Published
August 1, 2022
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South Africans are in a strong position in many ways to run successful importing/exporting businesses. We blend the natural resources with the entrepreneurial spirit for a winning formula.
There are, however, some unforeseen issues that can sink an SMME importer/exporter.
Here are a few significant financial aspects to look out for and what you can do to mitigate the risk.
Exchange Rate Fluctuations
The first issue is dealing with multiple currencies and the time delay between paying and receiving goods. The currency exchange can fluctuate positively or negatively. Your calculated risk as a trader can mean a decent profit or a business loss.
Interest Rate Fluctuations
To manage inflation, the various countries’ reserve banks can increase or decrease interest rates at any time. Not only do you need to know what is happening in SA, but also in the countries you trade-in. Understand what is happening to get a complete picture of potential interest rate hikes or reductions.
Commodity Price Management
When a commodity is scarce, the price can skyrocket. It is simple supply and demand. The problem with selling to a local supplier at a special rate and then paying an inflated price is not ideal.
Investment Management – Investing your surplus cash
If you as a business have surplus cash, where to invest is a crucial question. Based on when you may need it, or if you can support it somewhere long term becomes the ultimate question.
What is the solution?
You can solve all of these issues with a treasury management system. You have far more insight into what you can achieve when you can see the full scale of your currency, pricing, and exchange exposure alongside the company’s investment portfolio.
Reduce the risk of overexposure
If you add a Financial Risk Management Solution to your business, you can expect the following:
- Exchange Rate Risk Management
- Interest Rate Risk Management
- Commodity Price Management
- Investment Management (Surplus Cash)
- Liquidity Risk Management (Financing Options)
- Treasury Management System Support
Read more about treasury managment here.
If you are unsure how it can help your importing/exporting business, speak to one of the Bizcash consultants, who, in partnership with Change Financial Solutions, can help you understand the pros and cons of your business.
Get in touch with us on 0861 93 93 93 or email us at info@bizcashscf.co.za or contact us here.
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