Experian’s latest research uncovered that thousands of UK companies could be missing out on export opportunities and with it, the chance to increase their turnover significantly. This makes venturing into the world of export for the first time an exciting prospect for any company.
However, it’s important that new exporters keep their wits about them and remember the basics. Applying a few simple rules from the outset will help to reduce risk, maintain a good credit record, attract finance and keep on top of potential cash flow issues.
Tip 1: Immerse yourself
It’s critical for a first-time exporter to gain knowledge about their prospective market and plan a strategy. This includes understanding the country itself and its economic & financial stability, as well as your future customers and the specific need for your product. You also need to get to grips with its company culture, finance, language and legal requirements.
Tip 2: Only fools rush in
Make sure that you investigate the financial standing and history of any prospective international partners and clients. It can be difficult to judge at a distance whether they present a high risk, so it’s worth investing in some in- depth company information to understand their credit worthiness and payment performance.
Tip 3: Cash flow across borders
Exporting creates certain pressures on cash flow that domestic companies does not. The very process of exporting is slower, therefore you need to be aware that there might be a bigger gap between the production & shipping of goods and getting paid. You could consider insurance to guard against the impact of not being paid on time.
Tip 4: Manage your costs
You will more than likely have to cope with additional logistical problems such as international transportation of goods which can cost more than you think. Make sure that you shop around before you commit to any upfront costs and research what currency you should be paid in to guard against currency fluctuations.
Tip 5: Strictly does it
Put a stringent credit management and collections procedure in place. This will provide a consistent guide for your customers and suppliers on how you will manage receivables and how you will deal with non-payment.
Tip 6: Attract trade finance
Many exporters are turned down for trade or export finance because their credit score is not strong enough. Make yourself more attractive to would-be funders by always paying your invoices on time. Ensure that your credit record is correct and informing the relevant credit reference agencies of any changes within your company.
Tip 7: Understand the restrictions and regulations
Many countries have restrictions on foreign ownership and investment, so you need to be aware of any possible state intervention or heavy regulation. You also need to be aware of your commitments here in the UK in terms of reporting additional income from exporting.
Tip 8: Plan long-term
Many countries favour companies that can prove their long-term commitment and although you should go into exporting with the view of it as a medium-to-long term activity, it pays to future-proof yourself with a reactive exit plan should the need arise. Particularly considering any potential rises in inflation a plan of action could come in useful further down the line.