Birmingham - Safer trading with Coface #3
1
Many UK small businesses have a lot to offer in overseas markets but are reluctant to take the risk. In the third of Coface’s advice articles for SMEs in Birmingham, we explain how to expand overseas without over-exposing your business. The Government’s newly appointed Business Secretary, Sajid Javid, has an overflowing in-tray but perhaps his greatest challenge will be to help rebalance the UK economy towards export-led growth. The British Chambers of Commerce was quick to say that one of his biggest priorities “should be kick-starting a revolution in exports, to get more companies trading around the world.” 1 This is no easy task: domestic growth has driven the UK recovery and export trade still lags behind. According to the latest balance of payment statistics 2 , the UK’s trade deficit in goods and services for March 2015 was £2.8 billion, albeit better than February. Improving this record will require patience, persistence and a change of culture within many British businesses who currently believe the export market is not for them. If exporting is going to take off, the West Midlands can show the way. The most recent HMRC figures 3 show that the region was one of only three to see an increase in exports in 2014 (up 5.8%) and also achieved the largest percentage rise in exporting businesses (0.7%). The West Midlands also stands out because it is less dependent on European markets than other parts of the UK. Largely thanks to the region’s thriving automotive sector, China is now the region’s biggest export market (the value of goods increased by 32.4% in 2014). And yet it’s likely that much of this export success is being driven by larger businesses. A survey of more than a thousand UK SMEs by KPMG 4 , found that more than a third of small businesses and a fifth of mid-sized businesses had no interest in exploring overseas markets, despite the rewards on offer including faster growth. Sadly, it appears that many are deterred by the unfamiliar language and business culture, along with the fear of exposing their businesses to greater risk, including bad debt. However, SMES do not have to miss out. Support for companies who want to export is available from the Government’s UK Trade & Investment Department (UKTI), local Chambers of Commerce and trade organisations such as the British Exporters Association (BExA). Coface has developed two policies for SMEs with turnover of up to £10million. Premier Trader and SafeTrader are available for a fixed annual price which includes credit insurance cover against insolvency or protracted late payment by overseas customers and payment collection. As well as peace of mind, this gives you the confidence to grow your business beyond UK boundaries and could help you demonstrate your financial health to potential investors. For more information call 01923 01923 478111 or visit www.cofaceuk.com References 1 BCC comments on the appointment of Sajid Javid, BCC media release, 11 May 2015 http://www.britishchambers.org.uk/press-office/press-releases/bcc comments-on-the appointment-of-sajid-javid.html 2 UK Trade (summary), March 2015, ONS, 8 May 2015 http://www.ons.gov.uk/ons/rel/uktrade/uk trade/march-2015/summ-uk-trade--march-2015.html 3 Regional Trade Statistics Fourth Quarter 2014, HMRC, 5 March 2015 4 Export Week: 36% of UK small businesses shun overseas expansion, KPMG, 10 November 2014 http://www.kpmg.com/uk/en/issuesandinsights/articlespublications/newsreleases/pages/e xport-week-36-of-uk-small-businesses-shun-overseas-expansion.aspx Safer trading with Coface Most importantly, it is possible to trade safely overseas if you follow Coface’s five tips to mitigate the risk: 1. Work with an established provider of business information who can tell you about the business culture and trading situation in a potential market. Coface is present in 67 countries and our website provides free analyses on country risk and the business environment of most countries around the globe. 2. Use credit assessments to evaluate the trading record and financial health of overseas customers. Coface has access to a global database which tracks the trading behaviour of over 65 million companies. 3. Obtain credit insurance so you can be confident of recovering the value of an insured bad debt in the event of insolvency or protracted late payment. When evaluating credit insurance providers, check their record in insuring export trade because it’s important that your insurer has experience and resources in your key overseas markets. 4. Practice sound credit management: insist on a contract; keep a close eye on the payment behaviour of overseas customers and be wary of deviations from their previous practice; base credit limits on a company’s financial health (don’t increase them as a reward for good payment behaviour or an inducement to place an order). 5. Outsource debt collection as this will help maximise cash flow and reduce payment delays, as well as saving you valuable time. Collection agents should understand the local cultural and market conditions and are fluent in your customers’ languages.
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Many UK small businesses have a lot to offer in overseas markets but are reluctant to take the risk. In the third of Coface’s advice articles for SMEs in Birmingham, we explain how to expand overseas without over-exposing your business.
