Most South Africans do not know about the Absa trade and working capital. If you are among them, read through this guide to learn.
This fund is essential to mitigate trade risks, ensure payment security and maximize your working capital.
Absa helps you meet your local and international trade objectives through the various trade and working capital solutions.
We will elaborate further on these solutions.
Absa Trade And Working Capital
Absa helps you manage your business’s risks involved in trade through specialized finance and guarantee solutions that ensure payment and even out cash flow.
You get trade products to help manage risks, negotiate credit terms, reduce pressure on cash flow, and trade confidently and efficiently.
There are two common trade and working capital solutions offered by Absa.
- Documentary solutions
- Letter of credit
Now that you understand the Absa trade and working capital, we will show you how the documentary solutions work in South Africa.
What Are The Documentary Solutions
These are solutions to help you make and receive international payments securely.
Export documentary collections are a simple and efficient way to collect payments for goods you export.
The exporter needs to send documents that allow access to the goods being imported to their bank along with a bill of exchange requesting payment according to the agreed terms.
Payments are requested either immediately on presentation of the collection to the importing customer or on an agreed future date.
The importing customers are required to endorse the bill of exchange by signing it for term payments before they receive the documents allowing them access to the goods.
Signing the bill is essential to indicate that they have accepted the bill.
Import documentary collections offer you a safe and secure way of sourcing products globally to help increase your business opportunities.
There are two types of import documentary collection documents, namely:
- Documents against acceptance
- Documents against payment
The exporter sends documents to allow access to the goods, and payment is requested for insight payment or on-term payment.
This is how the documentary solutions for Trade and working capital work in South Africa.
We are now going to show you how the letter of credit works.
How Does Letter Of Credit Work
The letter of credit covers your trade risks and guarantees you payments once you provide all the required trading documents.
There is the export documentary letter of credit and the import letter of credit.
The import letter of credit will provide you with valuable risk mitigation tools to assist with international trade transactions.
This is all you need to know about Absa trade and working capital in South Africa.