Trade Compliance in SAP: The key areas of review for secure and efficient foreign trade processes
Trade compliance is becoming increasingly challenging due to rising regulatory requirements, complex supply chains and geopolitical developments.
Companies must manage numerous audit processes simultaneously in order to avoid risks and operate in compliance with the law.
In this article, you will learn which trade compliance audit areas are particularly important, what challenges arise in this context, and how these processes can be efficiently managed directly within SAP.
At a glance
- Trade compliance is becoming increasingly complex due to rising regulatory requirements
- Essential verification processes relate to, amongst other things, sanctions lists, export controls, customs and preferential trade arrangements
- Manual verification processes lead to errors, delays and legal risks
- Integration with SAP enables automated, process-integrated checks
- Companies benefit from greater security, transparency and efficiency
- M.SecureTrade from Mercoline helps you implement trade compliance within your SAP system
1. Why is trade compliance so important?
International trade is subject to extensive regulations. Trading companies must comply with numerous legal requirements and deal with issues such as export controls, customs regulations and sanctions lists.
Breaches of legal requirements can have serious consequences, such as:
- Hefty fines
- Disruptions to supply chains
- Damage to reputation
Complying with all trade compliance requirements is no easy task: the complexity of international trade increases with every new sanctions list, every geopolitical development and every change in legislation.
To keep pace, companies need to reduce manual effort and digitise and automate their trade compliance processes.
2. The biggest challenges in international trade
Many companies face these problems in international trade:
- Increasing regulatory requirements
- Complex export controls and embargoes
- Time-consuming classification of goods
- Lack of transparency regarding global goods flows
At the same time, poor-quality master data, siloed IT systems and manual compliance processes can cause delays and increase the error rate.
3. Tade compliance areas you need to keep an eye on
In international trade, there are numerous areas you need to manage simultaneously:
- Sanctions list checks
- Export controls & embargo checks
- Customs & tariff classification
- Preference management & rules of origin
- Master data & partner checks
- Documentation & Audit Compliance
In the following chapters, you will learn more about the individual verification areas.
3.1 Sanction List Checks
Companies are legally obliged to check all business partners against national and international sanctions lists.
This applies not only to business relationships with other companies, but also to internal contracts (e.g. with employees).
If this check is not carried out, companies face significant legal consequences.
You can find out more about this topic in our article “Sanctions list checks: identifying risks & ensuring trade compliance”.
Best practice
Sanctions list screening is mandatory across all business processes and must not be limited to when new customers or other business partners are onboarding. As sanctions lists change regularly and new lists become relevant, regular, automated checks are essential. This is the only way to identify matches at an early stage and avoid risks.
With M.SecureTrade Sanctions List Screening, you can check master and transaction data against national and international sanctions lists in no time at all – automatically and seamlessly integrated into your SAP system.
In addition to direct financial sanctions imposed by, for example, the EU or the US, indirect supply bans and end-uses are also checked.
In the event of a match, these are immediately displayed and logged. Automatic blocks are also possible.
This allows you to raise the compliance standards of your partner screening to a secure level, well above the minimum legal requirements. You will also fulfil industry-specific due diligence obligations.
3.2 Export Controls & Embargos
Before any export, companies must check whether goods, technologies or business transactions are subject to export control restrictions.
Various factors play a role here:
- Embargoes against countries or regions
- Lists of goods and dual-use regulations
- Military or critical end-uses
- Licensing requirements
- Material classifications and commodity codes
Complexity is constantly increasing, particularly in international supply chains. Even incorrect material master data or missing classifications can result in risks going unrecognised or transactions requiring authorisation going unnoticed.
Best practice
Embed export control checks directly into your business processes. Materials should be assessed within the SAP system using defined characteristics such as classification, material type, pricing or export indicators. This enables critical transactions to be identified at an early stage and supports decisions that comply with regulations.
M.SecureTrade Export Control supports companies with automated checks against goods and embargo lists. These checks can be carried out directly whilst master and transaction data is being processed. Matches are monitored, documented and can trigger automatic follow-up processes such as blocking or notifications. This reduces compliance risks and ensures that export processes are managed securely within SAP.
3.3 Customs, ATLAS & Tariff Classification
To ensure that foreign trade processes comply with the law, correct tariff classification – that is, the correct assignment of commodity codes (statistical commodity code and customs tariff code) – is essential.
Correct tariff classification enables further processes, such as preferential trade management, export controls or ATLAS declarations.
