The ins of importing and outs of exporting

At Currency Partners, we can help you navigate and ease the complexities of importing and exporting for your business. Give yourself a competitive edge with our value-added commercial Business solutions, specifically designed for Importers and Exporters.

Our expert team of dedicated Business specialists will take the time to understand your business and offer you a comprehensive end-to-end solution for your supply chain. We’ll not only help you free up capital and facilitate your payments, but also manage your risk, cut your costs and protect your profits. That means you will have more time to focus on growing your business.

Navigating South Africa’s Exchange Control and Customs and Excise regulations as well as managing the various duties, tariffs and levies can add significant complexity to the import process. These challenges are further compounded by the lack of sight throughout the supply chain, currency risk from volatile exchange rates, clearance delays and inconsistent regulations depending on the origin of your goods.

In addition to this, the biggest challenge for most importers is cash flow. Your money is likely to be tied up in complex transactions for considerable periods of time and combined with volatile exchange rates, budgeting for your cost of sales, determining pricing and planning for positive cash flow becomes an unpredictable and unreliable process.

In turn, getting paid by your customers is a vital consideration in planning cash flow for any exporter and choosing the most reliable and secure method of collecting payments is therefore crucial.

The administrative burden of managing the specific regulations, numerous documents and clearances required which include shipping and bank documents, can be very onerous and complex.

Mitigating Risk in International Trade

There are a number of options available to importers and exporters used to collect and/or make payments. These include:

Open accounts

In this instance, the supplier runs a credit line for the importer so they can pay at their convenience. However, this form of payment has become increasingly rare, and depends heavily on the business relationship between the supplier and importer.

Advanced payments

Advanced payments require the importer to provide a deposit for their order with the supplier and when purchasing foreign currency to make this payment, one must provide a pro-forma invoice for the deposit.

Documentary collections

Document collection is a cost-effective option for import and export operations. This requires the supplier and importer to provide a number of documents to their respective banks as security for the payment and delivery of goods.

Documentary collection options are as follows:

• Bill of Lading: On receipt of the Bill of Lading, the importer pays the supplier and a commercial invoice which must be submitted to the bank when payment is made.

• Payment on Delivery: In this instance, the importer pays the supplier once the goods are received. Documents confirming receipt of the goods include: a Commercial Invoice, Bill of Lading, Bill of Entry, and the SAD500 form. These documents must be submitted to your foreign exchange provider to make payment.

• Foreign Bills for Collection: This payment method entails using the importer and exporter’s respective banks to act as intermediaries. The exporter submits a draft and other relevant shipping documents to the bank before the goods are exported. The bank then forwards these documents to the collecting bank along with instructions that goods may only be released once the payment has been made.

• Letter of Credit: A Letter of Credit is a contract drawn up between the sending and receiving banks, confirming that payment will be made to the beneficiary bank once the terms of the order have been met. It provides an economic guarantee from a creditworthy bank to mitigate risk for the exporter. These Letters of Credit vary depending on the terms required and agreed upon by the parties involved.

How can we help?

At Currency Partners, we take the time to understand your business so that we can provide you with a unique and bespoke end-to-end solution designed for your business. With our preferential exchange rate pricing, supply chain management Business Portal, value added services and a dedicated specialist dealer, we can cut your costs and take the hassle out of the process to help you manage all of the above from start to finish.

Furthermore, our trade finance offering, credit facilities and risk management strategy allow you to optimise your working capital and protect your hard earned profits.