UK exporters that had previously only traded with the EU are now having to wise up to the fact that Europe may become a true export market, and that they will have to register as an ‘Economic Operator’ and need an EORI number. Export delivery terms will need to be formalised and be able to evidence export for zero VAT instead of destination accounting. This will be particularly felt in Northern Ireland. As members of BExA, Trade Finance Global heard from Susan Ross MBE, honorary Vice-President of BExA.
The British Exporters Association asks SME exporters to share stories of where government support works… and what is needed for the post-Brexit environment
At the same time as Brexit, the UK’s small and micro exporters are challenged with implementing ‘Making Tax Digital’ (MTD) for HMRC. A business owner might ask ‘in what way is an Excel spreadsheet not digital’ and there are some cheap short cuts, but with MTD likely to extend in future to other areas such as payroll, now might be the time to scale up fully. Most accounting firms will have developed special relationships with particular MTD providers and be able to set up a system for a business because it helps them to do the business’ accounts. But still the SME has to devote time to learning another new system.
Small companies don’t have spare resources or a department supplying training. Their managers are busy at the ‘coal face’ and can’t devote valuable time or cash to attending training or conferences to understand ‘the big picture’. On the other hand, they have a huge advantage over large corporates in that the reporting lines are so much shorter, so innovation can ‘get done’ so fast that they won’t realise how much they are innovating. The UK’s aerospace and automotive sectors have developed quite a name for innovation, largely built on the work of their supply chains. With the demise of the High Street perhaps we should nurture this and aim to change the Adam Smith quote to be that we are a nation of innovators.
It seems that a lot of SMEs get in to exporting when they receive their first overseas order for their product. This brings some urgency into the need to wise up to how to export safely. The British Exporters Association (BExA), an independent national trade association run by exporters for exporters, is working on ‘signposting’ resources for the export community. This will complement its set of 7 useful guides to exporting that are freely available on the web. BExA is also offering its SME members, for the month of April 2019, five free Dun + Bradstreet business information reports each, to help with understanding their overseas customers better. An SME’s first years’ membership of BExA could pay for itself immediately.
Acutely aware of SMEs’ challenges in relation to access to finance, BExA has consistently lobbied UK Export Finance (UKEF) to provide support to help with exporters’ working capital needs and continues to be intricately involved in UKEF’s revitalisation, including the introduction of the Working Capital Guarantee Scheme and bond support, the widening of the support both in value and by avoiding the need to name a specific export contract, and now to delegation so that banks can streamline the approval process. BExA is working on trying to get an allocation of the Direct Lending Facility to SME finance needs. The association was also instrumental in widening UKEF’s export credit insurance – these covers are widely used as a backbone to trade finance.
BExA’s current challenges in relation to SMEs include:
- Finance support for companies that are tendering fixed price in foreign exchange, for the risk that the contract is won at a later date when movements in the exchange rate have wiped out the profit margin.
- Responding to the EU consultation on export credit insurance. UKEF has been a great support for all sizes of exporter where commercial insurers have limited appetite. We need that to continue, but also need UKEF to be able to cover an exporter’s first export even if that is a sale to an EU destination.
- Access to finance: we need the British Business Bank to extend from being an investment bank to
beingable to provide clearing facilities where an SME is not able to obtain suitable terms from a commercial bank.
Other areas of BExA focus include extending the reach of the Department for International Trade (DIT) where, disappointingly, the Passport to Export scheme is currently closed. BExA is also active in encouraging challenger banks and fintechs to support the SME space, and opening up UK aid to enable companies to bid alongside foreign companies.
BExA is well-regarded by UK Government in relation to its lobbying. But it needs some help: there is nothing like a good story in explaining what could be done better, and so BExA is looking to hear exporters’ stories – which will be used on a ‘no-names’ basis. This includes examples of where UK support has worked, and where more is needed. If you have a story that would help us to explain exporters’ issues, please get in touch – email@example.com.