Transcript of Birmingham - Safer trading with Coface #3
Many UK small businesses have a lot to offer inoverseas markets but are reluctant to take the risk.In the third of Coface’s advice articles for SMEs inBirmingham, we explain how to expand overseaswithout over-exposing your business.
The Government’s newly appointed Business Secretary,Sajid Javid, has an overflowing in-tray but perhaps hisgreatest challenge will be to help rebalance the UKeconomy towards export-led growth. The BritishChambers of Commerce was quick to say that one ofhis biggest priorities “should be kick-starting arevolution in exports, to get more companies tradingaround the world.”1
This is no easy task: domestic growth has driven theUK recovery and export trade still lags behind.According to the latest balance of payment statistics2,the UK’s trade deficit in goods and services for March2015 was £2.8 billion, albeit better than February.Improving this record will require patience, persistenceand a change of culture within many British businesseswho currently believe the export market is not for them.
If exporting is going to take off, the West Midlands canshow the way. The most recent HMRC figures3 showthat the region was one of only three to see an increasein exports in 2014 (up 5.8%) and also achieved thelargest percentage rise in exporting businesses (0.7%).The West Midlands also stands out because it is lessdependent on European markets than other parts of theUK. Largely thanks to the region’s thriving automotivesector, China is now the region’s biggest export market(the value of goods increased by 32.4% in 2014).
And yet it’s likely that much of this export success isbeing driven by larger businesses. A survey of morethan a thousand UK SMEs by KPMG4, found that morethan a third of small businesses and a fifth of mid-sizedbusinesses had no interest in exploring overseasmarkets, despite the rewards on offer including fastergrowth. Sadly, it appears that many are deterred by theunfamiliar language and business culture, along with thefear of exposing their businesses to greater risk,including bad debt.
However, SMES do not have to miss out. Support for companies whowant to export is available from the Government’s UK Trade &Investment Department (UKTI), local Chambers of Commerce andtrade organisations such as the British Exporters Association (BExA).
Coface has developed two policies for SMEs with turnover of up to£10million. Premier Trader and SafeTrader are available for a fixed annualprice which includes credit insurance cover against insolvency orprotracted late payment by overseas customers and payment collection.
As well as peace of mind, this gives you the confidence to grow yourbusiness beyond UK boundaries and could help you demonstrate yourfinancial health to potential investors.
For more information call 01923 01923 478111 or visit www.cofaceuk.com
References1 BCC comments on the appointment of Sajid Javid, BCC media release, 11 May 2015
http://www.britishchambers.org.uk/press-office/press-releases/bcc comments-on-the
appointment-of-sajid-javid.html
2 UK Trade (summary), March 2015, ONS, 8 May 2015
http://www.ons.gov.uk/ons/rel/uktrade/uk
trade/march-2015/summ-uk-trade--march-2015.html
3 Regional Trade Statistics Fourth Quarter 2014, HMRC, 5 March 2015
4 Export Week: 36% of UK small businesses shun overseas expansion, KPMG, 10
November 2014
http://www.kpmg.com/uk/en/issuesandinsights/articlespublications/newsreleases/pages/e
xport-week-36-of-uk-small-businesses-shun-overseas-expansion.aspx
Safer trading with Coface
Most importantly, it is possible to trade safely overseas if youfollow Coface’s five tips to mitigate the risk:
1. Work with an established provider of business informationwho can tell you about the business culture and tradingsituation in a potential market. Coface is present in 67 countriesand our website provides free analyses on country risk and thebusiness environment of most countries around the globe.
2. Use credit assessments to evaluate the trading record andfinancial health of overseas customers. Coface has access to aglobal database which tracks the trading behaviour of over 65million companies.
3. Obtain credit insurance so you can be confident of recoveringthe value of an insured bad debt in the event of insolvency orprotracted late payment. When evaluating credit insuranceproviders, check their record in insuring export trade becauseit’s important that your insurer has experience and resources inyour key overseas markets.
4. Practice sound credit management: insist on a contract; keepa close eye on the payment behaviour of overseas customersand be wary of deviations from their previous practice; basecredit limits on a company’s financial health (don’t increasethem as a reward for good payment behaviour or aninducement to place an order).
5. Outsource debt collection as this will help maximise cashflow and reduce payment delays, as well as saving you valuabletime. Collection agents should understand the local cultural andmarket conditions and are fluent in your customers’ languages.
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