safer international trade and more efficient ways to fund it · 8 30% from trade loan 30% from...
TRANSCRIPT
1
Safer international trade and more
efficient ways to fund it David Salter, NatWest
5/13/2015
2
Agenda
1. Making international trade safer – How to help ensure you get paid – and on time: ‘Letters of Credit’ and
‘Documentary Collections’
– How to ensure your trading partners keep their promises: ‘Bonds and
Guarantees’
2. Efficient ways to fund your international trade – Pre-shipment/Post Shipment Finance: Short term Trade Loans
– Funding your automotive tooling requirements via ‘Tooling Finance’
3
Biggest concerns re. international trade
% Concerned*
* Very/somewhat concerned scores combined
64%
63%
60%
53%
49%
42%
24%
RISK FUNDING
4
RISK
5
How to help ensure you get paid – and on time
6
How to help ensure you get paid – and on time
• Letters of Credit – Buyer’s bank pays you
– Title to goods granted to
buyer only when they pay
• Documentary Collection – Title to goods granted to
buyer only when they pay
NatWest Buyer’s
bank
Buyer Seller
(You)
7 How to ensure your trading partners keep
their promises
• Bonds & Guarantees
NatWest Buyer’s
bank
Buyer Seller
(You)
NatWest Buyer’s
bank
Buyer Seller
(You)
Performance Guarantee Financial Guarantee
e.g. Advanced Payment Guarantee
8
FUNDING
To edit click View>Header and Footer 9
Pre-shipment and post-shipment finance
Goods
received
Length of transaction
Pre-shipment funding gap Post-shipment
funding gap
Sales
contract
agreed
Raw
materials
shipped
Materials
arrive and
manufacturer
pays
Product
manufactured
Product
shipped
Buyer pays
immediately
Buyer pays
at 30, 90
or 180 days
OR
10 What is a trade loan and how can it help
manufacturers?
Trade Finance loans are kept
separate from regular every day
working capital facilities
like overdrafts
Funding is provided for the length of
the contract – no need to take
longer credit than is necessary or
try and build short term contract
requirements into your
12mth overdraft.
Manufacturing can be complex with
multiple phases. Our Transaction
Control Team (TCM) will monitor
the phases and organise
staged payments, as well as
monitoring payments from buyers.
Due to the close control and
monitoring of the Trade Loan, and
the way the application is assessed,
it is possible for credit appetite to be
stretched and extra funds provided
Clarity
Support
Efficient
Additional Funding
11 How does tooling finance help automotive
suppliers? An example
T-27 T-21 T-15 T-9 T-0
T+ 60
days Months
OEM signs
contract with
supplier for
10,000 plastic
door handles to a
bespoke design.
To be delivered in
2 years.
1 Supplier
signs
contract with
a Tool Maker
to produce
the bespoke
mould
needed.
2 Tool
designed
and design
approved.
First 30%
payment to
Toolmaker
3
Tool manufactured
Tool maker expects
30% on purchase of
raw materials
Concept:
Tool maker
expects 30% on
approval of
concept part
produced.
4 5
Tool
shipped
Pre-production
Tool maker expects
10% on OEM
approval of parts
produced
6
7
Production 9
OEM pays
100% for the
tool
10
Tier 1 supplier
invoices the
OEM for the
tool
8
30% from
Trade Loan
30% from
customer
30% from
Trade Loan
10% from
Trade Loan
100%
repayment
from OEM
Workshop 2
UK Export Finance
Supporting UK Exports
May 2015
13
Introduction
• Tim Palmer – Business Manager for civil Transport,
Infrastructure & Energy projects
020 7271 8067
• Phill Potter – Senior Export Finance Advisor for the
Midlands, West & Wales
(0)7866 480 996
To edit click View>Header and Footer 14
Objectives of Workshop
15
• Explain how UK Export Finance – the UK’s export credit
agency – supports exporters and helps overseas buyers
purchase from UK exporters
• Introduce UKEF’s range of products and services
• Case studies where UKEF has worked with UK exporters and
overseas buyers
Overview of UKEF support
UKEF’s support broadly falls into two categories
16
Products and
services that
support the
overseas buyer
(Finance
Products)
•Providing guarantees to banks on loans they
give to overseas buyers to purchase goods
and services from UK suppliers
•Direct lending to overseas buyers so that they
have the funds to purchase goods and
services from UK suppliers
•Buyer Credit
Facility
•Supplier
Credit
Facility
Products and
services that
support the
exporter
•Reducing or removing the risk of non –
payment from the overseas buyer
•Helping to support a bond offering which is a
requirement of the contract
•Assisting with working capital requirements
• Export
Insurance
• Export Working
Capital
• Letters of Credit
Guarantee
• Bond Insurance
• Bond Support
Finance Products
Finance Products
Buyer Credit Facility
Supplier Credit Facility
Purpose of finance products is to give banks the confidence to
lend by guaranteeing the loan they provide
17
Buyer Credit: Terms and Conditions
• Minimum contract value of £5m (Supplier Credit available for
smaller contract values)
• Bank provides a loan for a maximum of 85% of the contract value to
the overseas buyer to finance the contract with the UK exporter, or
UKEF funds from its Direct Lending Facility
• UK Export Finance’s 100% unconditional guarantee of repayment to
the lending bank
• UK Export Finance becomes involved in the negotiation of the loan
documents
• Exporter gets paid when they perform work and buyer repays loan
over two to ten years with repayments guaranteed by UKEF.
