Financing International Trade: UK Export Finance on Supporting SMEs, Securing Funding & Global Trade Opportunities

Ben Bradford: 00:00:00

Hi, I'm Ben Bradford and welcome to the first ever edition of the Horizon podcast, bringing you the same amazing insights and contributions as the Horizon magazine, but this time bring it straight to your ears.

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And for our first episode, I'm delighted to be joined by Daniel McPartland from UK Export Finance as we delve into the support that they offer and how they can make your export dreams a reality.

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Enjoy the show.

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Foreign I'm Ben Bradford, editor at Horizon Magazine and it's my pleasure today to introduce you to Daniel McPartlin from UK Export Finance.

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port Finance back in December: 2021

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Thank you very much for joining us today.

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Daniel, how are you?

Daniel McPartland: 00:01:02

I'm very well, thank you Ben, thank you for having me.

Ben Bradford: 00:01:04

Good, no worries at all.

Ben Bradford: 00:01:06

Well, suppose, might as well jump straight in and we'll keep it simple.

Ben Bradford: 00:01:10

To start with, can you just explain what UK Export Finance is and how it helps businesses?

Daniel McPartland: 00:01:16

Yeah, absolutely.

Daniel McPartland: 00:01:18

So, UK Export Finance, we are the UK Government's export credit agency.

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years ago now back in: 1919

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We work very closely with the Department of Business and Trade, His Majesty's treasury, But also over 70 private lenders and insurers from sort of the private market, high street bank and other lenders.

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And we are here to ensure that no viable UK export fails for a lack of finance or insurance.

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And we do that at no net cost to the taxpayer.

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As I say, we work with a number of private market lenders.

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But to be very clear, we're here to complement the private sector and not compete with the private sector.

Daniel McPartland: 00:02:05

So we aren't a bank ourselves, we don't provide any direct lending or financing to businesses, but how we work is by providing government backed guarantees to financial institutions which enables them to then lend money to UK businesses and help them on their export journey.

Ben Bradford: 00:02:25

Like to the bit you said there and it's kind of a good tagline I suppose, that bit about no viable business failing due to lack of finance.

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through the financial year of: 2023

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I was surprised to say, hey, I think it was 650 businesses and B that half of those were SMEs.

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d SMEs per year by the end of: 2029

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Which, you know, is ambitious.

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Great target to have.

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Can you just explain then how important SMEs are to UK export finance?

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Because sometimes when you talk about finance like this, people immediately just think the multimillion pound big contracts.

Ben Bradford: 00:03:15

But obviously that's not the case.

Daniel McPartland: 00:03:18

Yeah, no, you're absolutely right.

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You'll see a lot of our marketing in the press and it will be those big ticket items, the multimillion, if not even hundreds of million pound deals that we provide support to.

Daniel McPartland: 00:03:32

And absolutely, you know, that's what we're here for and we do back those large transactions.

Daniel McPartland: 00:03:37

But as you rightly say, you know, SMEs are the backbone of the UK economy and are very much an area where we want to provide support to and more support to, as you rightly call on.

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rrently running to the end of: 2029

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And we are well on track for that, you know, as we are today, you know, just over halfway through the financial year, we're well on target.

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So this year we're targeting to 500.

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We've already achieve 70% of that target.

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So, as I say, well on track to get there to supporting SMEs.

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But ultimately our support, it's really there.

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It's for any business.

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If you are a business that is either already an established exporter or perhaps you've identified markets overseas where you'd like to expand to and are new to exporting, then again, that's where we can come in and provide support on.

Daniel McPartland: 00:04:37

So really, if you are turning over a million pounds all the way up to hundreds of millions of pounds a year, we will have support that we'll be able to identify and help you with.

Ben Bradford: 00:04:48

I suppose that kind of leads us on very nicely to the next question.

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You talk about the support, you're talking about the solutions that you offer.

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Could you just give us a very brief overview of what they entail, what they include and how they can help different businesses?

Daniel McPartland: 00:05:03

Absolutely, yeah.

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So we like to sort of break our support into three subcategory areas.

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So category one is helping businesses win contracts.

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So this is very much focused on overseas buyer financing.

