Does the US Dollar exchange affect your business? Do you pay for suppliers overseas or does your business indirectly get affected hugely by the foreign exchange?
Well, ours does. And through all the years we have had many ups and downs in this area.
As importers ourselves, we understand firsthand how the US Dollar exchange can make you lose huge amounts of money in a matter of minutes. Generally, this is not such a concern if you’re outside of South Africa, but when you trade from inside of SA and you are paying suppliers outside of the country or even your customs fees and landing costs of shipments, the US dollar affects everything.
Due to our country’s currency that fluctuates so much during 1 day of trading, you could be paying anywhere between 10c up to over R1.00 more per dollar. This has happened to us so many times and we have learned to buy/pay and settle on an exchange rate and move on. Because once you pay, you cannot stop the transaction.
I remember one specific day in 2008, we only had our business just over 1 year and we had to pay a big invoice, however after I went to the bank and submitted the invoice for payment, the dollar strengthen in SA favour and went down with 58c in a matter of 2 hours. I was devastated. I run back to the bank, spoke to the bank managers, demanded for my payment to be stopped, but nothing could change it. We lost over R15 000 (Just over $1000) on that day due to the exchange rate. It was devastating, especially when you are a new starting business trying hard to make it work and even more so if its due to the exchange rate and nothing you did or someone else did to your business.
We then decided not to look back after paying invoices, but to learn from it, keep our eyes open to the exchange, trying to watch the weekly exchange and measure for ourselves when would be the best time to pay, and once we paid, we moved on.
Due to this specific currency exchange platform we find ourselves in, we have implemented price checking on all stock items every month. And if the exchange rate has affected our selling price versus our cost too much, we need to make the correct adjustment as needed. Always be ready for change. Do not let it surprise you or catch you off-guard. Plan for price spikes and also for product changes.
Maybe you can relate, or maybe you can learn from us. But this is one area we can share some advice and guidance to you if you are working with overseas suppliers. Our businesses are structured this way, so we can save money in all the small areas, as you never know when the unforeseen can come up.
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Till next week,
Have a fantastic day.