18
UKEF Direct Lending Facility
19
• Under the scheme, UKEF will work with a partner bank in the market
to deliver funding from a reserve of £3 bn. We use an approved bank
to disburse and manage the loan on our behalf
• Interest rate payable by the buyer is calculated on a fixed rate basis,
the Commercial Interest Reference Rate (CIRR)
• CIRRs are based on Government bond yields for the currency
concerned
• Current CIRRs* for repayment terms of 8.5 years +
USD 2.84% GBP 2.48%
Euro 1.09% Yen 1.14%
*Rates as of April 2015
• NB - the arranging and managing banks will charge additional fees
Supplier Credit (Finance Product) 20
Purchase of 118 Buses by Swift Transport New Zealand from
Alexander Dennis Ltd
Using a Loan
with extended
payment terms
118 ADL Buses
Purchased by
Swift Transport
Supported by a
UKEF Guarantee
“There’s no doubt that UKEF played a significant
role in us penetrating this important new market”
Robert Davey, Group Commercial Director at ADL
21
Display cases to Qatar
“The payment terms
agreed with the client
meant that we would have
had difficulty maintaining
a consistent cash flow
over the period of the
contract, which would
have had an impact both
on this new project and
on our work elsewhere.”
Jim Stewart,
Managing Director,
ClickNetherfield
Export Working Capital Scheme
Bond Support Scheme
‘’The underwriting from UK
Export Finance gives you a
lot of security and
confidence, especially when
you’re going into developing
countries like Cameroon’’
Haydn Beddows
Group Sales Director
Micron Sprayers
22
Sprayers to Cameroon
Export Insurance Policy
‘’The help from UKEF has
enabled us to trade on an open
account basis. As a result, we can
accept orders, build the
machinery and send the shipment
on credit terms that are helpful to
the dealer’’
David Barton
Group Export Finance Manager
JCB
23
JCBs to North Africa JCB found it difficult to access credit insurance to cover exports to a new market
in North Africa. We provided JCB with an Export Insurance Policy which helped
JCB build its relationship with a new dealer
Cost of Cover/Premium
24
• UKEF charges for the services it provides
• Premium is determined on a case-by-case basis
• OECD sets the bench mark rates
• Premium is based on credit risk and length of contract
performance, and repayment terms
• Can be paid up front or, for finance products, partially financed
• For finance products, premium is separate from the interest rate
which is paid on the loan
Eligibility
• Contract must be with a corporate entity carrying on business in the
UK
• Shareholder nationality is not relevant
• Liberal foreign content rules
− Minimum 20% UK content, up to 80% from other countries
− Up to 30% ‘local costs’ from buyer’s market
• Loan or guarantee can be for one contract or a line of credit for
multiple contracts with different companies, subject to each meeting
UKEF criteria
25
Other Criteria
26
Bribery & Corruption
• Exporter declarations and representations on how contract was
acquired
• Disclosure of activities of any agents or representatives involved
• Requirement to enter into a formal agreement with UKEF
Environmental Standards
• Projects need to meet IFC (World Bank) standards on environmental
assessment
UK Export Finance Regional Advisers 27
Midlands, West and Wales
Senior Export Finance Adviser
Phill Potter
+44 (0)7866 480 996 [email protected]
Leicestershire, Nottinghamshire,
Derbyshire, Lincolnshire, Rutland
Tony Petersen
+44 (0)7825 276 476 [email protected]
Northamptonshire
Johanna McSweeney
+44 (0)7580 742 517 [email protected]
Staffordshire,
Warwickshire, Birmingham
Jane Cooper
+44 (0)7580 745 925 [email protected]
Herefordshire, Worcestershire,
Shropshire, The Black Country
Anne Lockett
+44 (0)7580 742 532 [email protected]
Bristol, Gloucestershire, Somerset,
Devon, Cornwall, Wiltshire, Dorset
Hugh Francis
+44 (0)7880 358 220 [email protected]
Wales
Mathew Hughes
+44 (0)7772 243 678 [email protected]
Specialist - Mid-sized Businesses
Midlands, West and Wales
Paul Callin
+44 (0)7580 742 767
North
Senior Export Finance Adviser
North East
Jonathan Leonard
