Importing and exporting goods and services

Businesses selling goods or services overseas face risks when it comes to cash flow and receiving payment from buyers.

While the global market could offer immense potential, navigating the intricacies of importing and exporting can be a complex and expensive venture.

Proper funding can help ensure that your business can handle the logistical and regulatory challenges, as well as lay the foundation for overseas expansion such as:

Challenges for import and export businesses

• Initial stocking

  Importing often involves buying in bulk to achieve economies of scale.

• Customs duties and taxes

  Importing goods can attract customs duties and taxes, and costs can vary by country and product.

• Shipping costs

  Transporting goods across borders, be it by sea, air, or land, incurs significant costs, especially when dealing with large quantities or delicate items.

• Compliance

  Different countries have diverse regulations concerning product standards, safety, and quality, which can be costly to ensure compliance.

• Insurance

  The international transit of goods carries risks such as damage, theft, or loss, making insurance an essential cost.

• Local representation

  Establishing local offices, warehouses, or hiring representatives in the target country can streamline operations but may require financial outlay.

• Currency fluctuations

  Currency value can fluctuate, potentially impacting profits – having a buffer can help navigate these financial ebbs and flows.

There are various finance products that can support exporting goods and services.

Trade (or export) finance

Trade finance provides guarantees and advance payments.

Products include:

• Letters of credit

  A legally binding guarantee from a bank that a seller of goods will receive payment from a buyer if the goods or services are delivered on time.

• Export credit insurance

  An insurance policy that protects an exporter from not receiving payment from the buyer.

• Bonds

  This provides a guarantee to the importer should the exporter not meet the obligations of the contract.

• Supply chain finance

  This type of finance helps businesses manage their working capital.

  It involves a supplier receiving early payment of an invoice by a finance company.

  The business that has purchased the goods or service then pays the funder once the invoice is due.

  Find out more about supply chain finance.

• UK Export Finance (UKEF) General Export Facility

  UKEF is the UK government’s export credit agency – find out more about UKEF. The General Export Facility (GEF) provides partial guarantees to banks to help UK exporters gain access to trade finance facilities.

  This allows businesses to unlock working capital to support business growth without the need for a specific export contract.

  Businesses can use the funding to cover everyday costs linked to exporting. GEF allows exporters to access cash facilities such as trade loans, and contingent obligation facilities such as bonding and letter of credit lines.

• UKEF Bond Support Scheme

  If your business wins an export contract, you might need to provide a bond.

  A bond can often be provided by the exporter’s bank, although collateral is usually required which can put pressure on the exporter’s cash flow or working capital.

  To deal with this, the UKEF Bond Support Scheme provides a guarantee of up to 80% of the value of the bond.

Find out more about trade finance.