to boost exports
Exports can boost company revenue and the UK economy – and expert help is at hand so you can get finance to increase your sales overseas, writes Elizabeth Anderson
International trade is often described as the backbone of the UK economy. Exports contribute almost £900bn to the UK economy each year and the sector supports tens of thousands of jobs.
For small and medium-sized businesses (SMEs), selling overseas offers the potential to boost stability and profitability, as well as grow the workforce.
Businesses that export are more competitive, pay higher wages and are more profitable – boosting general growth and the UK’s future prosperity.
Win export contracts by providing attractive financing terms to their buyers
Fulfil contracts by supporting working capital and trade finance
Get paid by insuring against buyer default
UK Export Finance (UKEF) is a UK government department that helps UK companies
Businesses are likely to be concerned about whether an overseas buyer will pay, particularly if you are offering credit terms of 90 or 120 days.
A credit insurance policy, offered by UK Export Finance, can protect against loss of non-payment. Private insurance companies also offer this type of insurance, but may not have the appetite or capacity – perhaps because a company is new to exporting or the order value is too small – and this is when UKEF can step in.
Companies are more likely to need insurance through UKEF if they are selling to customers in emerging or high-risk markets.
There is no lower or upper value limit on the insurance available through UK Export Finance. Although UKEF can underwrite and offer an insurance policy directly, it also works with brokers to look at the whole market.
There can be a payment gap when arranging a large international order. An overseas customer may place a large order of goods or services, and may not pay until the goods are received. As a business, you may need to find extra money to fulfil this order.
UKEF does not loan money itself, but acts as a guarantor, making it easier for companies to get a loan from a bank or private lender. The money could be used for any form of export development – whether that’s buying goods or equipment, or perhaps opening a new workshop in the UK.
Plymouth-based company Aquamare Marine, a service business for luxury yacht builders, recently expanded into the United States after utilising UKEF’s General Export Facility via its bank Santander.
UKEF has a team of 29 specialist export finance managers to help SMEs navigate export finance.
They will help you get a better understanding of your export finance requirements and, where possible, they’ll identify an appropriate solution to support your export transactions. Export Finance Managers will talk you through relevant UK Export Finance products and services and can assist in the preparation of an application.
They are also able to discuss private market options and often refer exporters to insurance brokers and credit insurance companies.
Businesses that want to sell overseas should not be discouraged by any preconceived complexities on access to finance. UK Export Finance can provide insurance to reduce any risk of not being paid, and help you arrange finance to ensure you have the funds to fulfil orders and grow your business.
Visit ukexportfinance.gov.uk to find out more
In Summary...
Company Director of Aquamare Marine
Mike Sommerfeld
70,000
Some businesses may be exporting without realising it – perhaps selling to one customer overseas – and there may be an opportunity to develop this further. If you have a viable export opportunity, here’s how UK Export Finance can help your business thrive.
£900
billion a year
The UK economy benefits from a company’s success overseas and yet many businesses may not be aware of the free support available from the UK government to help you succeed. It is estimated that more than 70,000 businesses have the potential to export, although the prospect may be daunting to companies given the various stages and procedures they need to consider.
The General Export Facility provides a guarantee of up to 80 per cent of a lender’s facility. This means banks are more likely to lend, since they have the confidence that the risk of default is reduced through UKEF’s guarantee. UKEF works in partnership with all five major UK banks, as well as non-bank lenders such as Newable Business Loans, to help exporters borrow money.
Thanks to the guarantee from the General Export Facility, Aquamare Marine was able to open offices, workshops and a large hangar space in Fort Lauderdale, Florida. The company tripled its revenue, then doubled it again, expanding its workforce from 20 to 140 people. It is now starting a boat-building business on top of its existing service business.
UKEF can also work with banks to offer bonds to help companies receive money upfront. As an example, if a business wins a new contract, it may be required to provide a contract bond. The business’ bank can issue the bonds to the buyer, but it typically requires collateral to secure the bond, in the form of a cash deposit from the business.
expand that business further
Fourth Element’s director of finance Christian Rossetti
wouldn’t have been able
UKEF can provide a guarantee for up to 80 per cent of the bond’s value, meaning the bank can release the cash collateral back to the business to use as working capital.
UKEF’s wide range of support means British businesses are not held back due to lack of access to funds. For example, Cornwall-based Fourth Element – which sells clothing and equipment for scuba diving, swimming and freediving in 1,600 shops across 59 countries – turned to UK Export Finance for help in 2022 to facilitate the purchase of more stock. Fourth Element was able to use UKEF’s General Export Facility to increase the amount it could borrow from its bank because UKEF provides a guarantee of up to 80 per cent of the facility limit.
And the knock-on effect? Fourth Element’s exports to the rest of the world rose 91 per cent in the following year, with the company’s revenue growing by 38 per cent overall. The company is now considering UKEF’s other financial tools, including advanced payment bonds, supplier finance and performance bonds.
How UK businesseS
can get finance
Specialist guidance
Finance
Insurance
Exports contribute almost £900bn to the UK economy each year
In 2022/2023 UKEF provided £6.5 billion of direct support through loans, guarantees and insurance policies to UK businesses
UKEF provided £6.5 billion in financial support in 2022/2023 alone
to UK companies
Produced by Telegraph Media Group
Project manager: Tom Gadd
Editor: Rupert Murray
Writer: Elizabeth Anderson
Sub-editor: Tim Cumming Video and photography manager: Alex Kelly
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Web editor: Jasmin Nahar
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Stateside success: UK Export Finance helped Aquamare Marine gain traction in the the United States CREDIT: Gareth Iwan Jones
Exponential growth: Fourth Element experiened a significant uptick in revenue from exporting CREDIT: Simon Burt
Exponential growth: Fourth Element experienced an impressive uptick in revenue when they began exporting CREDIT: Simon Burt
Stateside success: UK Export Finance helped Aquamare Marine gain traction in the United States CREDIT: Gareth Iwan Jones
Exponential growth: Fourth Element experienced an impressive uptick in revenue when they began exporting CREDIT: Simon Burt
Business reporter Elizabeth Anderson on taking your business further with UKEF
