The budget offered eastern promise for exporters but other support is available, and on a global scale
For those looking to venture over the Great Wall, Mr Osborne’s announcement that he is to increase funding for UK Trade and Investment activities in China, as well as helping fund a series of trade missions, is welcome news. However, where do you look for help if your compass is set in another direction?
Entering any new market carries with it risks and expenses. And whilst these may be easier to control closer to home, as soon as a stretch of water divides you and your invoice, a whole new set of considerations come in to play.
Access to customer credit intelligence and knowledge of local terms and customs are but half the problem. Add to that the issues of foreign languages and currencies and it’s clear that getting any one of them wrong could at best erode your margin or at worst wipe it out completely.
Travellers Checks
The invoice finance industry has for many years been supportive of UK exporters and not just by the welcome provision of finance against outstanding invoices. Decades of experience have resulted in a raft of products aimed at assisting each stage of the business cycle and reducing seller risk.
Any sales process should start with a check on the creditworthiness of likely customers and without the benefit of a local grapevine it’s not always easy to get an up to date picture. Luckily, those invoice finance providers active in the export trade not only have access to the relevant information but can also insure the debt against default and/or insolvency.
Mi dispiace, ma non capisco!
The funding of export debts is understandably the driver for most businesses looking at the invoice finance option and with up to 90% on offer in some cases it’s not surprising. Despite global agreements and EU payment directives, delaying payment until just before the bailiff kicks the door down remains a national sport in some countries. Financing that cashflow gap is therefore the most serious consideration for most businesses.
However, it’s really only half of the solution to good cashflow management as these debts do need collecting. And let’s face it there’s no better excuse for not understanding a payment request if your knowledge of English is patchy and it will take more than talking loudly and slowly over the telephone or resorting to Google Translate to write an email.
Nessun problema, io parlo la lingua
Historically, UK invoice finance companies used correspondent businesses based overseas and took advantage of their local knowledge and ability to converse in order to collect outstanding invoices on their behalf. This network still exists and continues to provide valuable assistance in many parts of the world however the industry at home has evolved considerably over the years.
These days you can find providers employing banks of multi-lingual credit controllers working shifts in order to cover worldwide time zones. Currency accounts and exchange services have also added value to the offering by reducing the risks associated with rate fluctuations.
Any business looking to venture abroad would be wise to weigh up the invoice finance options and advice is available regarding choices and likely costs. Armed with this information, all you have to do then is make sure you budget for it – even if Mr Osborne didn’t.
by Steve Leeves