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Importing, Exporting And Growth

Foreign markets offer a wealth of opportunities, as long as you can navigate the complexities of foreign exchange.

Sasfin

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Consider the following scenario: Joe wants to start importing external hard drives from the Middle East. He’s confident that he can sell each hard drive for R300, more than covering his costs and generating a decent profit margin.

He places his order with a reputable supplier and four weeks later his shipment arrives via sea freight. Unfortunately, during that time there’s been a negative movement in the exchange rate, and suddenly he owes his supplier R350 per unit. Not only can he no longer make a profit, the sale of his goods won’t even cover his costs. He’s taken a big bet and he’s lost.

So, what went wrong? In a nutshell, Joe didn’t factor currency volatility into his planning. “Currency volatility is a major factor influencing the success of businesses around the world,” says Roberto Rebuzzi, Head of Forex, Sasfin Bank.

“Correctly managing the highs and lows can set businesses apart from their competitors and reduce financial risk. However, this isn’t an area business owners are necessarily skilled in. They should be focused on managing their businesses and access to market. Experienced forex and treasury management teams can guide them through the export, import and foreign exchange process.”

Managing Risk

“If you don’t have a proper treasury policy in place — and many SME importers do not — you could price your goods incorrectly or not take exchange rate fluctuations into consideration,” explains Rob.

“As an example, you could plan to sell imported widgets for R12, but it ends up costing you R14 or R15 just to import the goods. Situations like this can cause serious damage to businesses and their cash flow.”

Related: Sasfin Is Gearing Your Company For Growth

Sasfin’s Forex department has two core functions: 60% of the business facilitates trades in and out of the country, as well as personal foreign exchange. The other 40% of the business focuses on managing the risk for clients involved in exporting and importing products.

Pre-determined Costs

A treasury department’s role is to manage a business’s risks, depending on the company’s risk appetite. What does this look like in terms of foreign exchange controls?

“If your costing is perfect and you’ve got an appetite for risk, you might only want us to manage 40% of your foreign exposure, for example,” explains Rob.

“The rest you’ll leave open to the movements of the exchange rate. In terms of the 40% we manage, we use forward cover to fix your costs at a predetermined time and price. You know that you have a shipment of cellphones coming in in three months’ time, and you’re sourcing the goods at $12 per unit. You can come to us and request a fixed price for that shipment in three months’ time, based on the current exchange and what the goods are costing you. In this way your expenditure and costs are fixed — you know exactly what you will need to spend when your goods arrive (or at least for the percentage of the deal that you’ve asked us to manage), and you’re not at the mercy of exchange rates. With a volatile currency, the cost could be $8 or $16 by the time your goods land.

“With a strong treasury policy in place you can work out where you need to protect yourself and where you can take a bet on the Rand being stronger than the current exchange rate.”

The Sasfin Difference

Sasfin Forex offers a unique range of specialised services and solutions that reduce loss of revenue and increase competitiveness and market share.

Related: CEO Michael Sassoon Shares Sasfin’s Successful Strategies To Stand The Test Of Time

The Sasfin Difference

Currency volatility is internationally regarded as one of the top five business risks. When it comes to foreign exchange it is therefore important to partner with the experts; to place trust in experience, skill and knowledge. As an authorised dealer in foreign exchange, Sasfin Forex prides itself on its ability to execute foreign exchange transactions at the right price in volatile markets in the most professional manner.

  • Competitive exchange rates
  • Direct access to our dealing room via our online system or telephonically
  • Competitive bank transaction fees for foreign transfers and receipts
  • Electronic documentation flows
  • A business hinged on excellent, personalised customer service
  • Additional value to the transaction (freight, trade finance, marine insurance 
and more)
  • Payment instruction forms at the click of a button
  • Assistance with private FX investment transfers.

 

Sasfin Corporate Finance focuses on providing innovative commercial and banking solutions to our clients. As an accredited sponsor and designated advisor with the JSE, we offer our sponsor and designated advisor clients independent advice on a full range of corporate finance transactions including advice relating to continuing obligations in terms of the JSE Listings Requirements. Sasfin Capital is a division of Sasfin Bank Limited, a subsidiary of Sasfin Holdings which listed on the JSE in 1987

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Company Posts

Rethinking Learning In The 21st Century

The changing world of work has disrupted the three elements of the traditional ‘career’: Expertise, duration, and rewards.

Wits Plus

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Traditionally the concept of a ‘career’ was considered to include three elements:

  1. A career represented our expertise, our profession, and ultimately our identity.
  2. A career was something that built over time and endured. It gave us the opportunity to progress and advance.
  3. A career gave us financial and psychological rewards. It made life meaningful and paid us enough to live well.

The changing world of work has disrupted all three elements: Expertise, duration, and rewards.

A career can now be as long as 60 years; at the same time, due to rapid advancements in technology and the changes that bring about in the workplace, skill sets can become obsolete in as little as five years.

Increasingly, companies need to rethink the way in which careers are managed and learning opportunities are delivered, and many have already begun to overhaul their career models and L&D (Learning and Development) infrastructure in line with the digital age.

Related: Your Investment In Knowledge

Employees’ learning behaviour is also changing. In the past, employees were able to obtain the skills required for their career early on and as a once-off; now, the career itself is a journey of learning, up-skilling, re-skilling and continuous reinvention to remain relevant and to thrive in the changing world of work.

