# General Business Category > Business Finance Forum >  How to pay for imports

## Dave A

Not something I have to worry about much personally, but I might need this sort of service one day.

I got a call this morning asking if I have to pay for imports. The long and short of it is Bidvest Bank believes it has the most cost effective and convenient way to do this. So I share it for anyone who might be interested.

Their offering is fxPaynet, a totally online service without transaction fees. The bank only makes their money out of the spread between buy and sell prices, and at a quick glance that spread seemed a lot smaller than what I tend to see at my bank.

If you check it out, or are aware of something competitive that also does the job, please give feedback here.

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BusFact (13-Aug-10)

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## Gone Fishing

Hi DaveA

I currently import items about every 4 months over the last 10 years or so. I just go into the bank, provide Pro-forma invoices and do an electronic transfer to the recipients account. 
The charges from the bank have been minimal, on average R250 per transaction, regardless of the Invoiced amounts, which have been between R50 - R100k.

Where they could be skimming a little extra is the spot rate for the currency they give me. Perhaps here Bidvest bank could be sharpening their pencil.

One tip, though I'm not sure if all the banks allow it. 

If i can, when paying for the imports is to pay cash. This is then deposited into the banks account at the same time i fill in the forms for the transfer. 

I've saved on the Cash deposit fee's plus any transactional fees the transfer would of then cost from my business account for the transfer. 
I think this would only show up as a transaction on your monthly statement and is perhaps a cost not taken into account at the time the import payment is made?

Obviously for large sums its not practical, but for mine where 90% of my business is cash and for small businesses in general, every little helps.

Just one word of caution. Importing any goods has risks and i would recommend that cash transfers be done only with fairly small amounts and with recipients who you know.

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wynn (11-Sep-11)

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## Gone Fishing

Following on from my reply.

I am looking for advice on dealings within Africa. I've been importing for a while now with people I know, but i now have some opportunities with products in Africa, specifically, Mali, Ghana, Nigeria.

What would be the safest method of payment when dealing with these countries and is their any payment method that allows me to inspect the goods once they have landed and i have inspected them, before OK'ing the release of funds?

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## BusFact

> What would be the safest method of payment when dealing with these countries and is their any payment method that allows me to inspect the goods once they have landed and i have inspected them, before OK'ing the release of funds?


A Letter of Credit would be along those lines. Not normally based on your inspection, but based on documents provided by the supplier. I'm not clued up on exactly how much protection this offers you, but it is the most common mechanism for forex transactions when the customer and supplier do not know each other well.

A chat with your banks forex department or some of their literature should be able to explain further. It a bit of a pain in terms of paper work, but possibly worth the effort.

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## Martinco

I have been using Bidvest for some time now and found them excellent  :Smile: 
They even bring the documentation to my premises to get the signatures and their rates are certainly better than what I get from STD Bank.  :Thumbup:

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## Martinco

I did another transaction via Bidvest yesterday and all went totally trouble free. :Thumbup:

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## yuemax

> A Letter of Credit would be along those lines. Not normally based on your inspection, but based on documents provided by the supplier. I'm not clued up on exactly how much protection this offers you, but it is the most common mechanism for forex transactions when the customer and supplier do not know each other well.
> 
> A chat with your banks forex department or some of their literature should be able to explain further. It a bit of a pain in terms of paper work, but possibly worth the effort.


Hi BusFact,

Here in Asia, we stipulate one of the conditions of a L/C is a passed inspection report from a third-party inspection company (shameless punt www.TopInspection.com )

Some suppliers do not like this condition, but it does a lot for the product quality conformity.

Cheers,
Max

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## roryf

I bring in the occasional container from a reputable supplier in India and have had quite good luck. We are however looking at bringing in a few containers from China and this is a whole new ball game. What we have done, is write a specification on the product and have asked for the product to inspected by an International Lab to check if it is in compliance with the spec.

We will also go through the route of using an L/C with terms and the terms required to pay the money over will be based on the Lab certification. I hope this works.

