Overcoming finance as a barrier to export

Overcoming finance as a barrier to export

Export offers significant, untapped opportunities for the UK economy and companies are increasingly waking up to the potential benefit to their bottom line; the number of UK exporters increased from 11,710 in Q1 2016 to 12,265 in Q1 2017.

Yet while the increase is positive, the figures are still woefully low, with hundreds of companies failing to harness opportunities available in overseas markets.

The list of concerns is long; customs issues, intellectual property, routes to market, distribution agreements, logistics – and of course access to finance. Finance is an important factor in the ability of businesses to succeed, with exporting creating various upfront costs such as logistical spend, product changes to ensure suitability in foreign markets and additional payroll costs to list just a few.

Access to finance is consistently cited as a key concern for companies considering exporting, yet it needn’t be – there are a wealth of options available, but there is undoubtedly an awareness piece still to be done to ensure that business owners understand what their options are and how to access them.

The availability of traditional bank funding has been a hotly-discussed topic in recent years, yet many business owners are not au fait with the range of alternative finance options available.

UK Export Finance (UKEF) is just one avenue to explore – part of DIT, it is the UK’s export credit agency. UKEF’s mission is to ensure that no viable UK export fails for lack of finance or insurance and during the last five years has provided £14bn support for UK exporters. With a capacity of £50bn and the ability to issue loans, guarantees and insurance policies, it’s a logical place to start for companies looking to access finance. Companies operating for under 2 years may also be able to access a startup loan.         

It’s also important to note that, while accessing bank funding has been challenging in recent years – particularly for companies with no export record – it shouldn’t be dismissed outright without picking up the phone and finding out what they might be prepared to do for your business. Some government agencies, such as UK Export Finance, may be able to work with your business to offer a middle-man role between yourself and the bank, which may lead to a partial guarantee of working capital. 

But in situations when banks aren’t willing to lend, there are many other alternative lenders including those in the peer-to-peer space that will.  There are now plenty of lenders specialising in international trade, offering products such as stock finance, trade finance, unsecured loans along with variations of the more traditional invoice finance products.

We know that the export opportunities are vast – and for those companies with an exportable product or service, it’s important that access to finance isn’t viewed as an insurmountable obstacle.

In reality, it’s a challenge that can be easily navigated with a knowledgeable and experienced advisor and the confidence to get out there, explore new markets and think bigger.