Older employees who studied at a time where most of one’s learning occurred prior to entering the workplace, find themselves working alongside millennials who place greater value on learning and progression rather than on earning potential as a first priority.

Eighty-three percent of the respondents surveyed in Deloitte’s 2017 Global Human Capital Trends survey say their organisations are shifting to flexible, open career models that offer enriching assignments, projects, and experiences rather than a static career progression.

However, in today’s fast-paced business world, even if companies are restructuring L&D delivery, no one is going to make you engage in a strategy that is essential to your future success – continuous learning. You will have to take the initiative yourself.

Noted self-help expert W. Clement Stone, in his many writings on this topic, recommended that one spends anywhere from a half-hour to two hours a day in study and thinking time. This tireless dedication, combined with an insatiable curiosity, will equip you to excel in the future world of work. What’s more, learning new skills and knowledge can be fun!

The good news for both companies and for employees is that an explosion of high-quality content and digital delivery models offers employees ready access to continuous learning. The Wits DigitalCampus offers a range of accredited and fully online short courses to support your continuous learning.

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Company Posts

Your Investment In Knowledge

When you understand the value of knowledge, in this world where technology is rendering previously expensive products or services much cheaper (and even free), it’s just a matter of getting more of it. Dedicate yourself to constant learning!

Wits Plus

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Most people spend their lives collecting, spending, and worrying about money — so much so, in fact, that they say they “don’t have time” to learn something new.

However, some of smartest and busiest people in the world — Barack Obama, Warren Buffet and Bill Gates — all spend at least one hour a day on deliberate learning. They see what others don’t: That learning is the single best investment of our time that we can make. As Benjamin Franklin said long ago, “An investment in knowledge pays the best interest.”

When you understand the value of knowledge, in this world where technology is rendering previously expensive products or services much cheaper (and even free), it’s just a matter of getting more of it. Dedicate yourself to constant learning!

One of the very benefits of ongoing technological advances is that it empowers an accelerated and personalised learning experience that puts the learner in the driver’s seat. Modern learning harnesses the speed, power and ubiquity of digital capability. Online platforms, software and mobile devices means that the traditional hurdles to learning — such as income, status and location — have just about disappeared. Knowledge can now be gained by anyone with the passion to pursue it and the commitment to stick with it.

Related: Building Customer Relationships

We are only at the tipping point of what future learning technology can deliver. Artificial intelligence (AI) will transform all aspects of human capital management, including learning. Technology-enabled learning will be immediate and directly relevant to the task, for example:

  • personally tailored learning content and experiences delivered to you as and when you want or need them
  • chatbots and virtual assistants can source and categorise the information that you need for optimal decision-making
  • augmented and virtual reality simulations can provide a multi-sensory experience to speed up and embed learning.

Additionally, social connectivity already enables user-generated content to outpace and outstrip what traditional education and learning institutions can deliver.

Knowledge may be the new money but, unlike money, you don’t lose it when you use knowledge or give it away. Transferring knowledge anywhere in the world is free and instant. It’s fun to acquire and it makes your brain work better. It helps you think bigger and beyond your circumstances. It puts your life in perspective by essentially helping you live many lives in one life through other people’s experiences and wisdom.

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Company Posts

Are You Struggling To Find Financing For Your SME? Try Alternative Finance

If you don’t qualify for traditional funding or if it isn’t the right fit for your SME why not explore alternative funding? We specialise in alternative financing options by providing in-depth and custom plans for you and your business needs.

Spartan

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Alternative Finance is finance beyond the traditional – it is defined by the financiers’ area of specialisation – by what they specialise in, whom they serve, and how they provide their funding. It does not replace traditional finance but rather functions as a complementary and additional form of funding.

Alternative financiers are specialists – they focus on a particular need and on a specific audience. As a result their ‘how’ is customised to deal with their chosen target market and for this targets unique needs. This applies to the funder’s processes and to their level of flexibility around things such as collateral.

An example of this is that a SME may have an existing R1 million overdraft (their traditional finance) secured by R 1.5 million collateral but suddenly they need R5 million for some kind of contract or bridging finance – they need it fast and don’t have that extent of collateral.

The traditional funder cannot provide what they need, their process is too long and their flexibility is too low. An alternative financier providing bridging finance and specialising in SMEs is ideally positioned to fill this gap.

One of the most significant differences between a traditional funder and an alternative financier is in their process. In the case of the alternative financier, they have often chosen to deal exclusively with a particular customer base, for example SMEs. As a result, this funder has both an affinity and contextually relevant empathy in working with SMEs.

Not only do they speak the same language the funder also has an appreciation for the time and material constraints of the SME and has developed their processes to cater to this market. This applies most notably to the turnaround time of the funding need and to the assessment aspect – where flexibility around things such as collateral is vital in making the finance happen for the SME.

A traditional funder is unable to meet the deadline of a bridging finance need, submitted on an urgent basis, where the finance is needed as soon as 2-3 days from time of application. A specialised or alternative funder is able to do exactly this. A traditional funder is also unable to find creative methods in solving the SMEs lack of high-value collateral in applying for finance.

This SME has generally already used their high-value collateral for traditional credit facilities but now needs funding for growth or resolution of a temporary cash flow challenge. An alternative financier is able to look at such an application in a different way, and has most likely already established alternative ways to make this happen for the SME.

Related: 5 Key Questions To Answer For Raising Funding

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