Thanks to technology, the world’s a much smaller place than it was a decade ago, and trading with global suppliers is more accessible than ever.
During the global pandemic, we’ve seen side hustles growing into fully fledged businesses and small-medium operations expanding into new territories – but we’ve also seen significant disruptions in global supply chains, which can make a new venture into global markets a challenging prospect.
Even the most established businesses are needing to review their supply chain management to ensure better cash flow, shipping processes and quality control.
So, if you’re mixing in global business circles – or you’re giving the prospect some serious consideration – here are five things you need to have in place to ensure it’s as successful as it possibly can be.
1. Connect your systems across the supply chain
Good businesses are built on solid foundations – and today, that means technology. If you’ve got the right tech in place to manage your systems and processes, you can scale with relative ease. If not, any unexpected growth can ground you before you get started.
It’s important to have your systems and processes defined and refined – and automated where possible.
Jim Vrondas, Head of Client Management for Foreign Exchange International Payments at American Express, advises business owners to keep a keen eye on their supplier tracking.
“Business owners should use technology to check stock levels and ensure product is readily available, while avoiding costly stockpiling,” Vrondas tells Kochie’s Business Builders. “Their systems should track orders, manage warehouse and transportation optimisation, to ensure reliability across the supply chain.”
Of course, having strong accounting software capturing every last detail is essential. There are a number of cost-effective solutions out there – Xero, MYOB and Quickbooks quickly spring to mind – and if you’re trading overseas make sure your solution is configured to recognise and capture international transactions.
If you’re not sure how to proceed, speak to your accountant.
2. Do your due diligence on your suppliers
If you’re doing business with a new supplier – regardless of their location – it’s essential you do your due diligence.
In the early days, the promises a new supplier may make in terms of quality of goods, delivery and support can sound wonderful, however when reality hits and you are entrenched in the day-to-day, things can transpire a little differently.
Do your research on your standards and make sure they’re up to the same level as yours. This means laying out those expectations right from the get go (for example, deciding what goods would be defined as ‘defective’).
While doing your research, speak to other current clients of that provider. What are their experiences like? Also, be honest about the vibe you’re getting from them – are you overlooking any warning signs because you’re so keen to get over this next hurdle?
But most importantly, make sure you ask about current lead times. During the pandemic, supply chain difficulties have seen some lead times increase dramatically, so get a realistic view on how quickly goods will really arrive.
If lead times are an issue, then you may consider going with a local supplier who will take less time. It’s all about working out the cost-benefit without sacrificing the quality you’re after for your particular business. Quite simply, the more time you put into choosing the right partners, the better.
3. Have a reliable, secure and speedy payment service
Overseas payments can be expensive – and slow to process. Which is why it’s important to have a reliable, secure and quick method of paying overseas suppliers.
“The payment industry is evolving very rapidly and it’s hard for business owners and decision makers to keep up,” says Vrondas.
It helps to keep abreast of foreign exchange rates and global market conditions to ensure you’re making cost-effective decisions. Additionally, explore the kind of payment service you’re using and how your business credit card can help iron out the pain points of chasing up invoices or paying suppliers in their currencies.
“We’ve developed a solution known as American Express AccessLine®1, where business owners can register and enrol to pay suppliers in over 110 different currencies, virtually anywhere in the world, even if they don’t accept card payment,” Vrondas explains.
“American Express’s AccessLine® is built for business; it’s a smart cash flow management tool that offers a safe and secure way to pay suppliers on an American Express Platinum Business Card. American Express AccessLine® also offers dual verification for added protection against fraud.”
If you need extra time to make regular supplier payments, the American Express Platinum Business card offers an unsecured line of funding along with up to 55 cash flow days to help bridge the gap to allow you the breathing space between accessing capital and paying for it.
4. Ensure you have a formal supply agreement in place
Expanding and growing your business means doing things properly – and this partly comes in the form of contracts. Having a formal agreement in place with a new supplier is critically important – it ensures both parties know where they stand as it categorically outlines the deliverables and sets expectations.
Importantly, it can also detail penalties for not meeting those expectations.
If you’re unsure about signing a formal supply agreement, get some legal advice. It may seem like an unnecessary expense now, but it will give you enormous peace of mind.
5. Make sure it’s worth it
When you’re researching overseas suppliers and creating your cost projections, ensure you’re taking everything into account.
For example, what would the impact of an exchange rate rise be? Have you taken into account any import tax you’ll need to pay? How about the shipping time – is it really worth it to get those goods offshore? And then, of course, storage – will you need to store the goods when they arrive?
By having a holistic (and realistic) view of the true costs, you can quickly assess the true value of the opportunity.
For more tips and insights to help you do business better, check out American Express’ Business Class: Trends and Insights.
See what’s possible with American Express Platinum Business Card, including 200,000 Bonus Membership Rewards Points plus a $300 credit when you apply by 12 January 2022.2
Terms & Conditions:
- AccessLine™ is not available to individual consumers. To enrol in this service, your business will be required to complete an application, which is subject to review and approval by American Express. For a copy of the application, including terms and conditions, call 1300 855 749. Users need to have an American Express Corporate Card or American Express Business Card, an FX International Payments account and be registered to use AccessLine™.The information contained in this website has been prepared without taking into account your objectives, financial situation or needs.
You should read the PDS and consider the appropriateness of International Payments in relation to your individual requirements. Terms, conditions, fees and charges apply. For further information, please refer to the relevant PDS: Telegraphic Transfers. The Target Market Determination is available here.
- Offer only available to new American Express Card Members who apply by 12 January 2022, are approved and spend $5,000 on their new Card in the first three (3) months from the Card approval date. Card Members who currently hold or who have previously held any other Card product issued by American Express Australia Limited in the preceding 18 month period are ineligible for this offer. A $300 credit will be applied to the card account plus 200,000 Membership Rewards Bonus Points will be awarded to the eligible Card Member’s account 8-10 weeks after the spend criteria has been met. This advertised offer is not applicable or valid in conjunction with any other advertised or promotional offer. Subject to the Terms and Conditions of the Membership Rewards Program available at membershiprewards.com.au.
This article is brought to you by Kochie’s Business Builders in partnership with American Express.
Feature image: AdobeStock