"The challenges exporters face and how to overcome them"


Chris Hardy, head of sales London, Bibby Financial Services, on exporting hiccups

export map of world

According to the latest figures from the Office for National Statistics (ONS) Britain’s overseas trading picked up in the third quarter of 2012, following a 15-year low in June.

Opportunities for small and medium-sized enterprises (SMEs) to penetrate overseas markets and increase order books remain very much available.

The ongoing uncertainty and instability in the eurozone has undeniably prompted many SMEs to revise their international trading strategies, with many looking further afield to find countries for their exports.

Indeed, the ONS has revealed that the EU is, for the first time, no longer Britain’s main export market.

In the three months to May, 51% of British exports were distributed to countries outside the EU while exports to countries within the EU fell by 7.2% – with businesses increasingly turning their attentions to fast-growing emerging economies in Latin America and Asia.

For businesses considering breaking into these wider overseas markets, there are a number of factors to consider, but there is also a lot of support available to enable UK firms to achieve their exporting goals.

Risk-averse funding

The greatest challenges for many small and medium-sized businesses in moving from a national to an international operation, is overcoming exchange rate fluctuations, dealing with the cultural, legal and language barriers, coping with extended payment terms and maintaining a healthy cash flow.

There is support to overcome these challenges, and it should be sought out for there are plenty of international opportunities for British SMEs to export their products, allowing for growth and expansion on the world market.

An international trade report by The Institute of Export and Trade found that inadequate access to finance remains one of companies’ biggest barriers to growth, with the lack of support from banks forcing 66% of firms to dip into their own finances to drive business growth.

And despite being well-intentioned, government initiatives such as the Enterprise Finance Guarantee have not succeeded in forcing banks to loosen lending criteria and boost lending levels to SMEs. 

There are other options to fund businesses than banks, and the alternative finance market grew by 23% this year. Independent specialist finance providers, such as Bibby Financial Services, support UK businesses involved in international trade by providing tailored funding solutions and support that best matches the specific needs of the business.

Exporters should be considering other viable sourcesof finance, including export factoring, which provides immediate upfront funding against outstanding domestic and overseas sales invoices.

Cultural differences

Business owners and managers should also not overlook a pool of potential international customers because of fears associated with financial, cultural or legal differences. Despite many firms being open to trading overseas, perceived financial and cultural barriers, as well as stringent export regulations can be seen as obstacles to growing a national company into an international operation.

Dealing with language barriers

Providers of export factoring such as Bibby Financial Services, house expert teams of experienced, multi-lingual staff, who will liaise with overseas customers for payment on the client’s behalf and help them overcome any potential cultural and communications barriers. As well as undertaking the collections and credit control, bad debt protection ensures overseas trade is conducted securely, protecting you from non-payment by your customers.

International credit risk

There are obviously a number of concerns for a company aiming to export abroad, one being the credit worthiness of an international company. All good export factoring companies should offer a credit check or bad debt protection, ensuring the credit worthiness of a foreign debtor and ensuing peace of mind for their UK customers.

Currency payments

It is crucial to ensure that your international customers can pay you in their local currency via their bank; having a health flow of cash between your companies is essential for smooth operations. SMEs can now source an invoice finance specialist with local expertise and the ability to offer multi-currency accounts, especially as many specialists have multi-national operations themselves, enabling you to work together in the countries you export to if you so wish.

Legal issues

Disputes, legal issues, non-payments and how to resolve them in the local region are one of the major concerns for SMEs considering trading abroad An export factoring company should be able to offer bad debt protection or assistance with foreign disputes in the country where the dispute is taking place or here in the UK.


Finally, become knowledgeable about incoterms. These are a set of three-letter standard trade terms (11 varying types) most commonly used in international contracts for the sale of goods. It is essential that any business is fully aware of the terms of trade before agreeing a contract to ensure that shipment and risk bearing responsibilities are clear and understood. Examples of incoterms are below and these can vary between different types of transportation:

• CPT – CARRIAGE PAID TO (… named place of destination) The Seller pays for moving the goods to destination. From the time the goods are transferred to the first carrier, the Buyer bears the risks of loss or damage.

• CIP – CARRIAGE AND INSURANCE PAID TO (… named place of destination) The Seller pays for moving the goods to destination. From the time the goods are transferred to the first carrier, the Buyer bears the risks of loss or damage. The Seller, however, purchases the cargo insurance.

Best of British

Accessing the finance needed to fund overseas activity will enable firms in the UK to take even greater advantage of opportunities on foreign shores. But businesses need to be aware there are facilities out there to overcome the challenges associated with trading internationally and that despite economic stagnation in the EU, there is still a strong demand for quality products from all over the globe

Chris Hardy is head of sales London, at Bibby Financial Services