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Even the smallest exporter can and must access trade finance to truly thrive

Written by Richard-Simon Lewis on Wednesday, 12 June 2019. Posted in Global

Utilising private finance is easier said than done for less established exporters. But UKEF, the government agency, ensures no one’s denied the chance

Even the smallest exporter can and must access trade finance to truly thrive

Exporting is clearly a key way for businesses to grow. It can boost sales, create job opportunities and increase stability with a global pool of customers at your fingertips. Although it can seem like a daunting prospect to begin with, exporting is a natural step forward in helping businesses of all sizes realise their ambitions.

However, lack of finance or insurance is a frequent barrier to exporting that particularly stifles UK SMEs. After all, it’s not always enough to export a great product or service. Companies can face a number of challenges in securing and fulfilling contracts without the right financial backing, including working capital constraints, bond requirements from overseas customers and being denied credit insurance to sell to particular markets. From construction and healthcare to aerospace and beauty products, this can be a problem across every industry.

Finance is available from the private sector but it’s no secret that smaller, less established companies can struggle to gain trust. In some of these cases UK Export Finance (UKEF), the UK’s export credit agency, can help ensure they win, fulfil and benefit from international sales just like the big names. Based all over the UK, its network of export finance managers can also help signpost companies to alternative sources of support from the private sector. Here are just a few examples of the UKEF route in action.

Bioguard Hygiene

When Bioguard Hygiene, the Northampton-based cleaning products manufacturer, won an export order worth £90,000 with a large pharmacy chain in the Middle East, the company didn’t immediately celebrate. Although the contract was certainly a positive step for Bioguard’s growth ambitions, having to finance production on a much larger scale without the security of advance payments had the company seek extra financial protection to safeguard against non-payment.

However, since most of Bioguard’s business is domestic it only wanted a standalone policy to cover its new deal but struggled to find single-market cover from the private insurance market. As part of the solution, UKEF provided bespoke export insurance support against the risk of non-payment by an overseas buyer. Bioguard could then secure significant revenue from an important new customer and maintain its momentum in a high-value market.

Spurred by the success, in just four years Bioguard quadrupled the proportion of its export business and hopes to continue its overseas success, aiming for at least 40% of its orders to come from abroad within the next two years.

Leisurewear

As an already global business, Manchester-based children’s clothing company Leisurewear faced a longer than average trade cycle. This meant when contracts were won in Algeria and Libya significant pressure was added to extend levels of working capital at the company’s disposal.

To tackle this, Leisurewear was able to secure a tailored end-to-end revolving working capital solution with help from UKEF and Barclays Bank. This brought the company sufficient time to get supplies, payments from clients and fulfil contracts before paying back the loan.

Thanks to the arrangement, Leisurewear was also able to grow its business in China and Ukraine.

Essex Girl Beauty

Michelle Lauren, founder and director of Essex Girl Beauty, the beauty product supplier, founded her company in 2013. Starting off as a hobby, it sells the latest beauty products from around the world including spray tanning kits, nail art products and hair care tools. But as most of Essex Girl Beauty’s suppliers are outside the UK it faced strict cash flow restrictions, with Lauren needing to make quick returns on existing stock before ordering fresh stock.

Fortunately, Lauren’s local UKEF export finance manager worked with her to discover what products were available from her bank and arranged introductions with key people so they were in a position to provide support quickly.

As a result, Lauren’s financial turnover went from £83,000 last year to £110,000 this year, with a forecast of £150,000 in 2020.

Considering the massive boon exporting brings businesses no one should be denied the chance. So instead of swallowing rejection from the private sector, check your eligibility for UKEF’s help.

About the Author

Richard-Simon Lewis

Richard-Simon Lewis

Richard Simon Lewis is head of origination, client coverage, marketing and communications at UK Export Finance, the export credit agency

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