty payments and ultimately into the accuracy of financial reporting.

If customs data is incomplete or inaccurate, the financial consequences are real.

The risk of over- and under-reporting

VAT is calculated from the values declared at the border. If those values are wrong, so is the VAT.

• Over-reporting leads to excessive VAT outflows that must later be reclaimed, creating liquidity strain and reconciliation headaches
• Under-reporting creates exposure to penalties, back-payments and interest, not to mention reputational risk during an audit

For finance, the accuracy of VAT reporting is only as strong as the customs data it is built on.

Where errors arise

There are many ways customs data can go wrong. Individually they may look like technical details, but collectively they shape the financial position.

The examples below are among the most common sources of financial risk in customs data:

• Classification (HS codes): An incorrect code alters duty rates and VAT calculations, inflating costs or under-declaring liabilities
• Country of origin: Determines preferential duty rates and compliance with trade agreements. Errors here can trigger unexpected costs or challenges from authorities
• Valuation and currency conversion: Declaring the wrong invoice value, or applying the wrong exchange rate, skews both VAT and duty. Even small misstatements repeated at scale create large variances
• Proforma invoices: Using draft or provisional invoices as the basis for customs declarations risks misalignment with final commercial invoices. This creates discrepancies that complicate audit trails and reconciliation

You might also be interested in this article: Are your products classified correctly?

Export risks

Customs data is equally important on the export side. Goods leaving the country may qualify for VAT zero rating, but that treatment comes with strict conditions. Finance must be able to demonstrate that the goods have genuinely left the country.

If documentation is missing or incomplete, the zero rating can be challenged. That creates exposure to unrecoverable VAT, penalties and reputational damage.

Common export risks include:

• Sales treated as exports without sufficient proof of exit
• Use of draft or incorrect invoices that do not match the export declaration
• Gaps in evidence such as missing exit confirmations or incomplete customs records

Without a clear audit trail that links sales invoices, export declarations and exit confirmations, finance cannot fully substantiate the VAT treatment of exports. This leaves businesses vulnerable in audits and undermines the reliability of reported revenue and tax positions.

You might also be interested in this white paper: Getting it right & monetising customs relief on duty & VAT

Audit trail and compliance

Every customs declaration becomes part of the financial audit trail. Auditors and tax authorities will expect evidence that VAT and duties were correctly declared and recovered. If customs data does not align with financial records, finance faces not only the operational burden of investigating discrepancies but also exposure to audit findings and potential financial penalties.

Without visibility into customs data, finance leaders cannot be certain whether reported VAT positions are complete, accurate and defensible.

Why finance should care about customs data

Customs data may be generated outside the finance function, but it drives financial outcomes:

• Liquidity depends on VAT and duty being declared at the right value
• P&L accuracy depends on duties being correctly classified and captured
• Audit readiness depends on customs data that matches financial records

When trade and customs data is treated as an operational detail rather than a financial control point, finance absorbs the risk.

Customs data is not just logistics or compliance data. It is financial data. For finance leaders, understanding its role is essential to protecting liquidity, maintaining reporting accuracy and ensuring audit readiness.