Nedbank Business Banking helps you manage Covid-19 global trade challenges

Solutions for businesses that trade globally include short-term overdrafts and tailored trade finance facilities with extensions

08 July 2020 - 07:42 By Patricia Holburn
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With solutions from Nedbank Business Banking, SA’s export businesses can manage their global transactions and continue to trade successfully.
With solutions from Nedbank Business Banking, SA’s export businesses can manage their global transactions and continue to trade successfully.
Image: Picture: 123RF/Anek Suwannaphoom

The year 2020 has been tough for businesses that trade across borders. Supply chains were disrupted when many countries closed their borders to all but essential supplies, demand declined as pandemic uncertainty took over, and exporters had to deal with a volatile local currency. SA’s export industries were particularly hard hit when Covid-19 lockdown regulations came into effect. 

Managing cash flows and export income may be more challenging, but with solutions from Nedbank Business Banking, SA’s export businesses can manage their global transactions and continue to trade successfully.

The bank’s team of business bankers recognises that businesses need extra support in these times, and has experts and solutions to help businesses manage their cash flows. In addition to their specialised solutions for exporters, Nedbank Business Banking also offers short-term working capital solutions as well as tailored trade finance facilities that can be extended.

Cash flow problems solved

Cash flows have become more challenging for exporters in the face of low demand, slow or changing supply chains, and a volatile currency. Forward cover contracts used by businesses for a degree of certainty around future income can mitigate some of these challenges, but not all. 

Low demand and rand volatility have increased the potential for a mismatch on forward cover contracts, which puts cash flows under pressure, limiting the business’s ability to meet its obligations on time, and to fund further production and exports. 

Delayed export proceeds or an inability to receive proceeds due to restrictions has also meant that forward exchange contracts cannot always be used or fulfilled. Businesses have had to deal with the possibility that they have to fund a negative cash flow difference when a forward exchange contract is unwound.

Nedbank Business Banking offers clients solutions to alleviate the resulting cash flow pressures through short-term overdrafts or the extension of trade finance facilities. Export factoring could also greatly assist in cash flow pressure, as Nedbank can advance up to 80% of the invoice value in the foreign currency to exporters, thereby reducing exchange rate risk. With cash flows restored, businesses can continue to operate and pay staff and suppliers.

Tailored solutions for global businesses

These solutions are in addition to Nedbank Business Banking’s range of products and services for their business clients that trade internationally. 

The bank offers a foreign currency account that is ideally suited to exporters as it can be used to manage foreign currency receipts and payments. The account also provides flexibility for advances and settlements.

Nedbank Business Banking offers businesses several solutions to manage cross-border trade transactions.

The bank’s funded solutions include rand trade loans, discounting export letters of credit, and a full suite of pre- and post-shipment trade finance products. In addition, clients have access to solutions to help them with supply chain finance. 

Nedbank Business Banking’s global payment services ensure clients can make and receive international payments easily and quickly. Payments are settled through encoded SWIFT messages, so the transaction takes place in a completely secure environment. Clients can also use NedTreasury, an online platform for global transactions, to make payments, track transactions and book forward exchange rates.

Nedbank Business Banking has a team of experts ready to help clients with the management of day-to-day export challenges and unique challenges arising from unplanned and new situations, such as the one that Covid-19 presents. 

Global trade may have declined in the past few months, but much of the world still relies on trade for essential goods, commodities and, ultimately, future economic growth. Nedbank Business Banking is ready to partner with business with solutions, expertise and advice to help it take advantage of both the challenges and opportunities presented by today’s tough climate.

Visit Nedbank Business Banking for more information.

This article was paid for by Nedbank Business Banking.