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Accounts Receivable Ledger Project (ARL)

BCCC CARM Sub-CommitteeUpdates and New Scenarios

September 19, 2012Version 1.1

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PURPOSE

• To provide examples and updates of how ARL will affect the commercial process between Importers, Brokers, and the CBSA.

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TABLE OF CONTENTS

Scenario updates from July 5th presentation

1. New process (non-CSA) Update!;

2. Offset Update!;

3. GST Option; 4. Importer Direct Security (IDS) Option

3/4a : Importer pays duties & taxes

3/4b : No payment of GST/IDS amounts

3/4c : Both Broker & Importer pay

1. B2-1 Detailed Adjustment Statement (DAS): B2-1 (DAS) – Broker submits B3/CBSA generates DAS New!

New Scenarios

6. CLVS posting

7. Multiple Brokers’ and Importer payments are applied against an Importer’s SOA (5 pages)

8. SOA’S where Broker pays non “GST/IDS”, but Importer doesn’t pay the “GST/IDS”. (5 pages)

9. DN the day following payment for Importer where Broker took refund credit - short their paid SOA (2 pages)

10. SOA & DN for Importer where there is a residual credit greater & smaller than the threshold (5 pages)

11. DN where Broker has made partial payment

12. Over-payment by Broker and by Importer DN (6 pages)

13. RSF & Payment

14. ePayment

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Scenario 1: NEW PROCESS (Non-CSA) Clients import commercial goods into Canada. Proper import/release documentation is provided; goods are released. Importers and/or Brokers submit CBSA coding form (B3) by the final accounting due date. ARL will generate a Daily Notice (DN) of all recorded transactions for that day, including

B3’s per B3 accounting date. Brokers and Importers using RPPP will receive DN’s. If there are no transactions, no DN

will be generated. While DNs will be populated per accounting date for B3s, the Statement of Account

(SOA) will be populated using the B3 release dates. As such, the DNs will be used to reconcile transactions while the SOA will be used to confirm monthly payments due.

On the 10th of every month, Importers and Brokers will receive a SOA displaying daily summary totals of financial activity for each day of the previous calendar month. For Brokers, SOAs will be broken down by client.

Brokers/Importers may pay electronically via their Financial Institution (FI), or provide payment at a CBSA office by the 15th day of the month following the month of release/issuance. If the 15th falls on a w/e or holiday, payment is due by the 1st business day following the 15th.

Payments made will appear as transactions on the CBSA clients’ following DN.

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A Broker or Importer submits an Adjustment Request (B2) for a refund on a specific transaction; the B2 is assessed by the CBSA.

A B2-1 Detailed Adjustment Statement (DAS) is created to adjust the client account as required, resulting in a refund owing to the client.

The B2-1 is sent to the Importer (and/or Broker). The refund amount will be recorded in the client’s account and will appear as a negative transaction on the client’s DN as well as on the Broker’s DN (in that client’s section) on the following day.

The B2-1 credit amount will form part of the Importer’s daily summary total on his SOA and will be reflected in the same manner on the Broker’s SOA, in that client’s section.

If the total amount due on the SOA is less than the approved refund(s), ARL will automatically perform a query of the Importer’s account and calculate the new receivables (1st to 15th of month in which the SOA is generated) owed to date.

If the receivables total is of the same value or greater than the residual credit, the credit will be kept and appear as an offset on the following DN.

If the receivables total is smaller than the residual credit, an amount equal to the « new receivables » amount will be used as an offset, and a cheque will be sent to the client for the residual credit if it is above the determined threshold.

Scenario 2: OFFSET

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Scenario 3: GST OPTION Upon importation of commercial goods using RPPP, the Broker and Importer agree to

use the GST Option for a specific transaction.

Broker submits B3 on behalf of his client, coding Field 6 of the B3 with a “G” for the GST Option used.

The ARL will generate a DN of all recorded transactions to the Importer/Broker on the following day.

Both the Broker’s and Importer’s DN will show this transaction with a « G » in the GST/IDS Option column.

The Broker SOA will show the following 3 lines: « Total Payable » for that Importer (only the portion where this specific Broker was used); « GST/IDS Option » amount where the Importer is directly responsible to pay the CBSA; « Difference » amount between the first two. This last amount is to be decided on who will

pay it, the Broker or the Importer; this is the Importer’s discretion.

