East Lancashire Chamber of CommerceInternational Trade Club - 20 July 2010

Export Finance &

Introducing Chamber Invoice Finance

Nigel MillsDirector Strategic MarketsNigel CrosseHead of International Business07774 483202

AgendaWorking Capital Management UK & Export

1. Market place • UK business & banks• Export environment• Trade finance rends• Invoice finance for open account trade

2. Components of working capital • Approval & new markets• Fund with certainty• Collect quickly and professionally• Protection

3. Introducing Chamber invoice finance

4. Case studies

5. Questions & Debate

Our role: make12 become 13!!

Count the people, wait until they shift, and then count them again

Who and what

Nigel MillsDirector Strategic Markets

RBS Invoice Finance

Nigel CrosseHead of International Business

RBS Invoice Finance

Banking / Trade Finance

Biggest invoice finance business in the world

Innovation SME’s & Export

• USA/Europe/ India

• Export collect and protect

• EFG top ups

• Alliances ie. BCC

• Sectors • Pharmacy

• Manpower

• Agriculture

£5m pa + 10% Yr on Yr export

Market place UK SME’s editorial

Market place UK SME’s Research

•Olympic Glass; sealed unit manufacturer key message – essential to insure your debts

•EVC design & print – keep on top of your top debtors and have good credit control

•Intelligent property maintenance – avoid risk, establish credit limits and stick to them

•Mimetic Vacuum forming – have tight credit management and insure on new customers

•Hayley Shape design – Be careful with terms of trade with POD’s etc

•Atlas Polymers – Check credit worthiness especially on exports

Market place – not brilliant for SME’s

Domestic Scene

1. New Markets difficult

2. Bank Funding ? Neutral/Uncertain

3. Late payments 10 – 15 days

4. Trade Insurance Limits Prices

5. Insolvency/ “Busts” increasing

Mkt place – export SME’s

2009 survey SME's

41% seen growth in Export

29% refocused to international markets

42% access to export finance diminished

33% late payment issues overseas

55% Biggest problem with Europe

BCC Exporting Britain 2009

87% members Export Europe

57% don’t use any trade finance i.e. open account

Mkt place Export break down - Where

North America

15.8%

Asia 11.9%

South America

1.8%

Middle East 3.9%

Africa 3.4%

Non-EuroZone 13.1%

UK Exports by Value of Goods in 2008

Euro Zone 49.8%

Source Data: International Trade Centre

64,3

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US

German

yNeth

erlan

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France

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Belgium

Spain

Italy

Sweden

China

USD

(mill

ions

)

1,46

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781,

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594,

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541,

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537,

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467,

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455,

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200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

German

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China

US

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France NL

Italy

Belgium

Russia

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a UK

USD

(mill

ions

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273,

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205,

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136,

700

128,

300

127,

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121,

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89,7

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75,000

150,000

225,000

300,000

375,000

450,000

525,000

United

States

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France

Spain

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Goods exports by Value (2008)

Source Data: International Trade Centre

Top 10 destinations for UK exports

Services exports by value (2007)

Mkt place Export Environment Mix UK is the 11th largest world exporter by value of goods and the 2nd by value of services

Egypt, 2%

France, 1%

Ireland, 1%

Other, 20%

Other, 36%

Turkey, 2%

Italy, 1%

Morocco, 1%

China, 14%

Thailand, 3%

Saudi Arabia, 2%

Pakistan, 3%Taiw an, 4%

Spain, 2%

UAE, 5%

India, 7%

HK, 7%

S Korea, 9%

UK, 10% Bangladesh, 2%Japan, 2%

United States, 1%

Malaysia, 1%

Mkt place Trade Finance trends – doc credits

Mkt place Trade Finance trends – Invoice Discounting

9.19.89.16.64.3ID

1.41.61.51.31.0Factoring

20092008200720062005Export

(ABFA)

Export Invoice discounting doubled 4yrs to 2010

Background Insurance collapsed in 2008-9

Growth again in 2010

2008-9 Non Rec/Insured -14%

Mtk place Trade Finance trends – ample funds available

Business Sales volumesLimits shaped to minimize cost

Funds drawn by businesses

Available debtor to advance

Working Capital Management Disciplines & Tips

Trade insurerCredit controllerBank o/dCredit reference agency

Can not pay?Will not pay?Waiting to payLikely to pay

Trade insurerGood spread Guaranteed/

indemnity Risk = gross

margin

Rigorous credit control

No leewayLegal action on

tapStop deliveries

Tight invoice terms

Proof of deliveryConfirmed lines of

finance

Clarify whoCredit checks

Agree limitStick to it

Constantly update

ProtectCollectInvoice & FundApprove

Invoice Finance Explode the Jargon

Approve Fund Collect Protect

----- Invoice Discounting ---- ---- }

----- ----- ---- --- - Factoring --- ---- ---- ----- --- --- }

---- ---- ---- ---- ---- ---- ---- Non recourse factoring ---- ---- ---- ------ }

