All this is great! Not so great are comments from the experts who claim the hurdles encountered by SMEs trying to export are merely ‘perceived problems’ or ‘psychological barriers’.
Whilst exporting can prove successful the problems encountered are often very real and should never be swept aside.
The most common problems are how to get paid and how to get paid on time. Late payment is particularly common with European countries, many of whose average payment times make our own look ideal: the average invoice settlement time in the UK is 49 days. This compares to 83 in Italy, 73 in Spain, 65 in France, and 53 in Belgium.
Tardy settlement, however, pales into insignificance when compared to a total default in payment, which is far more difficult to deal with abroad.
The second problem is that of communication. This was best summed up by a cynic who said everyone speaks English when it comes to buying the goods, but the communication fails when it comes to paying for them.
But communication barriers also involve different customs or ways of doing things. This applies to countries with different cultures such as Japan and China, but can also apply to countries nearer to home.
The problems here can appear particularly daunting for small businesses new to international trade.
Finally, let’s add into the pot the problems small firms experience with exchange rates and the strength of sterling. The strong pound has a bad habit of eating away at profits.
All is not doom and gloom though, and a clearly thought-out export strategy can put a small business on the map.
To export successfully, SMEs must get organised. They need to research potential new markets by participating in trade exhibitions and talking to other companies. They need to adopt a strategic approach – tackling one new market at a time.
They need to make sure they have the most appropriate form of funding.
Bank overdrafts, which can be withdrawn at any time, may not be suitable.
A factoring service, which ensures smooth cashflow and offers payment collection may be better.
- Ian Varley is operations manager of Bibby Factors International.
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