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Commodities and manufactured goods could not move between
continents without the support of a trusted banking partner.
The assurance of smooth and reliable payment keeps the trade
wheels turning.
The foreign currency specialists at Bidvest Bank not only
secure optimum exchange rates and provide forward cover they also supply a
range of complementary services to importers and exporters.
For instance, trade finance in transaction currency is an
increasingly important tool for companies with a solid financial position or
those providing adequate security.
To give an example; a company may expect payment in US
dollars for beneficiated goods containing an imported element that in turn has
to be paid for in dollars.
It often makes business sense to settle the import account
after obtaining a loan (trade finance) denominated in dollars, knowing pending
payment for the finished goods will more than cover these input costs.
Such transactions are not only convenient, they avoid
currency risk.
Dollar borrowings like this have beenare permitted for many
years by the SARB.
Importers with longstanding relationships with their
suppliers often negotiate an open account with their offshore partners, giving
them perhaps 90 days' revolving credit.
In most cases, however, Letters of Credit from a reputable
banking partner (in effect a line of credit from the bank) will be required.
This instrument stipulates a set period and financial amount
and lists various terms and conditions, including insurance verifications and
documentary proof that the stipulated goods have been loaded, shipped and/or transshipped
on time and in good conditions specified.
Bank guarantees for a specified sum and period can also be
provided to trusted clients and require much less documentation.
Trade facilitation via instruments like this is core
competence at a corporate foreign exchange specialist like Bidvest Bank.
