Bibby Financial

Feature by Andy Meadwell, international trade finance spokesperson for Bibby Financial Services

Although there has been some debate over the impact on exports of a weak pound, new research undertaken by Bibby Financial Services suggests that the UK economy is starting to reap the benefits. It revealed that 41 per cent of business owners have experienced growth in the export side of their business, showing UK businesses are overcoming perceived challenges to international trading, such as language barriers, and finding solace in the strong Euro. Further findings include 31 per cent of businesses stating that the strengthening of the Euro has had a positive impact on their business, and 29 per cent saying that they have had to refocus their efforts on international markets due to the economic downturn. Although the research indicates that businesses are still finding domestic trading conditions tough, it appears that international trade is booming, and the latest statistics from the CBI, which show that the volume of UK exports increased by 0.8% in August,only serve to add further evidence to this statement. 

Worryingly, however, the research also highlights some ominous trends amongst UK businesses. 42 per cent said that access to finance has diminished, and this, coupled with the fact that 33 per cent of businesses stated that late payment is a major problem for UK exporters, means that financial liquidity and cash flow are becoming increasingly troublesome factors for UK businesses.  Credit control for overseas customers is a huge barrier when trading abroad, with many countries’ payment habits differing from the UK standard. This can have a significant impact on their domestic financial commitments, as late payment from international customers has a detrimental effect on financial liquidity, meaning less money is available to meet creditor payments, pay staff wages and invest in areas such as business development.

The research also showed that 55 per cent of businesses feel Continental Europe is the significant problem area. With heavy regulation in many countries on the continent, and differing legal systems, it is no surprise that many of the respondents have trouble when chasing payment overseas. Specialist invoice finance facilities can combat the difficulties encountered when liaising with international accounts departments, as the invoice financier takes on the responsibility for chasing and collecting customer payments using in-house, multilingual teams. These facilities not only help businesses keep cash flow healthy and provide the necessary funding for growth, but also enable business owners and managers to get on with what they do best – driving their business forward. Overall, the research is a positive sign for the UK economy, with businesses responding well to the challenging conditions that trading on the international stage can bring. 

We would expect external trade statistics over the forthcoming months to show an increase in the volume of UK exports, as well as a decrease in the deficit of trade in goods, complimenting the findings from our research. The research surveyed 200 small and medium sized businesses across a range of sectors and was compiled in order to reveal how the recession has impacted on the UK’s import and export markets. For more information visit www.bibbyfinancialservices.com or call 0800919592