+27 (0) 21 205 1980 info@domisa.co.za
FSP No 47661

Importing and exporting solutions

Importing & Exporting Solutions

Risk Management for Importers and Exporters in the South African Landscape

The entrepreneurial voyage is not for the faint of heart. Regardless of your industry, obstacles are faced daily, competition is fierce, and the landscape is everchanging, which collectively has an impact on your business.

The adage that, “we cannot direct the wind, but we can adjust our sails” holds a great deal of bearing for the South African landscape. Sources of systematic shocks are abundant, and it is therefore important to apply a clearly planned risk management framework.

Managing Exchange Rate Risk

A common risk that South African importers and exporters face is exchange rate risk. The volatility of the Rand is a great cause of concern to both importers and exporters, as their bottom line is directly impacted by the relative weakness (or occasional strength) of the Rand.

Exchange rate risk will unfortunately never be fully removed, but it is possible to smoothen its effects by entering a forward contract or by making use of a foreign currency account.

Forward Contracts for Exchange Rate Risk Management

Entering a forward contract removes exchange rate fluctuations, as the amount of domestic currency needed for the purchase of foreign goods (denominated in foreign currency) is specified in advance and therefore hedged against any adverse price movements.

Forward contracts are traded over the counter through authorized intermediaries, which would typically charge a fee (or a mark-up on the exchange rate) for their services. From an exporter/importer’s perspective, it is important to gain an understanding as to how much you are being charged and how that rate is calculated.

Foreign currency accounts are another efficient route to instruct bulk payments or to mitigate foreign currency risk.

Our Risk Management Services

In addition to the above, Domisa offers:

  • Treasury Outsourcing (managing of payroll and miscellaneous invoices)
  • Cash Forecasting for both actual and estimated future commitments
  • Free Foreign Exchange Consultations
  • Management of all balance of payments and South African Reserve bank applications
  • End-to-end compliance
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Please note: We do not exchange physical cash notes, we only exchange money via electronic bank transfers.
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