Banks don't deal with quality,they only deal with documentation!

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## yuemax

> I bring in the occasional container from a reputable supplier in India and have had quite good luck. We are however looking at bringing in a few containers from China and this is a whole new ball game. What we have done, is write a specification on the product and have asked for the product to inspected by an International Lab to check if it is in compliance with the spec.
> 
> We will also go through the route of using an L/C with terms and the terms required to pay the money over will be based on the Lab certification. I hope this works.
> 
> Banks don't deal with quality,they only deal with documentation!


LOL, yes, the banks only care about the $'s - but you can use the L/C to specify quality requirements - it works well to keep the supplier in check, as if you specify a third-party PASSED inspection report, then they know they have to comply with this legally.

Cheers,
Max

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## jjdewet

Hi,
I only joined today, so I'm a bit late for this thread...
I am a dealer at a Treasury outsourcing company. What we do is to facilitate payments for imports/exports using the bets banks. 

There are 2 compnents to consider when using a bank to pay for imports - 1) the margin added on the "SPOT" rate and 2) the Transaction fees.

On the first thing, the margin, the banks are making a huge amount of money. Standard Bank is by far the worst here. They might add up to 2% margin on the rate - so if you are buying US$ and the rate is R7.90, the bank will sell to you US$ at R8.0580 (R7.90+2%). Standard bank is good at this...they have a "system rate" which they publish to the admin people doing the paperwork. These admin guys will just phone the client and tell them that all the paperwork is in order, and then they will ask if they can "go ahead and process this payment" - in which they will use the system rate. Most people doesn't even know that they are being screwed.  Standard Bank can do about 2,000 transaction per hour...you can imagine what they make on it...The only way to get a better rate is to get "Direct dealing" but not everyone can get direct dealing. I was told that ABSA does not allow direct dealing for any amount below $150,000.00. Banks like ABSA, FNB and Nedbank all use the same process as Standard Bank, although, I believe Standard Bank is way ahead of the others.

Bidvest Bank has the fxpaynet system, and there is also Travelex, where basically anyone get 'n "Direct dealing" facility, but they still add a margin like other banks.
Investec also provides these services, but in order to open account, they require a massive transaction flow to be done in the account.

2) Regarding the fees, I'm not too sure about how it may be calculated, but I know that Bidvest charges around R495.00 per transaction, ABSA charges above R500.00 and Investec charges R195.00. When you do small transactions, or one amount, made up up of a lot of different payments to be made, these fees have a significant impact on the "All-in-rate", which is the rate you would pay in the end considering all the costs involved. For example, to pay an amount of $20,000.00 at a rate of R8.00 - adding R195.00 will give an all-in-rate of R8.0098. A $2,000.00 payment will end up being R8.0975...etc

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BusFact (09-Nov-11), Dave A (08-Nov-11), Miro Bagrov (14-Nov-12)

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## yuemax

> A Letter of Credit would be along those lines. Not normally based on your inspection, but based on documents provided by the supplier. I'm not clued up on exactly how much protection this offers you, but it is the most common mechanism for forex transactions when the customer and supplier do not know each other well.
> 
> A chat with your banks forex department or some of their literature should be able to explain further. It a bit of a pain in terms of paper work, but possibly worth the effort.


we also encourage our clients to make their supplier pay for the re-inspection fees. 

Cheers,
Max

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## sonic clearing

Obtain a credit app from the supplier...order the goods, Supplier arranges the transporter....Goods arrive at border you pay duties vat clearing fees etc....you recieve goods....stamp pod's that all is in order....driver returns pod's to supplier who then charges you out on your agreed 14 day etc .....

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## debitordersystem

There is no predefined definition of personal import and general a personal import is a direct purchase of foreign goods from overseas mail order companies, retailers, manufacturers or by an individual for the purpose of personal use.

The most common terms of purchase are as follows:

Consignment Purchase
Cash-in-Advance (Pre-Payment)
Down Payment
Open Account
Documentary Collections
Letters of Credit

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