Trade finance made simple: opt for a 'one-stop-shop' approach

In the pursuit of operational excellence, businesses consistently seek avenues to enhance efficiencies and secure the right assets essential for their operations.

Central to this strategic imperative is the assurance that productive assets deliver the required quantity and quality output. 

Concurrently, there is a pressing need to manage cash flow effectively amid economic challenges such as the energy crisis, escalating labour costs and rising interest rates.

To stay competitive in the dynamic landscape of local and international business, a focused approach to asset optimisation becomes imperative.

One proven method to boost efficiency involves expanding or upgrading a company's productive asset base. While this may incur short-term costs due to financing and implementation, the long-term benefits encompass substantial cost savings, improved efficiencies and the generation of new revenue streams.

However, navigating the realm of productive asset acquisition, whether locally or internationally, poses unique challenges.

International sourcing, in particular, introduces complexities such as:

• Challenges in identification and negotiation: Engaging with foreign suppliers can be arduous, given language barriers, differing business practices, and the inherent “trust gap”, especially when dealing with new suppliers.
  
  
• Logistical complexities: Managing the importation of equipment involves understanding shipping terms, determining roles and responsibilities between buyer and seller, and navigating the intricacies of logistics — tasks that can be daunting for first-time or ad hoc importers.

• Comprehensive pricing considerations: Pricing considerations extend beyond the equipment cost, encompassing logistics, insurance, customs, and duties from both countries.

• Foreign currency exposure: Hedging foreign currency exposure is crucial to mitigate the impact of volatile exchange rates during the import process.

In the face of these challenges, partnering with Merchant West emerges as a sensible strategic solution.

As the largest independently owned asset finance provider in SA, with a commendable 25-year track record, Merchant West offers tailored trade finance and asset-based finance solutions that cater to diverse client requirements.

Merchant West's trade finance solution entails financing capital equipment before it arrives in SA. The company settles the supplier in full, based on agreed milestone payments, providing facilities on an open account or documentary basis.

To hedge foreign currency exposure, Merchant West Treasury Solutions offers competitive rates.

Additionally, Merchant West finances the costs related to equipment movement, including export, local clearing, customs, duties and third-party charges.

With an approved panel of international logistics partners, Merchant West facilitates the physical movement of financed capital equipment. This comprehensive approach allows for a “one-stop-shop”, addressing both physical and financial supply chain needs. By partnering with experts in their respective fields of operation, clients save both time and money.

Once the equipment arrives in SA and the supplier is settled, Merchant West's asset-based finance solutions come into play, providing further financing for up to 60 months on an amortising loan basis with finance costs linked to the prevailing prime rate.

Choosing to partner with Merchant West in financing imported capital equipment guarantees peace of mind. The assurance that the supplier will be paid promptly, currency risks hedged, and logistics costs effectively managed creates a sense of comfort and confidence. This enables businesses to redirect their focus to what matters most — their core operations.

This article was sponsored by Merchant West.