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So it's an area perhaps where people aren't necessarily aware that we offer this type of support, but where you are perhaps going up against competitors overseas and your overseas buyers are looking for extended payment terms.

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As we're seeing a lot more now due to most countries around the world having economical challenges along with our own.

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So we can actually offer attractive financing terms for overseas buyers to purchase goods services from a UK business.

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So we will work with either an overseas buyer's bank in country or we can go to market here in the UK and find a bank to help fund a transaction.

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And that then obviously enables a UK business to open up financing for their overseas buyer, which enables them to perhaps purchase more goods than they typically would be able to, because obviously they can pay that off over a duration of time.

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Then Pot 2 is very much focused on businesses here in the UK, so that is then fulfilling the orders.

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So this is very much the working capital or bond support that we offer to UK businesses.

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So they might have one a contract with an overseas buyer and perhaps it's slightly larger than they typically would normally deal with.

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And thus they're going to need to buy additional supplies to produce the goods or even bring on more workforce or need more warehouse space, whatever it may be that comes up with these expanding contracts and expanding businesses when they are exporting and they have this working capital need, we will work with their banks, their current business bank, or if that bank isn't onboarded with us or perhaps isn't able to support that business, we can actually then help them with finding another bank that may be able to support them.

Daniel McPartland: 00:07:12

We will provide that bank with a guarantee.

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In most cases it's up to 80% of the total value of a facility that that will be will be provided.

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Typically, you know, it's trade finance facilities that we're talking about here.

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So it could be a trade loan or an overdraft facility or invoice financing.

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It really it's down to the bank and the exporter to decide what would work best for them and the business to give them the working capital that is required.

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And then that facility can be in place either on a contract specific basis or under a new product that we have, which is the general export facility where you have to qualify as an exporter to access it.

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It's a non contract specific scheme and it can be utilised for both working capital but also for bond payments as well.

Daniel McPartland: 00:08:01

So the likes of advance payment guarantees, warranty bonds, performance bonds, again some things that will come up when businesses are exporting these bond payments are perhaps something that will come out where they perhaps haven't been used to dealing with when they're just dealing with UK based businesses in comparison to overseas entities.

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And then lastly, and most importantly is ensuring getting paid.

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So we offer a standalone export insurance policy or credit insurance.

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This is on a contract specific basis and it's focusing on the buyer.

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So as we are today, currently, we do not offer insurance to any buyer that is based in an EU member country or any of the rich OECD countries.

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So that is then the likes of North America, Canada, Japan, Australia, New Zealand, etc.

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So it is aimed at the more deemed riskier territories, perhaps where the private market isn't able to offer insurance or isn't able to offer a competitive insurance package.

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So we will come on board and we will work with the UK business, they will provide us with some information on the contract and the buyer based overseas.

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And then like any sort of insurance, like you'll find with car insurance, home insurance, there's a premium paid to cover for a duration of time.

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So again, there'll be a premium that is based on the value of the contract, the length of time the UK company is looking for cover over, and then of course, the country in which the buyer is based, and a risk rating will be applied on that and an assurance premium will be provided.

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But it's quite a flexible policy.

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It covers most eventualities.

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So the obvious buyer failing to pay, cancelling an order partway through the contract, but also political and economical events in the country of the buyer, which could also cause them to not be able to pay.

Daniel McPartland: 00:09:56

And as we have seen over the last 18 months or so, been a lot of, you know, political and economical uncertainty across, you know, large waves of the globe and that's something that perhaps, you know, UK exporters haven't previously had to worry about and now it's something that they can mitigate against.

Daniel McPartland: 00:10:12

So across the board, that is a sort of three subcategory areas of where we, where we provide our support.

Ben Bradford: 00:10:18

Yeah.

Ben Bradford: 00:10:18

And there's, I suppose there's a lot there.

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When you take it in, you hear that you've got kind of you goods, businesses, your services, you cover as well.

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We talked already about SMEs.

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You've got kind of, from the UK point of view, you've got from the international, the buyer's point of view as well.

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And you've mentioned kind of a new service as well that you've brought on board there.

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So just putting you on the spot a little bit, I suppose, with these global uncertainty that's arisen and still around.

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We're coming out of COVID now.