The Importer will have the same lines but the amounts may be different, as they will be for all transactions, not only for a specific Broker.

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Scenario 4: Importer DIRECT SECURITY (IDS) Option

Upon importation of commercial goods using RPPP, the Importer (having their own account security) uses a Broker to provide their B3.

Two scenarios may occur: First, the Broker completes the B3 and uses the Importer’s own transaction number

(Importer ASEC as 1st 5 digits). In this case, field 6 is to be left blank. The transaction will be posted to the Importer account and will only appear on the Importer DN (ARL uses the ASEC form, the transaction number, along with the BN15 in field one of the B3).

Second, the Broker completes the B3 using their own transaction number (Broker ASEC as 1st 5 digits). The Broker will insert the letter “I” in field 6 of the B3, indicating that this Importer has his own ASEC. The transaction will be posted to the Importer account and will appear on both the Importer and Broker DN.

The Broker SOA will show the following 3 lines: « Total Payable » for that Importer (only the portion where this specific Broker was used); « GST/IDS Option » amount where the Importer is directly responsible to pay the CBSA; « Difference » amount between the first two. This last amount is to be decided on who will

pay it, the Broker or the Importer; this is the Importer’s discretion.

The Importer will have the same lines but the amounts may be different, as they will be for all transactions, not only for a specific Broker.

* Note: The transaction amount described in the 1st of 2 scenarios above will not appear on the Broker SOA.

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Scenario 3/4 a: GST or IDS OPTION (Importer PAYS)

On the 10th of the month, the Importer will receive a SOA displaying: « Total Payable »; « GST/IDS Option » amount where the Importer is directly responsible to pay the CBSA; « Difference » amount between the first two. This last amount is to be decided on who will pay

it, the Broker or the Importer; this is at the Importer’s discretion.

The Broker will also receive a SOA, broken down by client, with the same 3 lines per client. Note that the amounts may vary as the Importer may use many Brokers.

The options for payment are: The Importer pays only the GST/IDS Option amount indicated on their SOA while the Broker(s) pays the

balance(s); The Importer pays the « Total Payable »; no payment required by the Broker.

A third option may occur but should not: the Broker pays the « Total Payable » amount. GST and IDS Options allow the Broker to provide a lesser amount of security. This implies that their security does not cover the duties & taxes for IDS option transactions nor does it to the GST portion of a « GST option » transaction. As such, payment is required directly by the Importer. D-Memo(s) will be edited to reflect such change.

Payment made by the Importer will appear on their following DN and SOA. Payment made by the Broker will appear on their DN and SOA as well as on the

Importer’s.

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Scenario 3/4b: GST or IDS OPTION (NO PAYMENT) On the 10th of the month, the Importer will receive a SOA displaying:

« Total Payable »; « GST/IDS Option » amount where the Importer is directly responsible to pay the CBSA; « Difference » amount between the first two. This last amount is to be decided on who will

pay it, the Broker or the Importer; at the Importer’s discretion.

The Broker will also receive a SOA, broken down by client, with the same 3 lines per client. Note that the amounts may vary as the Importer may use many Brokers.

No payment is provided for the GST/IDS Option amount.

The amount owed becomes an outstanding amount that will be reflected on the Importer’s following SOA in the « Unpaid Balance Forward » line.

A Notice of Penalty Assessment (NPA) will be issued against the Importer for non-payment and will be posted on the Importer’s DN & SOA until paid. Once the NPA is paid, it will appear as « Paid » on their subsequent DN (one DN only, then removed).

Arrears interest will be calculated and charged on the outstanding amount until the total amount is paid in full. Interest will be posted on the Importer’s SOA.

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Scenario 3/4c: GST or IDS OPTION (PAYMENT BY BOTH)

On the 10th of the month, the Importer will receive a SOA displaying: « Total Payable »; « GST/IDS Option » amount where the Importer is directly responsible to pay to the CBSA; « Difference » amount between the first two. This last amount is to be decided on who will pay

it, the Broker or the Importer; this is at the Importer’s discretion.

The Broker will also receive a SOA, broken down by client, with the same 3 lines per client. Note that the amounts may vary as the Importer may use many Brokers.

The Importer pays the GST/IDS Option amount directly to the CBSA; mistakenly, so does the Broker.

The ARL will post both payments to the Importer account.

