For small and medium businesses (SMEs) that want to take on new export opportunities, understanding your business’ working capital position is critical. Working with the right financial partner can be the key to driving your export success.
Accountants and financial advisors continue to be a key support channel for SMEs that are looking to build their business overseas. According to Efic’s latest Exporter Sentiment Index published earlier this year, of 1200 SMEs interviewed, 1 in 3 would turn to their accountant for advice about financing for an export venture.
This should not be surprising given the depth of knowledge accountants have of the businesses they work with. And this knowledge can be critical in helping SME exporters tackle one of their biggest challenges – securing the finance they need to deliver on export opportunities.
The challenge of working capital
Alex Turner, Partner at Tilbrook Rasheed Chartered Accountants, says by working closely with his clients it is possible to pre-empt where working capital support may be required.
“We find that being proactive in this regard ensures working capital funding can be secured before a situation becomes critical or an opportunity is missed,” says Turner.
Entering new export markets can be daunting for SMEs, particularly with the challenges of working capital. Turner says that due to Australia’s geographical location, there can be long lead times before an Australian export product ultimately reaches the consumer and payment is received.
“SMEs traditionally approach their financial institution for financial support, however as with any small business, having sufficient tangible security can make accessing funds difficult,” says Turner.
Alternative support available
Finding alternative financing solutions has been one way Turner is helping his clients. Efic’s Small Business Export Loan provided fast, easy to access funds providing a cashflow boost for several of Turner’s small business clients. With funds available in as little as 9 business days, the Small Business Export Loan is helping SMEs take on opportunities that may not have otherwise been available.
“These loans are often a quick way to resolve an SME’s working capital requirements at short notice, assisting SME’s to cover manufacturing costs on the strength of an export purchase order.
“We have found these loans very accessible to smaller SME’s who may be looking to finance upwards of $20,000 on the strength of the export purchase order. Generally, Efic funds up to 80% of export purchase orders which can provide our clients with quick access to working capital that can be used to finance the manufacture of goods or other operating costs,” says Turner.
With accountants playing an increasingly critical role in their clients’ business success, having access to alternative finance solutions provides them with options needed to meet their clients’ needs.
“Preparing cashflow forecasts at the start of the financial period and regularly reviewing how the SME is tracking to budget is a key aspect to the process,” adds Turner.
About the author
Andrew Watson is Executive Director, Export Finance with Efic, a specialist financier that helps small businesses win business, grow internationally and achieve export success.