TRADE FINANCE - Accurate costing programme takes account of all variables

CLIVE EMDON
IN THE VOLATILE world of trade, changing duties, freight costs and exchange rates, success demands a reliable source of information that can provide you with today’s costing and likely situations in the future, says Arnold Garber MD of Compu-Clearing.
“In trade finance one has to work out costs at every phase of a process, including the cost of the money you need.
"Our Trade & Track product does each of these, but the problem is that 90% of traders learn by experience and only do their costing after the fact.” Garber paints a new world scenario of tens of thousands of suppliers of innovative products wanting to get into China’s emerging market. “Ten or 20 years ago one would have had to contact the trade commissioner. To research and find a supplier was a major problem. Today it takes 10 minutes with an email and you get your reply.
“The internet is the medium to connect the potential buyer to the potential seller,” says Garber.
“The problem is that although we may know the quantities, the supplier won’t let go of the goods until he has the money, and the retailer won’t pay for them until they have been delivered.”
The freight industry at large still works by conventional banking systems, says Garber. ”Take the young person with initiative but who is not an established businessman or woman. The first tier of banks would turn him down because he has no security. The 2nd level may provide him with finance but at exorbitant rates. They might charge 25 - 30% instead of the 12% from the banks.
“He may lose the deal or his money. The problem is that sometimes the margins are very small. He needs an accurate costing programme that will take account of the FOB rate, the freight, customs duties and insurance.”
Garber says the Trade & Track software has cost a couple of million to develop over the years. Compu-Clearing is making it available free of charge to exporters and importers, a cost that will be made up with additional bill of entry activity.