The small business owner’s guide to Companies House

Exporting to new international markets could be a valuable way to expand your business’ operations.

The possibility of increased sales and healthier profit margins from new international markets could help you grow faster than if you traded your products or services solely in the UK.

Exporting could also make your business more resilient and able to offset a downturn in the UK market with sales made internationally.

If you’re interested in starting to export, there are a number of sources offering support, such as the Department for Business and Trade and its Export Academy.

Read our guide on the steps you should take before you begin exporting.

Once you begin exporting you might need to access finance support to help your business through the peaks and flows of payment cycles or to invest in your business to secure growing international orders.

In some markets, you may also need to consider protecting your business against the risk of buyers defaulting on payments.

That’s why we’ve collaborated with UK Export Finance (UKEF), the UK government’s export credit agency.

They support exports for any size company and across industries, from capital goods to services and intangibles like intellectual property.

Read on to learn more about the most common challenges you could face as a new exporter and how to tackle them.

All of the products below have differing eligibility requirements so, as with all financial products, it’s important to seek independent specialist advice to help determine the correct product for your business needs.

  1. Managing working capital

Many exporters struggle with export contracts and the knock-on effects on the liquidity of their business.

In some markets, it’s quite typical for customers to require extended credit terms, meaning there can be a long delay for the exporter between doing the work and receiving payment.

This can have a negative impact on the amount of working capital available to a business to finance day-to-day operations, potentially limiting future business growth.

However, there’s support available to businesses that can help remove this constraint.

One option available to exporting businesses with liquidity concerns are working capital solutions, such as working capital loans.

These can be obtained through discussions with your bank relationship manager and can be used to help you manage periods of financial difficulty.

However, these might not always be a viable option and if you’re reaching your credit limit, it can be a good idea to speak to your bank about using UKEF.

UKEF could work with you and your bank to secure a loan or help you increase the value of your original loan.

This is because they can guarantee up to 80 per cent of the value of the working capital loan.

This allows you to take on larger orders and more international business by ensuring that you have the cash flow you need to fulfil the contracts.

If you’re interested in learning more, read our guide on working capital finance solutions.

2. Securing finance to export

There’s a lot to consider when starting to export – setting up supply chains, arranging for product shipping, negotiating with agents and distributors.

Making sure you have the correct finance in place to support your export activities can set you up for success.

Understanding how to optimise your use of finance from the outset can not only make the process easier but can also give you a competitive advantage over other businesses.

UKEF offers a range of products to support UK exporters and their international buyers, including the General Export Facility, Export Insurance Policy, and Bond Support Scheme.

UKEF’s General Export Facility?

Small businesses looking to expand their exporting volumes could benefit from UKEF’s General Export Facility.

By providing partial guarantees to exporters, this scheme helps smaller businesses secure trade finance facilities without being tied to a specific export contract.

This additional cash could facilitate the development of new exports or the undertaking of large orders.

Obtaining a General Export Facility could allow greater flexibility, allowing you to negotiate more flexible finance facilities with participating banks, potentially generating greater working capital for your business.

The General Export Facility also offers certainty as UK exporters don’t need to provide evidence of export contracts when they apply, meaning you won’t have to worry about whether an export opportunity can be supported by a General Export Facility.

Finally, for most applications, if they meets certain criteria, the UKEF guarantee will be granted automatically, speeding up the application process.

This is good news if you are an exporter who doesn’t regularly enter into large single export contracts.

There are rules on eligibility so it’s a good idea to check UKEF's website before applying with any of the participating lenders.

With maximum repayment terms of up to five years, a General Export Facility can cover up to £25 million per facility.

If you require more than this, you could contact local Export Finance Manager who will be more than happy to work with you to find the right product for you – get in touch with UK Export Finance to find your regional Export Finance Manager.

What is an Export Insurance Policy?

An Export Insurance Policy can protect you from the risk of non-payment, giving you the assurance that, even if your buyer does not pay or if payment is disrupted due to certain political and economic events in your buyer’s country, you’re still guaranteed to get paid.

For some markets, you may be able to easily arrange coverage with your existing broker or insurer.

For other markets, however, where private sector coverage may not be available, businesses can contact UK Export Finance who could help find the appropriate policy for their specific needs.

What is the UKEF Bond Support Scheme?

Another option is the UKEF Bond Support Scheme which provides partial guarantees to banks so they can issue bonds on behalf of UK exporters.

The Bond Support Scheme could make it easier to obtain contract bonds such as advance payment guarantees or performance bonds, from your bank without needing to put up a large deposit.

When banks are asked to issue bonds on behalf of exporters, they often require cash deposits to secure the bond.

This could put a lot of pressure on the exporter’s working capital and cash flow, which is why the scheme provides up to 80% of the value of the bond as a guarantee.

There’s no maximum value for each bond, nor any maximum or minimum term for a guarantee.

This can further ease the strain on working capital, giving you the flexibility you need to allow your buyers to pay on terms that work for them and make your bid attractive.

What is an Export Finance Manager?

Export Finance Managers are representatives of UKEF who operate across the UK.

Export Finance Managers help exporters get the details they need around payment methods and risks, types of finance available, trade finance (pre and post-export), credit insurance, and foreign exchange risks.

Having a conversation could enable you to have a better understanding of your export finance requirements and help UKEF to identify an appropriate solution that best fits your needs.

Export Finance Managers can provide you with information regarding UKEF products and services, as well as point you in the direction of private market options like insurance brokers or credit insurance companies.

3. Entering new markets

When thinking about exporting into new markets, the first port of call is often an overseas agent or distributor.

These agents are specialists in their country with extensive knowledge of the market and can be a great local resource in helping find customers.

However, this will cost you a commission each time and these can typically range from 2.5% to 15%.

Export Opportunities

An alternative is the Department for Business and Trade’s export opportunities website - it's free to use and offers listings of potential buyers from all around the world that have been identified by UK government experts in foreign embassies.

From major companies like General Electric to small and medium-sized buyers, there are a huge range of opportunities out there.

You can easily find them on the Department for Business and Trade’s export opportunities website – simply filter by product, service, sector, or market, or even sign up to alerts for whenever a buyer from overseas is looking for something you have to offer.

UKEF also hosts supplier fairs that connect UK suppliers with international opportunities.

These events place UK suppliers directly in front of international buyers, who are actively looking for UK products and services for their overseas projects.

Export Support Service

The UK government’s Export Support Service also provides invaluable resources on selling to new markets, such as what paperwork and rules you need to be aware of before taking the plunge.

Local trade teams can offer tailored export advice on everything from strategy and planning, to identifying new market opportunities and even arranging introductions to new supply chains.

Depending on your situation, you may also be able to meet with an International Trade Advisor.

An International Trade Advisor can link you to specialist export advisers, help you develop your export strategy, access training masterclasses, and help you make the most of the Department for Business and Trade’s global network to grow your business overseas.

These options are open to both businesses who are new to exporting and seasoned exporters.

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

Making business finance work for you

Our Making business finance work for you guide is designed to help you make an informed choice about accessing the right type of finance for you and your business.

Read the guide to making business finance work for you

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