The prior article examined how chancellor George Osborne aimed to double UK exports to 1tn per year by 2020 and get 100,000 more companies exporting as part of the UKTIs National Export Challenge. After all, Britains export of products hit a record high in 2013, rising to 304.3bn from 300.5bn in 2012.
Since then, however, exports of goods have decreased to 23.5bn, with many firms blaming the rising value of sterling for hampering efforts to sell goods, especially to continental Europe and China. This makes it an opportune time to find out who to go to and what to do in preparation for your exporting endeavours.
Furthermore, a demand for foreign trucks and lorries has worsened Britains trade deficit as transport companies scramble to buy vehicles to ferry around internet shopping deliveries as demand increases.
While it may not be the best of news, the UK’s transport chaos certainly offers up a lesson to all businesses: work out how your goods are physically going to get from A to B.
As Russell Grazier, regional director of global transaction services at NatWest, pointed out: If you are getting your goods out to South Africa and your sale falls through, 6,000 miles away, it’s either a huge loss or you have to find someone else who is willing to buy them, which is extra time and money.
This was echoed by Hugh Bailey, director of the British Exporter’s Association (BexA). He suggested that businesses of all sizes needed to have written contracts, as well as clearly defined and agreed terms of delivery. It was also crucial, he said, to prepare bids, costings and quotations.
Bailey advised: Work out and understand the true costs of preparing, documenting and shipping your goods to the place of destination. Also keep in mind costs associated with trade finance and your travel costs.
Read more on exporting:
- Working towards the government’s 2020 export target starts now
- UK businesses blame lack of finance for export delays
- The key fundamentals to address for any business considering exporting
In terms of help, HM Revenue & Customs (HMRC) offers a range of advice and guidance, while the International Chamber of Commerce has a published document on the international commercial terms used worldwide for the sale of goods. It carefully defines where risk passes from seller to buyer and who covers costs of freight, insurance, customs duty.
Perhaps the most crucial aspect to consider before you start exporting is your finance as well as how you’ll get paid.
Grazier claimed that understanding export mechanisms and regulations, as well as finding out what funding requirements you needed to go abroad, was paramount to any exporting company’s success.
He said: If you are going to expand abroad you are going to need to stock up on raw materials, new premises and equipment: you have to invest in your business in anticipation of that expansion so you need to go to your bank with details of your business plan in order to get the necessary funding.
Taking into account the market trends as far as price elasticity, negotiation style, credit terms and acceptable methods of trust, are just some of the factors that need to be considered. And, according to Grazier, it always helps to know whether there would be any time-lag between the shipment of goods and payment.
You should always seek the right advice and guidance from appropriate parties outside of banking as well as within banking, making sure that you investigate the market you are selling to, or wanting to sell to, and that there is a good market of opportunities to exploit,” Grazier explained.
UK Export Finance, for example, has regional trade finance advisors at the ready to help any exporting firm in need. It works closely alongside banks and individual companies, so is best placed to provide trade finance and insurance solutions.
However, Grazier explained that such government departments weren’t the only source available for exporters. He suggested that banks were more than willing to offer customers banking-related advice.
“We are quite happy for businesses to come to us at first, from a risk management and working capital perspective as thats the bit we focus on, but also we can assign someone to you to make sure that youve considered the other areas that are important to exporting before you start,” he said.