A manual process will be required to clarify the transaction(s) in error.

Scenario 5: B2-1 (DAS) – Broker SUBMITS B3/CBSA GENERATES DAS

A B3 has been submitted by a Broker where the adjusment is initiated directly by the CBSA. A B2-1 DAS is issued.

The B2-1 is sent to the Importer and/or to the Broker responsible for the B3 while the adjustment amount appears on the Broker and Importer DNs. If the adjustment is a credit, the refund will be applied as an offset to the Importer’s account.

If the adjustment is a debit, the transaction will appear in the « Other Transactions » section, with a specific due date (30 days from issuance) for that transaction.

On the 10th of the month following the B2-1 posting, the Importer and the Broker will receive a SOA displaying daily summary totals of financial activity for each day of the previous calendar month, including the adjustment amount if it is a payable.

If the adjustment is a receivable, the specific B2-1 will appear in the « Other Transactions » section for the Importer.

The Broker’s SOA will be broken down by client.

Brokers/Importers may pay electronically via their Financial Institution (FI), or provide payment at a CBSA office by the 15th day of the month following the month of release/issuance. If the 15th falls on a w/e or holiday, payment is due by the 1st business day following the 15th.

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Scenario 6: CLVS posting

Where a Courier/Broker imports LVS goods and accounts for them on an F type B3 (identified as the one single Importer and BN15, as the B3 is for a single client), the B3 will be posted to the Importer’s account, DN, and SOA.

• The credit will be posted to that Importer account and the refund (offset first) will be made accordingly.

Where a Courier/Broker imports LVS goods and accounts for them on an F type B3 (identified as the Courier/Broker and their BN15, as the B3 is for multiple clients), the B3 will be posted to the Courier/Broker’s account, DN and SOA.

• Where the B2 is presented by the Broker/Courier, the credit will be posted to that Broker/Courier account and the refund (offset first) will be made accordingly;

• Where the B2 is presented by the Importer, the credit will be posted to that Importer’s account and the refund (offset first) will be made accordingly. In this case, the Importer may not be in the ARL Master database and would require manual creation of the client and account prior to posting the credit.

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Scenario 7: Multiple Brokers’ and Importer payments are applied against an Importer’s SOA

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The following pages will show:

• Importer SOA with due amounts

• Broker 1 DN with partial payment to Importer account

• Broker 2 DN with partial payment to Importer account

• Importer DN with partial payment to its account

Scenario 7 – Importer SOA

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Scenario 7 – Broker DN

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Scenario 7 – Broker DN

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Scenario 7 – Importer DN

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Scenario 8: SOA’S where Broker pays non “GST/IDS”, but Importer doesn’t pay the “GST/IDS”

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The following pages will show:

• Importer July SOA with due amounts

• Broker July SOA with Importer’s due amounts

• Importer August SOA with due amounts including unpaid balance forward

• Broker August SOA with due amounts

Scenario 8 – Importer July SOA

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Scenario 8 – Broker July SOA

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Scenario 8 – Importer August SOA

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Scenario 8 – Broker August SOA

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Scenario 9: DN following payment for Importer where Broker took refund credit (short paid their SOA)

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• The following pages will show:

– Broker July SOA with Importer’s due amounts. Broker is to pay $36,980.11.

– Broker July 16 DN with payment of only $34,005.01.

Scenario 9 – Broker SOA

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Scenario 9 – Broker DN

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Scenario 10: SOA & DN for Importer where there is a residual credit greater & smaller than the threshold ($1,000)

The following pages will show:

• Importer SOA with a residual credit greater than threshold.

• Importer DN with a posting following refund process.

• Importer SOA with a residual credit smaller than threshold.

• Importer DN with a posting for unapplied payment.

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Scenario 10 – Importer SOA/Residual credit > threshold

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Scenario 10 – Importer DN showing refund

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Scenario 10 – Importer SOA/Residual credit < threshold

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Scenario 10 – Importer SOA with < threshold credit

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Scenario 11: DN where Broker has made partial payment

Scenario 12: Over-payment by Broker and by Importer (DN)

The following pages will show:

• Importer SOA with due amounts

• Broker SOA with due amounts

• Broker DN with payment of non GST/IDS amount

• Importer DN with full payment + Broker payment

• Refund process of over-payment

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Scenario 12 – Importer SOA with due amounts

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Scenario 12 – Broker SOA with due amounts

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Scenario 12 – Broker DN with payment of non-GST/IDS $

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Scenario 12 – Importer payment on DN + Broker payment

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Scenario 12 – Refund process of over payment

A manual process will be necessary in order to identify over payments such as in this scenario; this can be triggered by the client (Broker or Importer) or by the CBSA.

