International Trade

Bigger Advances In 'Smaller' World

April 2008
Sponsored by Fortis Commercial Finance

The world is getting smaller, or so it may seem. Technological advancements and political and legislative agreements in recent years have greatly increased the speed, frequency and geographical reach of communication and distribution around the globe.

In the corporate domain this has undoubtedly brought advantages. For many SMEs, opportunities for international business development, unthinkable in past climates, have become an achievable reality.

For companies previously trading solely within an increasingly saturated domestic market, the potential of accessing an entirely new customer base is highly appealing, particularly as it may reduce reliance on the health of the UK economy.

However, investment in such revolutionising ventures can be considerable. While a large corporation may be able to comfortably self-finance the development of a presence overseas, for an SME, additional financial support is likely to be required along with an extended risk management strategy to minimise the associated risks of international trade.

Combine this with the increased complexity of doing business abroad and it is easy to understand why companies might hesitate before making the decision to export.

Despite these hurdles, however, each year sees more and more SME businesses rise to the challenge, successfully creating and sustaining international buyer relationships. So this suggests that it is worth the commitment.

But how do these companies raise the finance needed and reduce their risks to an acceptable level?

In the last few years statistics released by the Asset Based Finance Association (ABFA) have indicated invoice finance has an unrelenting popularity among UK businesses with clients’ sales volumes totalling nearly £200bn in 2007.

The use of international factoring services is also steadily increasing as SMEs realise its benefits in mitigating some of the risks associated with overseas business. ABFA statistics... continued on page two >

 

 

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