Finding the right partner makes all the difference
Consistent and relentless innovation in business is more important than ever with recent months having seen much attention placed on the state of SA’s credit rating, as well as rising commodity prices and a volatile currency market, according to Adam Orlin, head of Investec import solutions.
He says companies, irrespective of industry, have to be agile and innovative to overcome the turbulent market conditions and unpredictable changes to business circumstances.
“Decision makers need to find ways to be more costefficient, while still maintaining a semblance of growth — and despite challenging conditions, there are still significant opportunities for businesses looking to import.”
IMPORT SPECIALIST
Orlin says using a single provider that can be the one point of contact in the import process can mean the difference between maintaining effective business growth and stagnating due to external factors. In addition, a high value import specialist will be able to finance the cost of goods as well as the forwarding and clearing costs.
“For business limited by cash flow, this is a lifesaver. Having that one point of contact to oversee the entire process means decision makers can stay focused on sales and marketing activities.
“The issue of business support — in terms of limited cash flow and funding — has always been a major challenge for most such companies; however, a simple solution of managed debt can, in fact, be a far more cost-effective form of financing your shipping requirements — beyond equity, giving you just the right working capital to get that shipment off the ground.
“Stable and well-established businesses have both the assets to borrow against as well as the cash flow to service the loans and, as such, managed debt financing can make real business sense.
“Finance specialists, commercial property structuring and debt advisory skills are underpinned by their exceptional market knowledge and experience. They have the ability to execute quickly to give their clients the competitive advantage and they believe in partnering with their clients to provide maximum growth and flexibility. Debt financing helps companies maintain and run their business without the bank’s influence on how they use the money.”
Orlin gives a few tips to take into consideration when financing through debt:
● The company has to have a revenue stream to qualify as risk evaluations are based on ability to pay back the loan;
● The company must have assets to secure a loan. Lenders might need to look for assets to secure a loan or personal assets to guarantee payback. If you would like to get a loan be prepared to put your personal assets at stake if you do not have a lot of company assets;
● Pay off your loan quicker — when paying back the loan, pay more than the minimum required. That way you can pay off your loan faster and you can apply for another loan after the first one is paid off;
● Self-funding can limit growth — self-financing companies can find themselves in a position where they run out of cash and
become desperate for financing. This can lead to loss of leverage. As a result businesses need capital to fund their growth;
● Take debt for bigger expenses — every business has different funding needs, but certain warning signs signal that a company is taking on too much debt. A healthy company should not be taking on debt for operating expenses, but for infrastructure or asset acquisition for growth;
● Businesses should be able to attract finance — this may also mean that the business owner has to put up their own money and invest in their business idea, which shows they have faith in the enterprise. You can’t limit yourself and you have to exhaust all avenues when trying to secure funding, but your offering needs to be believable and potential investors need to see a return on investment before you can even start talking numbers.
UNLOCK VALUE CHAIN
Unlocking the value chain has become critical as businesses set to tighten their belts. Orlin says that finding the right partner to help manage your import process and associated finance component effectively within the overall supply chain cycle can go a long way to saving businesses not only money, but endless frustrations, delays and implications that could have a negative effect on the business — in a time that they cannot afford one.
DECISION MAKERS NEED TO FIND WAYS TO BE MORE COST-EFFICIENT, WHILE MAINTAINING A SEMBLANCE OF GROWTH