Working together to overcome the barriers to exporting

Kash Ahmad, UK Specialist Director, Bibby Financial Services

Selling goods and services overseas can be a daunting task for small businesses. In fact, HRMC figures[1] show that most exporters are veterans of international trade – the average age of UK businesses engaged in trade is 10 years. In–turn, these businesses contribute to 85% of the value of UK exports and 83% of imports.

This could mean that many small to medium sized enterprises (SMEs) are still risk averse to working with international debtors or struggling to build an entry strategy that will kick-start their international expansion. It is certainly a concern for the business owners that we work with daily.

Our work with the BCC aims to encourage and support more UK SMEs to overcome the barriers to exporting and unlock growth from overseas markets. To do this we will work closely with individual chambers to help their members overcome the challenges that UK exporters face. It is sometimes the case that SMEs don’t possess the expertise or resources to export with confidence, but that is where we can help by working with them.

Our recent Trading Places report identified the primary challenges that both UK importers and exporters face in 2018. The most cited were currency fluctuations, administration, logistics management, and managing duty, VAT and freight payments.

There are several options available to help SMEs trading overseas overcome these unique financial and operational challenges, from finding the right funder to accessing support from government sources like the ‘Exporting Is Great’ initiative.

Unlock cashflow

Lengthy and inconsistent payment terms will often tie up cash and a tailored product such as Export Finance can help SMEs to overcome this challenge. It does this by unlocking cashflow in unpaid invoices and by providing specialist credit control support, helping businesses manage their debtors overseas.

However, it is often the case that exporters will also need to pay suppliers. Trade Finance enables businesses to buy, receive and sell goods before payment is made. It helps by guaranteeing payment to suppliers before goods are in transit and making payment when items are dispatched. This means businesses can build trust with suppliers due to payment guarantees and helps them to negotiate early payment discounts.

Build trust

Trust is an important part of any business, but the secret is to work with others in the supply chain to make sure that everyone is on the same page when it comes to exporting. Selling or receiving goods and services can be a complex process for SMEs, so it is essential to know who is on the other end of the phone. That is why arranging a face-to-face meeting with suppliers is likely to reap rewards.

Manage currency fluctuations

Our research found that more than two-thirds (67%) of SMEs that trade overseas have been financially disadvantaged due to currency volatility sparked by Brexit in the past two years. Furthermore, almost a quarter (23%) say they have never reviewed their foreign exchange requirements.

Foreign Exchange services can assist businesses in managing their exposure to currency volatility, allowing them to lock-in rates to avoid the erosion of sales margins.

BFS’s Export Finance Team specialises in working with thousands of UK exporters to help them navigate International Commercial Terms with language, currency, time zone and legal support.

BFS will be represented at the BCC’s International Trade Summit at etc.venues, Bishopsgate in London on 18th October 2018.

[1] HMRC, UK trade in goods statistics by business characteristics 2016

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