Exporting goods

With Brexit causing a drop in the value of the pound UK exports are becoming more competitive and firms wanting a new route to growth should consider exporting. The government has recognised this and is further pushing its previously announced First Time Exporters initiative that helps firms new to exporting.

Where can I find advice on exporting goods?

The UK is a nation of exporters. A June 2016 House of Commons briefing paper noted that in 2015 the country exported £223bn to other EU member states, a figure that represents 43.7% of the overall global total of £510bn. Based on May 2016 government data, it is estimated that 9% of the UKs SMEs export and a further 15% are in the supply chains of other businesses that export. If you are looking to move into this area, there are a number of sources of advice available.

The government UK Trade and Investment (UKTI)

The first place to look should be the government’s UK Trade and Investment (UKTI) department which has links with more than 100 global markets. UKTI offers a number of services through its First Time Exporters initiative including export opportunities it becomes aware of, UKTI trade missions and events and access to a regional network of international trade specialists and research experts. A full range of services can be read on the GOV.UK website.
Exporting is Great

There’s also the Exporting is Great website. It offers an export guide, details events near you and features links to advice and export finance and insurance.
Become a member of the Institute of Export

You may also get value in becoming a member of the Institute of Export. Small businesses (up to 49 employees) pay £250 annually and can then access, among things, a technical export helpline which offers advice on matters such as documentation, export controls, customs procedures, payment, insurance and, importantly, the Bribery Act 2010 which carries serious penalties for breaches committed by UK companies convicted of bribery anywhere around the world.

What should I consider before I start exporting goods?

Before you start exporting you need to be certain that there’s a demand for what you’re selling. Just as importantly, consider if your products will work without any modifications – electricity is a key point to note. Also think how an unaltered UK product would appear in an overseas market. In China, for example, white means death and red is considered lucky. At the same time, take advice on your company name and that of your product. Be very aware that what might seem innocuous in the UK could appear, for example, to be a form of vulgar slang in your target market. International brands spend fortunes trying to find product names that mean nothing and which are inoffensive.

It’s important to give thought as to the method of distribution, noting that local infrastructure may not be to UK standards. Also how you are to communicate and promote your company overseas. Apart from language barriers there may well be issues that relate to packaging and health and safety.

Do also take time to investigate the state of play when it comes to protecting your intellectual property such as trademarks, copyright and designs. If you can’t protect yourself, you may need to find other markets to trade in.

Other questions exporters should be asking of information sources include:

Are there any restrictions on movement of goods?
What standards must I meet?
What are the duties, tax and import procedures?
How do I establish a presence in the market?
Do any preferential trade agreements exist?
How reliable is the legal system?
What trading entities are allowed to operate?
What will the trading relationship be when the UK leaves the European Union?

How do I protect my currency position when I export goods?

Trading outside of the UK means dealing with currency risk. If you get your pricing right but fail to protect your currency rate, you could, on the one hand make more profit if the rate swings in your favour. However, a move the other way could wipe out your profit – and more.

For anything other than personal travel money your best bet is to use a foreign exchange broker (just search on Google). They can offer advice and services on options such as forward contracts (a currency contract at today’s price that is paid for in the future), a stop loss order (which guarantees a minimum exchange rate) and a limit order (selling currency for another when the rate reaches a given limit).

Getting paid for goods you export

You need to get paid for your exports and just as there are risks to trading in the UK, there are risks in selling overseas. You will also have to cope with language and cultural barriers as well as different legislation and of course, distance. The following offers practical advice on how you can ensure the risks are minimised.

Risk assessments, credit checks and insurance

Risks, credit checks and payment

The first step is to understand the country risks for your customer including the political and economic risks as well as any foreign exchange and conditions.

Find out more

Next you need to run a credit check on the client; this will show up how they’ve dealt with liabilities in the past. There are a number of firms in this sector that can help – a web search for ‘international business credit search’ will offer options including credit agencies such as Experian, Dun and Bradstreet, and Creditserve.

In terms of payment, you can seek payment in advance before despatch. You can also seek a letter of credit where the customer’s bank will release funds once the relevant paperwork is completed. Another option is a bill of exchange where goods are only released once the bill has been accepted your overseas bank.

Credit insurance and further assistance

It’s also worth considering credit insurance which, for a fee, will cover a loss should the customer not pay. You can insure against commercial risk (pure non-payment) or political risk (some form of intervening government action).

Find out more

The private sector provides products in this area to support exporters. The British Insurance Brokers’ Asssociation is a good place to start – once on their website type ‘trade credit’ into the search box.

A part of UKTI, UK Export Finance has a number of products that can also help. Note that backing will only be given to firms exporting to certain countries and where cover is not available from the private sector. The government, in other words, is the backer of last resort.

Checklist: Tips to help you export for success

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Visit the government backed export websites

Examples include Open to Export and Exporting is GREAT

Visit Lloyds Bank's International Trade Portal

For help on exploring oversea trade opportunities, visit lloydsbanktrade.com

Consider membership of the Institute of Export

More information can be found via the Institute of Export.

Understand the implications of the Bribery Act 2010 and appoint a member of staff to oversee compliance

Further guidance can be found on the GOV.UK website.

Undertake to protect your currency position

Credit search, where possible, your potential customers

Be aware of different cultures, languages, customs and etiquette

Look beyond the traditional markets to areas of the world others tend not to go to

Consider if your products need customisation for local markets

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Where can I find advice on exporting goods?

The government UK Trade and Investment (UKTI)

Exporting is Great

Become a member of the Institute of Export

What should I consider before I start exporting goods?

How do I protect my currency position when I export goods?

Getting paid for goods you export