Our post BREXIT relationship with the EU is now over six months old and UK importers bringing goods in from the EU are starting to get used to some of the many changes they have had to familiarise themselves with.
If you are a business owner who is buying from the EU and selling those goods into the UK, you will have been impacted.
To help business owners get to grips with the changes there have been numerous publications, webinars, videos and information sheets provided by HMRC. These will help business owners to understand and, more importantly, comply with the changes. In fact, HMRC have even set up their own YouTube Channel where this information can easily be accessed.
It is important that business owners can reach out and familiarise themselves with the salient points. Whether the help and advice are required for businesses who:
At WeDo Trade Finance we are already working with a number of business owners who import goods from the EU. In some cases, we have been able to assist them beyond the simple funding requirement by helping them to understand who they can go to for advice so they can access the information they will need.
Although this initial bedding in period has not been without a few bumps along the way, it is envisaged that more and more SME businesses will be looking to import from the EU. A number of these businesses will be unable to negotiate credit terms with their Suppliers and may be looking for assistance in funding the purchase of the goods into the UK and also in paying the clearance costs upon arrival.
WeDo Trade Finance are happy to help with Supplier payments, Freight payments, Duty and also VAT if required – easing the burden on the day to day cashflow of your business whilst also providing significant buying power to our Clients.
If you are importing from the EU and could do with some assistance or advice, please get in touch – we would be happy to see how we can help you.
Well – I think there is little doubt they have been a huge help for many businesses who simply would not have made it through without one.
According to British Business Bank, £79.3bn of Loans have been made to 1.67m businesses across Bounce Back Loans, CBILS and CLBILS – of which £26.4bn were CBILS (across 109,877 separate loans – averaging out at roughly £240K each).
Roughly 1/3rd of all Loans have been taken by businesses based in London & the South East, with a further 11% of Loans taken by businesses in the North West of England – who were the next largest participants on a regional basis.
It is also interesting to note that £12.4bn of all Loans taken nationally are supporting businesses in the Wholesale and Retail sectors – with the High Street now hopefully starting to recover and, in turn, seeing their Supply Chain coming back into play.
In many cases the CBILS Lender has provided a Loan and taken security over the Company (such as a Debenture), which ties up the company assets to that lender and it will be interesting to see what happens when the same business is now looking for extra funding to support their Working Capital requirements moving forward?
How many of those Lenders who have taken a Debenture will be prepared to extend themselves further and provide additional or complimentary funding lines without the support of the Government backed schemes?
And how many of them will be prepared to grant Security to another lender who can come in and assist with the “in life” working capital requirements now these businesses are looking to grow again?
It remains to be seen whether taking a CBILS for some SME’s has helped in the short term but maybe hampered them in the long term as they now seek this additional assistance as they try to take their business forward again.
Let’s hope common sense prevails and the CBIL providers do agree to work alongside other lenders who will be able to help these businesses thrive again.
Or maybe the Government / British Business Bank will take a look at the intended spirit of these Loans, where they have provided 80% support to the lenders, and realise there may be another issue to sort out if good businesses who took CBILS Loans but had to provide a Debenture are to be allowed to breathe and grow again.
Interesting days ahead for sure.
Vince Tovey – Managing Director
The last 12 months have been a fight for survival for many businesses. Unfortunately, it’s likely that this fight will continue well beyond the relaxation of lockdown rules in the UK. In the world of business, cash has been king for a long time, but it’s likely to be more important than ever before in the near future.
UK Government support has been provided to businesses and has been essential to enable them to continue to trade. It’s important to remember that the support offered, including bounce back loans, CBILS, deferment of VAT, rent and rates, will need to be repaid. This is going to put more pressure on the cash flow of businesses involved.
Forward planning is going to be ever more key going forward, especially cash flow planning. The SMEs who are putting their revised numbers together for the next 6 to 12 months will be starting to identify their funding requirements and where those dips are – and how regularly they occur.
There will be businesses who will see their cash flow dip around the need to pay their supplier for goods. In some cases, these same businesses will see previously available credit lines no longer be available to them or be drastically reduced – especially if they deal with overseas suppliers and manufacturers.
In cases where the cash flow hole is created by the need to pay a supplier for goods, this is a scenario where Trade Finance can be the most suitable and powerful solution.
This is achieved by the Trade Finance provider stepping in to the pay the supplier, allowing the goods to be paid for in full, the goods to be shipped and for customer orders to be completed. The proceeds of which will then, in turn, repay the Trade Finance liability – making the whole thing a self-liquidating short terms transactional requirement. This process is unlike a loan which will have a formal repayment profile over an agreed period.
So, as SME businesses start to plan and enter a period of optimism after a difficult time, it is those who can plan their future cash requirements and source the right type of funding solution with the right funding partner who may find they manage the choppy waters ahead better than others.
For more information on how WeDo Trade Finance might be able to assist please get in touch:
Trade Finance can seem like a complicated or overwhelming concept. With that in mind, we wanted to give a typical example scenario of where it could directly support your business.
Imagine that a business is purchasing goods regularly from China on ‘Cash Against Document’ terms to the value of £100k / $137k. In turn, that business is selling these goods to its customer at a price, including VAT, of £150k monthly.
What this means is that the business is paying for their goods, whilst said goods are in transit, using its cash generated from historic sales.
The business owner is keen to increase its sales, and in turn profitability, and are talking to their customer around an increase in quantities which will result in an increase in sales. These discussions go well – to the extent that the customer places an order of £450k inclusive of VAT – an increase of £300k against their standard orders.
The business discusses this with its supplier and, whilst the supplier is able to provide the quantities in the required timescales, the payment terms of ‘Cash Against Documents’ remains the same. This means that the business will need to pay their supplier the amount of £300k / $411k which at this time they are unable to do.
The business is now in a ‘Catch 22’ situation: wanting to grow the business, a customer that has placed an order at a much higher level, and a supplier who can provide the goods – but it has insufficient cash in which to proceed.
This is where Trade Finance can help the business to unlock its cash flow. With a properly structured Trade Finance Facility, the Trade Finance provider will be able to pay the supplier the purchase price of £300k / $411k on the existing terms set out by the supplier. This means that whilst the goods are in transit to the UK, the Trade Finance provider will not require repayment until the goods have been sold, if an Invoice Finance facility has been implemented, or when the customer comes to pay.
This results in a scenario where the supplier has been paid, the customer has received their goods in line with the expectations and the business is in a great position to continue to trade at increased levels.
Why get stuck in a rut and lose out on business? Don’t have sleepless nights, get in touch with WeDo Trade Finance and we see how we can help
Businesses are facing many difficulties with trading overseas at the moment, whether it be delays in ports or the strength of the pound against the currency you are working with. With all of these difficulties affecting various traders, here at WeDo we want to share with you a few key areas to focus your attention to avoid unnecessary risks.
Being prepared is the best way to combat or factor in delays, added costs or ending up with goods that aren’t what you bargained for. Any business looking to buy goods from overseas must go in with their eyes wide open, be aware of the risks they will need to control and mitigate, to ensure they do not end up with a problem.
Utilising a Trade Finance Facility will likely go some way towards this as the lender will look to implement certain conditions against which they will provide the funding – this is actually more about protecting the business importing the goods than it is the lender.
Here at WeDo Trade Finance, we have many years of experience that have allowed us to build up a network of contacts who may be able to help you manage the above risks.
Indeed, we also ensure that our facilities are structured in such a way that they will help to protect you as much as possible, whilst remaining in line with the terms your Supplier is prepared to work with.