March 05, 2020

Market News

Top 4 Risks of Importing and How to Avoid Them

Top 4 Risks of Importing and How to Avoid Them

Importing and exporting goods in South Africa can be a lucrative undertaking with many opportunities to expand your business. However, there are a number of risks and challenges associated with importing that should be considered to avoid potential losses or complications down the line. We’ve put together a list of the four biggest risks of importing and how we can help you with import solutions.

1. Cash flow

A lack of cash flow is often one of the greatest risks for importers. There can be a substantial wait between making payment for your goods and when you receive them. The nature of the goods you’re importing also plays a role in the length of time it takes between payment and delivery. In some cases, your money may be tied up for a significant amount of time.

At Currency Partners, we help mitigate this risk by replacing your tied-up capital, so that you can put your cash to better use elsewhere. We also leverage our economies of scale to provide the most competitive rates and cost savings wherever possible.

2. Operational risks

When it comes to importing, a lot of the operational transactions are out of your hands. As your products move through the supply chain, they become subject to a number of risks including loss or damage in transit, production problems, transport delays, administrative errors, clearance delays, and other potential challenges.

We will assist in hedging the client’s risk with various products for the period that it takes for the goods to reach South Africa, or their client overseas.

3. Volatile exchange rates

Any business that deals in a foreign currency is subject to fluctuating exchange rates. While some currencies are considered less volatile than others, constantly shifting political, geographic and economic factors can result in unexpected changes for even the most stable currencies.

Our upfront guaranteed pricing allows you to determine the profitability and viability of a product before committing to an order. In this way, you can protect your margin throughout the import transaction. Your dedicated FX dealer will assist you in how to secure your margins, using various hedging options.

4. Administrative complexities

South Africa’s exchange control regulations require that a number of very specific legislative measures be met. Importers in particular are faced with the tricky process of obtaining various shipping and bank documents when attempting to complete import transactions.

At Currency Partners, we help streamline the administration and complexities associated with managing the import process from start to finish. Our Payments team will manage all of your documentation, and complete your Balance of Payments (BoP) form on your behalf, taking the admin out of your payment process.

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