Despite all the turmoil and challenges being experienced on all fronts during 2021, it is my view that the quote, “the more things change the more things stay the same” still applies. In the context of today’s blog, it means “the more things change, the more the BASIC business principles and philosophies stay the same”.
After all the quote was coined 170 years ago in France by Jean-Baptiste Alphonse Karr in 1849, the year after the French revolution.
As previously mentioned, most people and businesses in the world are currently experiencing parallel disruptive/chaotic events spearheaded by a pandemic and major economic turmoil.
However, I firmly believe that we, as humans, have been given the ability to always create discipline from chaos and we will time-and-time-again, repeat history by finding solutions and altering and reshaping the way we do things to survive, and succeed! In this regard we are greatly assisted by the innovations and capabilities that are created through the “fourth industrial revolution”.
“the more things change, the more the BASIC business principles and philosophies stay the same”.
Businesses operating in the critically important import/export landscape should continue applying good business principles and maintain existing and established business relationships.
Foreign exchange intermediaries like BeztForex have an important role to play in providing foreign exchange services to clients. Foreign exchange intermediaries specialise in foreign exchange and global trade, so they are able to share and offer their expertise and experience to clients for the benefit of the client.
Let’s quickly recap why importing/exporting is a vital economic activity of any country.
It boosts development & reduces poverty in countries through increased commercial opportunity and private sector development that in turn leads to the generation of new growth. This ultimately generates growth in foreign exchange earnings and broadens the tax base!
It enhances competitiveness as companies are compelled to reduce cost of inputs, acquire new finance through investments, increase product value-add/innovation, and drives them to move up the value chain!
The opening of new markets is driven by a country’s willingness to open its doors to global trade opportunities. This in turn results in the expansion of opportunities for local companies.
Here are 10 tips for Importing/Exporting companies for 2022, by the BeztForex Specialists:
TIP 1
"Keep emotion out of the equation when deciding when to buy/sell foreign exchange. Rather base your decisions and actions on sound risk management and risk appetite principles." - Herman Bezuidenhout
TIP 2
Buying 100 Forward Cover all the time is equivalent to taking an extreme view about the currency, so is not buying Forward Cover at all." - Eddie Rall
TIP 3
"Education, Information, Diversity and controlling your emotions are all key to successful decisions regarding foreign exchange. Broaden your knowledge base regarding global trade. It is vital that you stay abreast of latest developments, especially as it relates to the digitisation evolution in global trade." - Lynn Jacobs
TIP 4
"Stick to your knitting and remove as many of the variables as possible" - Gunter Joachim
TIP 5
"Foreign exchange cost is often overlooked in the overall supply chain cost of landing goods/services. Ensure you have a strategy in place to manage this variable and more importantly do not erode margin when the currency moves in your favour" - John Darling
TIP 6
Choose a specialist service provider to enable your company to have access to expert skills and information 24/7. This will greatly assist your company to be both effective and competitive” – Herman Bezuidenhout
TIP 7
“Ensure that you fully understand all the components of costs and charges as it relates to both the physical and financial supply chain elements of your transactions. This will include:
The total cost included in overseas payments and the cost of Foreign Exchange transactions. This is often taken for granted and financial institutions take advantage of clients not always fully understanding all the layers of gross-border payment charges.
Cost of freight payments and the cost of clearing your goods. Ensure that you are getting fair pricing in this regard.
Ensure that the correct marine insurance cover is in place at a fair price. Inadequate marine insurance can be disastrous.”- Herman Bezuidenhout
TIP 8
“Protect your company against any risk of non-payment by overseas importers if you are an exporter and ensure that you receive the correct quantity and quality of goods if you are an importer”- Herman Bezuidenhout
TIP 9
“Always be conscious about the importance of the exchange rates and actively manage potential the risks to your business relating to volatile currency rates fluctuations. For Importers, there is no point sitting back hoping for exchange rates to improve, in order to be competitive. Judicious use of hedging instruments like forward exchange contacts can be most beneficial.”- Herman Bezuidenhout
TIP 10
“When consider availing of Trade Finance to fund the growth in your business, always maximise the most cost-effective ways (e.g., overdraft facilities) first before considering the more expensive Trade Finance options”- Herman Bezuidenhout
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