East Lancashire Chamber of Commerce International Trade Club - 20 July 2010

Transcription

1 East Lancashire Chamber of Commerce International Trade Club - 20 July 2010 Export Finance & Introducing Chamber Invoice Finance Nigel Mills Director Strategic Markets Nigel Crosse Head of International Business

2 Agenda Working Capital Management UK & Export 1. Market place UK business & banks Export environment Trade finance rends Invoice finance for open account trade 2. Components of working capital Approval & new markets Fund with certainty Collect quickly and professionally Protection 3. Introducing Chamber invoice finance 4. Case studies 5. Questions & Debate

3 Our role: make12 become 13!! Count the people, wait until they shift, and then count them again

4 Who and what Nigel Mills Director Strategic Markets RBS Invoice Finance Nigel Crosse Head of International Business RBS Invoice Finance Banking / Trade Finance Biggest invoice finance business in the world Innovation SME s & Export USA/Europe/ India Export collect and protect EFG top ups Alliances ie. BCC Sectors Pharmacy Manpower Agriculture 5m pa + 10% Yr on Yr export

5 Market place UK SME s editorial

6 Market place UK SME s Research Olympic Glass; sealed unit manufacturer key message essential to insure your debts EVC design & print keep on top of your top debtors and have good credit control Intelligent property maintenance avoid risk, establish credit limits and stick to them Mimetic Vacuum forming have tight credit management and insure on new customers Hayley Shape design Be careful with terms of trade with POD s etc Atlas Polymers Check credit worthiness especially on exports

7 Market place not brilliant for SME s Domestic Scene 1. New Markets difficult 2. Bank Funding? Neutral/Uncertain 3. Late payments days 4. Trade Insurance Limits Prices 5. Insolvency/ Busts increasing

8 Mkt place export SME s 2009 survey SME's BCC Exporting Britain % seen growth in Export 87% members Export Europe 29% refocused to international markets 42% access to export finance diminished 57% don t use any trade finance i.e. open account 33% late payment issues overseas 55% Biggest problem with Europe

9 Mkt place Export break down - Where North America 15.8% Non-Euro Zone Euro Zone 13.1% 49.8% Middle East 3.9% Asia 11.9% South America 1.8% Africa 3.4% Source Data: International Trade Centre UK Exports by Value of Goods in 2008

10 1,600,000 1,400,000 1,200,000 70,000 60,000 50,000 40,000 35,112 34,173 34,001 23,278 18,393 17,001 9,304 8,970 52,303 64,345 30,000 USD (millions) 1,466,137 1,428,686 1,299, , , , , , , , ,596 USD (millions) 1,000, , , , , , , , ,500 89, , , , ,000 - USD (millions) 89,000 Mkt place Export Environment Mix UK is the 11th largest world exporter by value of goods and the 2nd by value of services Goods exports by Value (2008) Services exports by value (2007) 525, , , , , ,000 75,000 - Germ any China US Japan France NL Italy Belgium Russia Canada UK United States United Kingdom Germany France Spain Japan China Italy India Ireland Top 10 destinations for UK exports 20,000 10,000 - Source Data: International Trade Centre US Germany Netherlands France Ireland Belgium Spain Italy Sweden China

11 Mkt place Trade Finance trends doc credits Taiw an, 4% UAE, 5% Pakistan, 3% Thailand, 3% Saudi Arabia, 2% United States, 1% India, 7% Morocco, 1% Malaysia, 1% Other, 20% HK, 7% Other, 36% Italy, 1% Ireland, 1% France, 1% Egypt, 2% S Korea, 9% Turkey, 2% Spain, 2% UK, 10% Japan, 2% China, 14% Bangladesh, 2%

12 Mkt place Trade Finance trends Invoice Discounting (ABFA) Export Factoring ID Export Invoice discounting doubled 4yrs to 2010 Background Insurance collapsed in Growth again in Non Rec/Insured -14%

13 Mtk place Trade Finance trends ample funds available Business Sales volumes Limits shaped to minimize cost Available debtor to advance Funds drawn by businesses

14 Working Capital Management Disciplines & Tips Approve Invoice & Fund Collect Protect Clarify who Credit checks Agree limit Stick to it Constantly update Tight invoice terms Proof of delivery Confirmed lines of finance Rigorous credit control No leeway Legal action on tap Stop deliveries Trade insurer Good spread Guaranteed/ indemnity Risk = gross margin Likely to pay Waiting to pay Will not pay? Can not pay? Credit reference agency Bank o/d Credit controller Trade insurer

