Q&A: How we can help manufacturers with specific business needs

Day-to-day banking

What are the specific challenges manufacturers face with cash flow, and how can the bank help businesses with their unique financial needs?

Manufacturing businesses tend to experience peaks and dips in cash flow between production cycles.

Usually, manufacturers need to pay suppliers and production expenses first before goods are sold and payments are received from customers.

The businesses then require funds to bridge the gap between paying for expenses, like raw materials and rentals, and receiving payments from customers.

Also, as you grow your business you would need to increase your turnover, and achieving this requires the business to increase the debtors’ book.

But extended payment terms of 30, 60 or 90 days and bad debt can result in additional cash flow pressures.

We understand these unique industry challenges and provides solutions to assist with improved cash flow management.

Foreign exchange and international payments

What are some of the challenges manufacturers face when importing and exporting materials and goods?

Making cross-border payments when importing and exporting can be an arduous task for business owners. Often, there are complex regulatory environments that businesses have to navigate, and confusing forms that have to be completed.

The agreement signed with a supplier may make provision for specific payment shipping terms, such as advance payments, letters of credit and guarantees required.

When importing and exporting, there is also always the risk of foreign currency fluctuations, which manufacturers need to be aware of and manage.

Currency variances can result in price increases, which will have a direct impact on the business’s profit margins.

These increases may not easily be passed on to the customer, resulting in the business having to absorb the cost.

Our forex and international trade specialists are able to give you guidance around cross-border regulatory requirements and transfer solutions to ensure that payment is made, and goods are received.

We’re also able to provide the following solutions to assist with your cross-border payment needs:

• IBFX (a forex payment solution)
• Guarantees
• Letters of credit
• Forex hedging solutions
• Forex specialists to help with international payment requirements

Machinery and equipment financing and insurance

Plant machinery and equipment are critical for any manufacturing business. What are some considerations manufacturers should be aware of when purchasing new assets?

During the course of operating, a manufacturer may want to add more equipment or machinery to increase efficiency and throughput, or even to expand production lines while maintaining those already established.

This comes at a cost for the business, and it may require financing to purchase these specialised assets.

Also, ensuring that the production lines are working efficiently and without loss of productivity is vital to any manufacturer’s bottom line.

However, even the most efficient productive lines will experience machinery breakdown and manufacturers need the right risk mitigation strategy to avoid loss of profitability.

We can assist with financing of the asset, and providing insurance for machinery failure.

We have Vehicle and Asset Finance specialists, as well as Insurance specialists who will assess your specific asset requirements and structure the finance and cover to suit your business’s exact needs.

Staff Benefits

Employees are a core component of the business. How can manufacturers provide additional value to their staff?

Irrespective of the nature of the manufacturing business, employees form the core of the business.

We can assist our clients with solutions to help you take care of your employees with benefits such as retirement funds and medical insurance.

We can also assist with workplace banking support, providing you and your employees with convenient banking solutions, such as our PayCard, which enables employees without a personal bank account to access wages from a pre-allocated card.

Instead of having to draw cash for wages, the business owner can simply load money on the card via an EFT.