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We're out of COVID That's been as well.

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How has export finance had to adapt and change?

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Or have you seen a change in what your customers or businesses are demanding from you?

Daniel McPartland: 00:11:10

Yeah, I think there's a wide range of changes that we've seen over the last two, three years and of course prior to that we were in a pandemic as well, which caused uncertainty across the board.

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Board for everyone.

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I think some changes we've seen is certainly overseas buyers looking for extended payment terms perhaps slightly further than the norm.

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So typically with the overseas contracts, your payment terms might be 60, 90 days payment after delivery.

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Perhaps now that's going up to 120 days or even further on from that.

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So that's creating real challenges for UK businesses in terms of managing their cash flow.

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They don't want to turn down these orders, but in some instances where they then have to view what cash is going to be in the business to be able to just continue their UK based activity as well as looking to expand overseas when there are these extended payment terms, that can really create quite a headache for a business to be able to manage that cash flow.

Daniel McPartland: 00:12:18

And that's as I say, where we can come on board and we can work alongside their bank and hopefully provide working capital solutions to manage their cash flow situations that they may have.

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But I think one sort of positive swing on it, I think particularly with Brexit and typically maybe UK based businesses were only looking at EU as their sort of international expansion, whereas with Brexit we've now seen smaller businesses actually reach further afield.

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You know, go, go to the Middle east, go to Southeast Asia, into South America, into sub Saharan Africa, really expanding, expanding their horizons and taking, you know, the opportunities that are there.

Daniel McPartland: 00:13:04

And, and, and, and as we, we, we've seen for a number of years, you know, there is so much interest in, in, in British made items having that stamp of this was, this was made in the uk, you know, that's, it gives UK businesses that sort of competitive edge over other entities overseas because of that Made in Britain stamp that they can, they can put on their items.

Ben Bradford: 00:13:28

As we mentioned at the beginning, Daniel, you're the UK Export finance manager for geographically North Yorkshire, Humberside, Teesside and temporarily Northern Ireland as well.

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So any business within those geographical regions, you're the guy to come to and speak to.

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But I presume in terms of a team and your colleagues, you've got colleagues that cover every other part of the UK and they'd be more than willing as well to speak to any business who falls within their geographical region.

Daniel McPartland: 00:14:02

Yeah, that's absolutely right, Ben.

Daniel McPartland: 00:14:04

So yeah, we split the UK into three regions, so I sit in the north region which covers all of Northern England.

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Scotland and Northern Ireland.

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We then have the Midlands and Southwest team and then the London Southeast team.

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I think there's just over 24 export finance managers.

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24, 25 of us.

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Now, as you say, based.

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We're all contracted from HO and we all live in our sort of geographical areas in which we cover.

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So absolutely, you know, depending on where, where a business is based, there will be an export finance manager that covers that area.

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You can go on the UK export finance website and there's a button that says find an export finance manager and you'll be able to locate all the information in terms of our emails, our mobile numbers and the areas in which we cover.

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But aside from that as well, again, as we are an export finance business, we cover the world.

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So we also have staff based overseas as well.

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So we call them country heads.

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So again, there's a little over 20 country heads.

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Typically they're based out of the embassies and they will cover larger regions.

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So for example, we have four country heads that cover all of Africa, one based in west east, one up in the north and one down in South Africa.

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So again, when businesses are looking to enter new markets, they might not be aware of sort of custom rules or even looking to gain more information on potential buyers overseas.

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We can make connections to our overseas country heads who are willing to speak with UK businesses and make introductions.

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But as I mentioned at the beginning as well, we work very closely with Department of Business and Trade.

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We, we kind of refer to them as our sort of sister organization.

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They have staffed in over 100 embassies around the world.

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And again, you know, they are there to be utilized by UK businesses as eyes and ears on the ground in these countries in which they might be looking to do business in, or even if they are actually perhaps going overseas to attend a trade fair or roadshows, things like that.

Daniel McPartland: 00:16:22

You know, we can put them in touch with our country heads or some of the staff from the department business and Trade, who can then help that business when they are then on the ground and looking to gain new business.

Ben Bradford: 00:16:37

That's great.

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And I think a couple of bits that I think really important is a, you've got those international basic, those international people who are there on the ground who understand their market and also how close.