15 Invoice Finance Explode the Jargon Approve Fund Collect Protect Invoice Discounting } Factoring } Non recourse factoring } 31% 10% EH 36% 8%

16 Chamber Invoice Finance Late payment remedy Overdue Debt > 30 Days vs Sales Ledger Balance 650,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000,000 90,000, ,000,000 80,000, ,000,000 70,000, ,000,000 ` 200,000,000 60,000, ,000,000 50,000, ,000,000 40,000,000 50,000, ,000,000 30/05/ /05/ /05/ /04/ /04/ /03/ /03/ /02/ /02/ /01/ /01/ /12/ /12/ /11/ /11/ /11/ /10/ /10/ /09/ /09/ /08/ /08/ /07/ /07/ /06/ /06/ /05/ /05/ /05/ /04/ /04/ /03/ /03/ /02/ /02/ /01/ /01/ /12/ /12/ /11/ /11/ /10/ /10/ /09/ /09/ /08/ /08/ /07/ /07/ /06/ /06/ /06/ /05/ /04/ /04/ /03/ /03/ /02/ /02/ /01/ /01/ /12/ /12/ /11/ /11/ /10/ /09/ /09/ /08/ /08/ /07/ /07/ /07/ /06/ /06/ /05/ /05/ /04/ /04/ /03/ /03/ /02/ /01/ /01/2007 Overdue Debt > 30 Days Sales Ledger Balance

17 Chamber Invoice Finance A>F>C>P Approve Fund Collect Protect Multilingual 6 Sources of info Constant update Record limit Soon as invoiced Any currency 85% Legal letters Claims process days Insurance/ not PUG/insolvency clearance

18 Chamber Invoice Finance exports to over 50 countries

19 Chamber Invoice Finance - IT FacFlow

20 Chamber Invoice Finance Solutions & Price Approve who you trade New markets Avoid bad debts Very close to debtor 85% funding Improve payment limits Ave. 55 days + 50k cash 2m t/o One contact Credit reference Finance vs. o/d Trade insurance Daily banking IT platform Benefits Cost Free software Free credit approval Free daily banking 10% discount for BCC intros Signed agreement not on Demand 3.5% over base rate 0.5% - 1.5% of turnover 1-2k set up From 10 a day

21 1.) Case study Columbia Staver Ltd. HSBC & Euler Trade Insurance 85% Export 15% to Brazil etc. 3m t/o Computer Parts Trade Insurance withdrew cover HSBC withdrew finance BCC Cambridge RBSIF Solutions: EFG core capital Invoice Finance Faster payment 75% finance day of Invoice Approved territory fully Difficult territory max 15% 400k raised 2.75% + base 0.62% t/o service charge

22 2.) Case study Metallisation Spray + weld machines (OEM + Spares) 9m t/o export 50 countries Lloyds & Atradius only fund insured debt Insurance reduced PROBLEM! Options Self insure buyer risk? overdraft or use own cash Difficult territories on L/C s Chamber Invoice Finance solution Approval of customers on line Debtors assigned 75% funding blend Good territories + other territories up to 10% of mix Credit control service Confidential or disclosed Set as disaster cover Premium retained if claims over 50k Premium returned if claims under 50k

23 3.) Case study Team Leyland Automotive parts 3m sales 90% export {Malta to Kazakhstan } Vehicles cash up front Components export insurance Atradius since 1993 Main supplier withdrawing credit terms Sector risk Limit withdrawn 2m limits drop to 700k 20% price rise Options Reduce sales Trade on open account & take the risk But bank may not lend without insurance Chamber Invoice Finance solution Provide Bad debt protection on Export and Domestic buyers replacing Atradius?. Approval of customers online Debtors assigned ~ 80% funding ~ collection and protection good territories ~ 50% on other territories (max 10% 0f sales) Credit control using major trading languages. Improved liquidity to pay key suppliers. Obtain new sources of supply or early settlement discounts.

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25 Working Capital for Exporters Need new thinking SME s keen to Export Funds available but SME s cautious L/C s flat & moving online Trade insurance has reduced Invoice Discounting growing fast case study Lots of support Chamber Invoice Finance Fast Response