At the same time, the requirements for digital customs clearance are constantly increasing. Export declarations must already be submitted electronically to the customs authorities via ATLAS. Digitalisation is also continuing to grow in the import sector. Companies must therefore ensure that customs processes are carried out efficiently, without errors and with full documentation.
Incorrect commodity codes, incomplete customs declarations or manual processes can lead to delays in customs clearance, additional costs objections from the authorities.
Best Practice
Maintain and monitor tariff classification data centrally and ensure that it can be used directly for customs processes. Automated customs declarations and seamless integration into your SAP processes reduce errors and speed up communication with the customs authorities.
With M.SecureTrade, you can map tariff classification and customs processes entirely within SAP. Data stored for foreign trade processes is automatically available for subsequent processes and forms the basis for secure customs clearance and other trade compliance procedures.
With M.SecureTrade ATLAS, export declarations can be submitted electronically to the customs authorities directly from SAP, and customs processes can be efficiently automated.
3.4 Preference Management & Origin of Goods
When countries conclude economic and free trade agreements with one another, companies can reduce customs costs and save money.
However, this requires proof of the preferential origin of the goods.
This can quickly become a challenge, particularly in complex supply chains.
Best practice
Automated management of supplier declarations and preference calculations provides a solution, because: Manual calculations are not only time-consuming but also increase the risk of incorrect preference declarations.
3.5 Verification of Master Data & Partners
To ensure that compliance solutions function reliably, companies rely on a clean data foundation: the better the quality of the master data, the higher the quality of the compliance check.
However, many companies face challenges:
- Incomplete or out-of-date data
- Incorrect mappings
As a result, compliance risks are not identified, are not placed in the correct context, or are incorrectly assessed. Examples include
- potential matches during sanctions list checks,
- missing VAT registration numbers for EU business partners,
- incomplete material master data for pricing, or
- missing information for export control checks.
Incorrect or incomplete master data therefore has a direct impact on the quality and reliability of all downstream compliance processes.
Best practice
Carry out regular quality checks on your master data and counterparty data. Data used in compliance checks is particularly critical, such as names, addresses, VAT numbers, commodity codes, origin information or characteristics relevant to export controls.
The higher the data quality, the more reliable your trade compliance processes will be.
3.6 Documentation & Audit Assurance
In addition to the actual audit, comprehensive documentation also plays a key role. Companies must be able to demonstrate at any time which audits were carried out, what the results were and what measures were taken.
Particularly during audits or regulatory inspections, comprehensive documentation determines whether compliance processes can be demonstrated in a traceable and legally compliant manner.
Best Practice
Ensure that audit results, decisions and changes are stored in an audit-proof manner. Manual documentation in Excel or siloed systems often leads to loss of information and a lack of traceability.
4. Trade Compliance directly in SAP
Companies can significantly boost their efficiency if trade compliance is not treated as an isolated issue, but is integrated directly into their processes and the SAP system.
Integration directly into SAP offers numerous advantages:
- Automated real-time checks
- Integration into order, delivery and logistics processes
- Elimination of data silos
- A unified data source for all compliance processes
- Automatic blocking and release mechanisms
- Audit-proof documentation of all checks
- Greater transparency regarding risks and audit statuses
This ensures that compliance requirements are not checked retrospectively, but are taken into account directly during operational business processes.
5. Managing foreign trade in SAP with solutions from Mercoline
With the M.SecureTrade foreign trade suite, Mercoline helps companies to fully map and automate their trade compliance processes within SAP.
The modular solutions cover key areas of foreign trade:
- Sanctions list checks
- Tariff classification of materials
- Export control
- ATLAS customs clearance
- Preference management
- Supplier declarations
- VAT number verification
- Confirmation of delivery
Businesses benefit from end-to-end process support, greater legal certainty and a significant reduction in the workload on their specialist departments.
Would you like to find out more?
Request a demo now or arrange a consultation.
6. Conclusion
Trade compliance is no longer a marginal issue. Increasing regulatory requirements, global supply chains and growing documentation obligations make professional and efficient management essential.
By taking a holistic view of sanctions lists, export controls, customs duties, trade preferences and master data quality – and integrating these directly into SAP – you can reduce risks, speed up processes and lay the foundations for secure international trade.
With SAP-integrated solutions such as M.SecureTrade, trade compliance requirements can be implemented automatically, transparently and in full compliance with the law – thereby optimising foreign trade processes in the long term.