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And that tie with Japan business and trade and kind of, I love how you mentioned was almost like that sister, sister branch, that sister arm that you've got there.

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And really businesses should be.

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And there's no reason why not to make the most of both of you.

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Kind of ask the questions, speak to you, make the most of the services because they're there and that is why you guys are there and why you're available.

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So you mentioned your website and that there is that kind of call to action button to locate your local export finance manager.

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But how would you say is the best way or is there another way that business can get in touch with yourself on the team?

Daniel McPartland: 00:17:35

Yeah, I mean it's a constantly moving piece for us to kind of raise the awareness of the support that is available.

Daniel McPartland: 00:17:41

So, you know, as I say, work very closely with departments of business and trade, but other government organizations and then obviously our stakeholders, so the likes of, you know, the big six high street banks.

Daniel McPartland: 00:17:51

But we are constantly looking at bringing on board other banks or other non banking financial institutions, as we would refer sort of the secondary market financial institutions.

Daniel McPartland: 00:18:01

We are always interested on bringing other financial institutions on board to work with us because of course that will then mean more access to finance for UK businesses, the more partnerships that we have.

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So a business can speak with their bank and depending on their relationship manager that they have, they should be aware of our services of UK export finance and how the bank can access us.

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So again, you know, speak to the bank, ask for support.

Daniel McPartland: 00:18:29

The bank may then bring us on board at that stage, reach out to the department Business and trade, they have international trade advisors, so a similar role to myself as an export finance manager.

Daniel McPartland: 00:18:41

Again, they can refer you to us, but as I say, come direct and I always say to businesses is it's never too early to engage us, even if you're perhaps not even exporting at this moment, or even ready to export, but you have the ambition that you want to be a business that is exporting or perhaps you don't have a contract in place yet, but are just looking to gain some advice or just extra information about the support that is available.

Daniel McPartland: 00:19:08

The earlier we come on board, the more support that we will then be able to find for a business.

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So reach out at the earliest opportunity via any means.

Daniel McPartland: 00:19:16

You can reach out to us by the traditional means of email and over the phone, but we've also got our own sort of LinkedIn profiles and reach out to us on LinkedIn.

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But you'll see us across the year.

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We attend many events that are put on by other sort of organizations, Chamber of commerce and trade associations and we also put on our own events as well alongside the banks that we work with.

Daniel McPartland: 00:19:42

So keep an eye out for those and come along and meet us.

Ben Bradford: 00:19:46

That's great.

Ben Bradford: 00:19:47

And I like how you're encouraging those businesses who maybe even just thinking about exporting or international trade, because sometimes they're the businesses who may be weighing up the pros and the cons, who's out there to help me.

Ben Bradford: 00:20:00

So you've been able to engage with those businesses.

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That might be the bit that tilts about the edge to go.

Ben Bradford: 00:20:05

Yes, I will step into that area.

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So I think that's kind of a really good point and from my point of view, a really good point to end on as well.

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So thank you very much, Daniel.

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I think you've done a fantastic job there of explaining how wide really UK export finance is in terms of your solutions and your products and your services, but also the types of businesses that you support.

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And there's no kind of set criteria of you have to be a business that falls within X, Y and Z to be able to come and talk to you.

Ben Bradford: 00:20:39

So thank you very much for your time and for doing that today.

Daniel McPartland: 00:20:43

Yeah, really appreciate you bringing me along, Ben.

Daniel McPartland: 00:20:46

So, yeah, look forward to working with yourselves moving forward.

Ben Bradford: 00:20:49

That's great.

Ben Bradford: 00:20:49

And thank you everyone for listening as well.

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If you've got any other questions for Daniel, then by all means, if you get in touch directly with himself with UK Export Finance, or you can pass them on through ourselves.

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If you want to hear more from the podcast, then by all means you can subscribe and receive notifications directly from your podcast streaming service.

Ben Bradford: 00:21:11

And equally, if you want to hear more from Horizon in general regarding the magazine and latest international trade news, then please do subscribe to our monthly newsletter.

Ben Bradford: 00:21:21

But until next time, thank you very much for listening and thank you very much again, Daniel, for your time.