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Minimise risk with trade partnerships

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Trading with offshore partners can be filled with both potential and peril. But there are strategies to manage the risks associated with importing and exporting, and benefit from them. For young tourists, the two greatest risks associated with travelling are getting lost and losing their money. Either is traumatic, but having both occur simultaneously can devastate the best and most meticulously planned itinerary. Australian businesses travelling offshore in either an import or export capacity are equally at risk of ending up in an unfamiliar landscape with depleted finances thanks to the unique risks associated with importing and exporting. But these risks can be both managed and transformed into opportunities that can ultimately benefit the business. Importers and exporters need to be absolutely certain of their access to funds. Trading cycles - both domestically and internationally - can be volatile depending on macroeconomic and sectoral factors, so Australian businesses need to make sure they partner with an organisation that can facilitate transactions as needed. National Australia Bank’s Trade Finance specialists provide solutions based on working capital finance and risk management to Australian businesses-from large retail, wholesale and institutional clients to small to medium-sized enterprises-that require flexible finance to support their trading cycles at home and abroad. Two key risks Australian exporters and importers face are related to interest rates and foreign exchange (FX). Adverse movements in either of these markets can result in a direct impact on profit and loss, reduced cash flow, higher costs or an inability to take advantage of growth opportunities. When a client borrows money for trade finance, or for any other borrowing requirement, they are taking on risk related to interest rates. The Reserve Bank of Australia has indicated that Australian interest rates will continue to rise towards average historical settings, so mitigating the risk of an adverse interest rate movement is critical for Australian businesses. Depending on the tenor of that finance and how long the trade cycle lasts, there is an opportunity to manage that interest rate risk with a tailored solution that can deliver a known interest rate level or map out a worst case scenario. Businesses dealing with suppliers or customers offshore are also exposed to FX markets. Movement in FX markets can have a direct impact on reported profit and loss as many clients, such as importers and exporters, make or receive payments denominated in foreign currencies. On conversion to the AUD, these payments can change in value from one day to the next depending on the relative value of the currencies involved. With the recent trend of the AUD now rising towards parity with the USD, importers and exporters may wish to think through how they can benefit from that movement or mitigate its effects on their business by speaking to a NAB FX specialist. Journeying offshore can be both exciting and risky, but you don’t need to travel alone-NAB can go with you. So, if you want to benefit from a partnership that’s prepared to understand your business as well as it understands foreign trade, let’s talk. Talk to a NAB FX specialist on 1800 019 215, or a trade finance specialist on 13 10 12 or visit www.nab.com.au/tradeoverseas

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