A report of unapplied amounts will be run monthly in order to identify such overpayments.

Authorized ARL users will review these amounts and take steps to identify which amounts are considered over paid, and:• Keep the funds in the identified payer account that overpaid; or,• Initiate refund of such amounts.

• Note that a business rule would be ideal in this case.

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Scenario 13- RSF & Payment

July 2012 RSF = June 2012 release/reception of goods; payment of $50K due July 16, 2012. (Client account/ARL = July 2012 RSF/$50K)• Payment made $45K on July 16.• ARL clearing = $45K to July 2012 RSF; $5K outstanding.

August 2012 RSF = July 2012 release/reception of goods; payment of $65K due August 15, 2012. (Client account/ARL = July 2012 RSF/$5K; August 2012 RSF/$65K)• Payment made $50K on August 15.• ARL clearing = $5K to July 2012 RSF; $45K to August 2012 RSF; $20K

outstanding. (As per payment allocation rules, clear oldest transaction first, i.e. July RSF first).

August 21, 2012 = Payment of $20K made. ARL clearing = $20K to August 2012 RSF; $0 outstanding.

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ePayment Flows 1. Importers making a payment to CBSA via a Financial Institution

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1. Importers making a payment to CBSA via a Financial Institution

1.Importers access the internet or telephone banking services of their financial institution to initiate a CBSA electronic payment. 2.Importers submit a valid Business Number (BN) and the payment amount to their FI. 3.FI’s generate a confirmation of payment completed.4.FI’s to record the payment in the commercial client bank account. 5.FI’s deposit the money with Bank of Canada.6.FI’s send the payment details file to the Receiver General (PWGSC-Government Banking System (GBS)).7.PWGSC provides payment details to CBSA.8.The CBSA system receives and decrypts the transformed payment details file. 9.CBSA ARL will apply the payment information to specific transaction numbers within each individual client account within ARL.10.CBSA reconciles with GBS.

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2. Commercial clients making a payment to CBSA via EDI

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2. Commercial clients making a payment to CBSA via EDI

1. Commercial clients transmit an EDI 820 to their financial institution to initiate a CBSA electronic payment. The 820 will be transmitted to PWGSC by the FI. The file is to contain the payment amount, the client identifier(s), for which the payment is to be applied against.

2. FIs generate a confirmation of payment completed. 3. FIs post the payment transaction in the importer/broker bank account. 4. FIs deposit the money with Bank of Canada.5. PWGSC transmits a summarized payment details file in an encrypted format (secure) to

ARL. 6. PWGSC provide payment details to CBSA.7. The CBSA System receives and decrypts the transformed payment details file.8. CBSA ARL will apply the payment information to specific transactions within each

individual client account within ARL, and a unique payment identification number will be assigned for each payment.

9. CBSA ARL will apply the payment information to specific transaction numbers within each individual client account in ARL.

10. CBSA reconciles with GBS.

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3. Wire Transfer for Non-Resident Commercial Clients

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3. Wire Transfer for Non-Resident Commercial Clients

1. Non-resident commercial clients will initiate a wire transfer payment with their foreign financial institution payable to CBSA BAN. Communication will need to take place with these clients, advising them of the different payment methods that will be available to the non-resident.

2. CBSA approval will be required for each non-resident commercial client who wants to wire transfer their payment to the CBSA. Instructions will need to be forwarded to each client prior to the first payment. Payment must be made in CAD funds only.

3. Wire transfer will not be a valid payment method for a Canadian resident.4. Non-resident Commercial Clients transmit payment allocation instructions data to the

CBSA (by fax or electronically via a secure channel). 5. The lead bank will deposit the money with the Bank of Canada.6. PWGSC will provide payment details to the CBSA.7. CBSA ARL applies the payment to the client accounts as specified in the client

payment allocation instructions. 8. The CBSA reconciles with GBS.

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CONTACT US

CBSA-ASFC_CARM.GCRA@cbsa-asfc.gc.ca