Standard Cash Flow and Operational Cycle
The cash flow cycle of an importer in South Africa is characterised by long lead times before goods are distributed and then an equally long wait for customer payments to be received. Research puts this at an average of 115 days for capital outlay between the foreign supplier payment and accounts receivable, placing a strain on cash flow.
The Introduction of Turners Trade Finance into the Financial Supply Chain
Introducing Turners Trade finance eliminates the burden of financing the process from the business’ cash flow. The supplier is paid up front, allowing the customer to negotiate an early settlement discount to offset the local finance cost, as well as lock-in the rate of exchange to fix margins. The 120-day term provided means the product can be manufactured, imported and delivered, sold locally and paid for before the customer settles the account with Turners Shipping.
Features and Benefits
- Off-balance-sheet financing
- Simple payment application procedure
- B-BBEE procurement points advantages
- SA Rand transaction, therefore, no forward purchase requirement
- Reduced Forex risk
- Possible discount on the purchase price
- No Letter of Credit costs/complications
- Highly competitive rates and terms
- Full costing facility
- Total visibility on each shipment (Shipment status report)
- Extension on, and improved, working capital and cash flow