Preparing for the Electronic Trade Document Act 

Charlie Bromley Griffiths at Conga explores the new data landscape that will emerge with the passing of the Electronic Trade Documents Act

 

In the last year, the Electronic Trade Documents Act, NI Protocol data sharing agreement and the Schrems II legislation have all  come into effect, setting the tone for future trade and data transfers. 

 

From here onwards, enterprises will need to be scrupulous with their data management and ensure they have measures in place to comply with the new regulations and the evolving data landscape.

 

There can be no doubt: business leaders will have huge transformation projects ahead of them. 

 

What is the Electronic Trade Documents Act?

With the passing of the Electronic Trade Document Act, digital trade documents now have the same legal footing as paper-based files and other contractual agreements and documentation. It has been designed to provide more efficient and cost-effective outcomes for the industry by removing unnecessary or complicated processes.

 

The Act expands on older legislation, such as the Bills of Exchange Act (1882) and Goods by Sea Act (1992), giving UK businesses more flexibility in how they trade. Most importantly, it will significantly reduce the environmental impact of everyday business. 

 

The UK Government estimates that the trade industry uses approximately 28.5 billion paper documents a year. Similarly, the Digital Container Shipping Association (DCSA) affirms that more than 16 million bills of lading were issued in 2020, 99 percent of which were paper-based.

 

This law will offer the shipping industry more economical and efficient options when executing routine business or legal tasks. By removing the need for physical documents, businesses will now have access to real-time data on trade flows. 

 

How will this effect day-to-day business? 

The Electronic Trade Documents Act applies to both large and small-medium enterprises (SMEs). However, digital trade documents themselves will not be mandatory; businesses can still use paper documents if they prefer.

 

The Act is designed to encourage enterprises to explore more sustainable and efficient business practices. However, under this new law, all digital documents must meet the government’s criteria. 

 

For example, the digital document should be susceptible to exclusive control; only one person, or party, should have control over the file at any one time. Additionally, when the digital document is transferred, those who previously had access to the file will no longer exercise control over the file.

 

Most importantly, a reliable system must be used to ensure that all these criteria are met. The trading party or individual that has access to the document should be able to demonstrate that the file is secure from unauthorised access or interference and that the file can be easily distinguished from any copies. 

 

The new Act may have implications for any existing contracts that businesses have in place with their current trading partners and suppliers. It is important that organisations review their contracts to ensure that they are compliant with the new legislation and make the necessary changes. Businesses may need to consider including clauses that address the use of electronic documents in trade transactions.

 

Governance, risk and compliance

The Electronic Trade Documents Act is clearly a step in the right direction. In fact, most businesses will welcome this change. However, for any of these directives to work, businesses must review their operations to ensure data transfers and contractual agreements are up to date, lawful and compliant. 

 

Naturally, short-term technology spending will increase, with businesses ramping up their digital transformation programmes to keep up with these new laws. However, companies need to be careful here.

 

Traders and suppliers must mitigate risk where possible and be mindful of this when rolling out any digital change programmes. They cannot afford to keep altering or redesigning their systems or data architecture each time they encounter a stumbling block. 

 

Digital transformation programmes of this size can be incredibly complex. Enterprise leaders need to approach this tactically and in a phased manner – especially when it comes to scaling solutions across their organisation and minimising any disruption.

 

It is vital that business leaders establish where they currently stand with regards to their digital transformation journey. Ideally, identifying any bottlenecks or inefficiencies, improving data flows and aligning all systems before adopting any new technology. 

 

This legislation offers a great opportunity for enterprise leaders to reassess and streamline their data and revenue processes. However, it is important that they do not get caught up in the technology, but instead, try to improve their operational cycle and data architecture.

 

By identifying key areas of improvement across the business cycle, leaders will have more of an idea of their digital maturity and what the next steps in their digital transformation journey should be.  

 

Digital vs data transformation 

Effective data management will be key here. How data is managed, stored and flows across the operational cycle is vital to an organisation’s day-to-day functions. If data is disconnected or siloed, it can seriously impact a business’ operational efficiency and result in revenue leakage.

 

With regards to the Electronic Trade Documents Act, if companies implement the wrong solution and data is left unaccounted for, the digital documentation will not be fully compliant. There could be serious consequences financially or even delays to trades and potentially a loss of business. 

 

Organisations will need to review their current data practices and rectify any issues identified throughout the document lifecycle. By reviewing their current data structure, enterprise leaders will have more insight into how data flows between teams, departments, and systems.

 

However, they will also need to ensure that they have the appropriate data-sharing protocols in place with their customers and trading partners. In fact, if a trading partner adopts a digital document solution, both parties will need to ensure that it meets the government’s criteria. 

 

The future of trade 

The Electronic Trade Documents Act is far more significant than it appears. Whilst it does not force organisations to commit to digital tools, it sets the tone for the future of business. As Paul Scully, the minister for the digital economy, stated, ‘what may look to many of us as a small change to the law is something that will have a massive impact on the way UK firms trade.’

 

Leaders should view this as an opportunity to improve their operations, and in time, adopt cleaner and more efficient business practices. More importantly, it paves the way for a digital future. Digital tools and documentation are now legally recognised and this could be applied to so many other sectors.

 

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Charlie Bromley Griffiths is corporate counsel at Conga

 

Main image courtesy of iStockPhoto.com