31% 10%

8%EH 36%

Chamber Invoice Finance Late payment remedy

Overdue Debt > 30 Days vs Sales Ledger Balance

£30,000,000

£40,000,000

£50,000,000

£60,000,000

£70,000,000

£80,000,000

£90,000,000

£100,000,000

£110,000,000

£120,000,000

£130,000,000

05/01/200719/01/200718/02/200704/03/200723/03/200715/04/200729/04/200713/05/200727/05/200710/06/200724/06/200708/07/200722/07/200729/07/200710/08/200726/08/200709/09/200721/09/200721/10/200704/11/200718/11/200709/12/200728/12/200713/01/200827/01/200810/02/200824/02/200809/03/200830/03/200813/04/200827/04/200818/05/200801/06/200815/06/200829/06/200813/07/200827/07/200810/08/200824/08/200814/09/200828/09/200812/10/200826/10/200816/11/200830/11/200814/12/200828/12/200811/01/200925/01/200908/02/200922/02/200908/03/200922/03/200905/04/200919/04/200903/05/200917/05/200931/05/200914/06/200928/06/200912/07/200926/07/200909/08/200923/08/200906/09/200920/09/200904/10/200919/10/200901/11/200915/11/200929/11/200913/12/200927/12/200910/01/201024/01/201007/02/201021/02/201007/03/201021/03/201004/04/201018/04/201002/05/201016/05/201030/05/2010

£0

£50,000,000

£100,000,000

£150,000,000

£200,000,000

£250,000,000

£300,000,000

£350,000,000

£400,000,000

£450,000,000

£500,000,000

£550,000,000

£600,000,000

£650,000,000

Overdue Debt > 30 Days Sales Ledger Balance

`

Approve ProtectCollect Fund

6 Sources of info

Constant update

Record limit

Soon as invoiced

Any currency

85%

Multilingual

Legal letters

Claims process

+ 5-10 days

£ clearance

Insurance/ not

PUG/insolvency

Chamber Invoice Finance A>F>C>P

Chamber Invoice Finance exports to over 50 countries

Chamber Invoice Finance - IT FacFlow

Chamber Invoice Finance Solutions & Price

• Approve who you tradeNew markets Avoid bad debts

• Very close to debtor 85% funding

• Improve payment limitsAve. 55 days + £50k cash £2m t/o

• One contactCredit referenceFinance vs. o/dTrade insuranceDaily bankingIT platform

• Free software

• Free credit approval

• Free daily banking

• 10% discount for BCC intros

• Signed agreement not “on Demand”

• 3.5% over base rate

• 0.5% - 1.5% of turnover

• £1 - £2k set up

From … “£10 a day”

Benefits Cost

1.) Case study

Columbia Staver Ltd.

HSBC & Euler Trade Insurance

85% Export – 15% to Brazil etc.

£3m t/o Computer Parts

Trade Insurance withdrew cover

HSBC withdrew finance

BCC Cambridge

RBSIF Solutions:

EFG core capital

Invoice Finance

Faster payment

75% finance day of Invoice

Approved territory fully

Difficult territory max 15%

£400k raised

2.75% + base

0.62% t/o service charge

2.) Case study Metallisation

• Spray + weld machines (OEM + Spares)

• £9m t/o export 50 countries

• Lloyds & Atradius

•only fund insured debt

• Insurance reduced – PROBLEM!

Options

• Self “insure” buyer risk?

• overdraft or use own cash

• Difficult territories on L/C’s

Chamber Invoice Finance solution

Approval of customers on line

•Debtors assigned – 75% funding blend

•Good territories + other territories up to 10% of mix

•Credit control service

•Confidential or disclosed

•Set as ‘disaster cover’

Premium retained if claims over £50k

Premium returned if claims under £50k

3.) Case study Team Leyland• Automotive parts £3m sales

•90% export {Malta to Kazakhstan }

•Vehicles cash up front

•Components export insurance

•Atradius since 1993

•Main supplier withdrawing credit terms

•Sector risk …Limit withdrawn

•£2m limits drop to £700k 20% price rise

Options

•Reduce sales

•Trade on open account & take the risk

•But bank may not lend without insurance

Chamber Invoice Finance solution

•Provide Bad debt protection on Export and Domestic buyers replacing Atradius?.

•Approval of customers online

•Debtors assigned ~ 80% funding ~ collection and protection good territories ~ 50% on other territories (max 10% 0f sales)

•Credit control using major trading languages.

•Improved liquidity to pay key suppliers.

•Obtain new sources of supply or early settlement discounts.

•

Working Capital for Exporters

Need new thinkingSME’s keen to ExportFunds available but SME’s cautious L/C’s flat & moving “online”Trade insurance has reducedInvoice Discounting growing fast case study Lots of support

Chamber Invoice FinanceFast Response 0800 085 6155