Speak to your banker before signing that import/export contract

By: Michael Thomas, General Manager: Global Trade at Nedbank CIB 

Cross-border trade offers enormous opportunities for development and growth in South Africa. In 2015, South African exports totalled almost US$ 70-trillion. Total imports for the same year came close to $80-trillion. This means approximately $150-trillion crossed our borders in one direction or another, either in the form of payments or receipts for cross-border trade. That’s a significant amount of money in anyone’s book – and South Africa’s banking sector is robust and scalable enough to handle those sorts of volumes.

However, there are many factors to consider outside of the transactional capabilities of cross-border trade. One of these is cybercrime, which, as a global business, has become profitable for crime syndicates.

Businesses are now acutely aware of the risks associated with electronic banking and communication, particularly when it comes to making or receiving foreign payments. There are various measures that you can take to mitigate the risk of falling victim to cybercrime when dealing with foreign companies.

  • Be circumspect when you receive notice of a change in banking details. Don’t accept these communications at face value. Always call your trading partner to verify any new details before making payments. It is important that you make the call yourself to make 100% sure you are speaking to the right people.
  • Never trust a deposit slip. Check your bank statement to ensure deposits have cleared before releasing any goods.
  • Always deal with a reputable local bank to minimise the risk of being caught short. If in doubt, speak to your bank representative. He or she will be able to follow up on any suspicious transactions before the damage is done.

Compliance

Another factor to consider when trading across borders is the regulatory environment. Each country has its own set of rules and regulations that govern the movement of goods and foreign currency. These are subject to change at a moment’s notice, often leaving the importer or exporter in a quandary. Access to expert knowledge in terms of the requirements determined by the various regulatory bodies governing global banking is key.  Having a trusted banking partner to guide you through this process can reduce delays in transmission of funds and prevent financial loss.

For example, the American trade embargo on Cuba is still in effect, even though diplomatic and other relations between the two countries have thawed. The embargo has a direct impact on how South African companies trade with Cuba as most of these trades are executed in US dollars. Typically, US dollar trades go through American banks that pick up the transactions and prevent the payments from going through. In extreme cases they may even confiscate the money.

This is just one example of how a particular regulatory environment can hamper cross-border trade for South African companies. There are, of course, many more. The fact with compliance is that there’s no choice. You either comply, or you go out of business. Compliance requirements should, therefore, make up a key part of any company’s cross-border trading strategy.

Again, there is much to be said for dealing with a reputable local bank when it comes to trading within the rules. Banks deal with international trades on a daily basis and have the local knowledge, contacts and – if required – the critical mass to help companies of all sizes to navigate the sometimes tricky waters of global trade.

So before you finalise your international trade agreements, speak to your trade and working capital specialist, your expert in global trade to help you transact safely and securely.

You have shown interest in this article, you might find this article “Mobile business banking: The future is now” relevant as well. 

By | 2021-06-08T00:16:45+02:00 October 10th, 2017|Transactional Services|0 Comments

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