+44 (0)7818 570 615 [email protected]
Scotland
Carlos Guallart
+44 (0)7580 742 533 [email protected]
Scotland
Carol Harvey
+44 (0)7817 830 833 [email protected]
South Yorkshire and the Humber
Richard Clarke
+44 (0)7815 491 133 [email protected]
Northern Ireland
Elizabeth McCrory
+44 (0)7435 323 231 [email protected]
North West
Steve Cowles
+44 (0)7966 308 452 [email protected]
North Yorkshire, West Yorkshire,
East Greater Manchester
Paul Wright
+44 (0)7812 667 312 [email protected]
Specialist - Mid-sized Businesses
North
Jon Boyce
+44 (0)7990 887 852 [email protected]
South
Senior Export Finance Adviser
Hertfordshire
Gill Targett-Adams
+44 (0)7720 496 383 [email protected]
Norfolk, Suffolk and Essex
Dan Hewitt
+44 (0)7580 745 923 [email protected]
Cambridgeshire and Bedfordshire
Johanna McSweeney
+44 (0)7580 742 517 [email protected]
London – City and East
David Scott
+44 (0)7580 742 528 [email protected]
London – West
Archana Singh
+44 (0)7580 742 519 [email protected]
Berkshire, Buckinghamshire,
Oxfordshire
Andrea Walker
+44 (0)7568 101 892 [email protected]
Kent, East Sussex, West Sussex,
James Bowker
+44 (0)7812 667 327 [email protected]
Surrey, Hampshire, Isle of Wight
Stuart Stoter
+44 (0)7817 829 591 [email protected]
Specialist - Mid-sized Businesses
South
Ian Wallace
+44 (0)7812 667 323 [email protected]
Best practises when working with
agents and/or distributors
James Gillespie
UKTI Export Trade Advisor
29
Time to market
Reduce
costs
Mitigate risks
Why do we consider the use agents or distributors ?
Why does it sometimes go all wrong ?
30
Risks to Intellectual Property
Performance not as expected Unforeseen costs
Relationship breakdowns
Supply Quality Territory
Less Control Other Interests
Payments
Best Practice for Selection
31
• NETWORK
• CREDIBILITY
• COMPATIABILITY
• PERFORMANCE
• TECHNICAL ABILITY
• CONFLICTS
• STABILITY
• PRODUCT ALIGNMENT
• CREDIBILITY
• LOGISTICS
• ABILITY TO DEVELOP MKT
• TECHNICAL ABILITY
• CONFLICTS
• LOCATION
AGENTS DISTRIBUTORS
Best Practice for Agreement and Operation
32
• UP FRONT DUE DILIGENCE
• CONTRACT FOR SUCCESS • KEY RESPONSIBILITIES
• DURATION
• TERRITORY
• PRODUCT OR SERVICE SPECIFICS
• IP OWNERSHIP
• METRICS
• COSTS OF PROMOTION / SAMPLES / TRADESHOWS
• PAYMENTS / COMMISSIONS / CURRENCY
• ONLINE SALES MANAGEMENT
• COMMUNICATION FREQUENCY AND REPORTING
• CUSTOMER DATA
• WARRANTIES AND LIABILITIES
• CANCELLATION
• TREAT AS TRUE PARTNERS
AGENTS and DISTRIBUTORS
Finding New Customers with UKTI
Business Opportunities and
Webinars Tim Maloney UKTI
12 May 2015
35
What? Upcoming Webinars
– France – The Automotive Sector
– Qatar - Opportunities In The Security Sector
– The Netherlands - Food & Drink
– Canada - Cyber Security
– Brazil - Culture, Opportunities And Challenges
– CEE - Digital Marketing
36
UKTI
Webinars
37
– Travel the world for free
– Access to experts & UKTI overseas staff
– Participate from your desk
– Ask questions to speakers
– Hundreds of Webinars a year
– Watch online again
Why? Benefits of Webinars
38
39
UKTI Business
Opportunities
40
FREE overseas sales leads
What?
41
– Tea to China
– Organic Pet Food to Germany
– Railway from Russia to China
– Scottish Salmon to Italy
– Wedding Dresses & Lingerie to Chile
– Hospital management - NZ
– Kids Books to Japan
– Cars to France
– British Beer to.....
What ?
42
How?
43
Around 1 in 3 companies reported a direct financial benefit
– 75% forecasted over £50k new sales
– 15% reported over £2m in new sales
– Estimated value to UK economy £2.9B
– 40,000 responses in the last 12 months
– Thousands of opportunities in over 100 countries
Why? Benefits
44
Over half the companies reported other business benefits
– 40% of companies said it gave them access to new contacts
– 40% of companies said it gave them access to unique information
– Nearly 1 in 3 said it aided their overseas market knowledge
– 1 in 4 said it helped their companies credibility
– 1 in 5 said it assisted in delivering their marketing strategy
Why? Benefits
How?
47
Contact Details
www.events.ukti.gov.uk
www.businessopportunities.ukti.gov.uk
