The effects of imports on business growth are not direct, but importing goods or services, whether in terms of raw material (for manufacturing) or wholesale (for resale) can help cut costs, particularly when sterling is strong. This could potentially contribute to the revenue required to generate business growth.
Whether you’re considering importing raw or half-finished materials or ready-made goods or services, there are some key finance issues that you should be aware of. Carl Hasty, Director of international payments specialist Smart Currency Business, offers these top finance tips for importers:
Perform a full cost analysis
You could theoretically accrue more costs from importing than if you acquired the same goods or services locally, but businesses may find that these costs pale in comparison to the savings borne by bulk-buying from certain overseas markets, particularly when sterling is strong (you’ll be able to afford more for each pound sterling spent). Remember to factor in costs like international delivery and potential customs fees.
Opt for trade finance
Trade finance is a popular method of finance that provides assurances to both importers and exporters. As an importer, you should obtain a letter of credit, which essentially guarantees payment to your overseas supplier upon delivery of goods. Once the goods have been shipped, the overseas supplier will receive payment. Trade finance guarantees that you will receive goods ordered, and can also vouchsafe payment to your overseas supplier.
Know how to maximise profits by minimising currency costs
Currency specialists will be able to help you find the right currency-purchasing solution for your business. Whether it’s taking advantage of live rates, booking favourable rates in advance for future purchase or setting maximum or minimum rates, timing and forward planning are key to minimising losses on international money transfers.
Protect your business by opting for insurance
Protect your business from unexpected hitches in importing by opting for relevant types of insurance, so that you’re covered in the event of non-delivery or damaged goods.
Any potential costs saved by importing can make a real difference to a business’s bottom line. This profit can then be re-invested into further plans for growth.