By Mark Riches, Bibby Financial Services.
When it comes to seizing a business opportunity and making the decision to start importing goods for onward sale, the whole process from securing funding, to dealing with different legislative requirements and getting to grips with contracts and tax implications, can seem daunting.
Specialist international trade finance provider Bibby Financial Services provides importers of finished goods access to the funding they need to pay suppliers upfront for the purchase of goods against confirmed customer orders. Our trade finance facilities can also provide businesses with funding for the purchase of finished goods from UK suppliers.
Bibby Financial Services has developed the following top tips to help UK businesses looking to import goods for onward sale:
- Do your homework
It is important to research the market thoroughly before you start importing products to the UK. Is there a demand for the product? If so, what level of sales are you anticipating? What is the best pricing strategy for the product? Will the market support a premium price, or should you adopt an entry-level pricing strategy?
- Get your finances in order
Be clear about the current state of your finances and make sure you have adequate funding and support in place to seize new opportunities.
- Know your suppliers and customers
Acting with a high degree of due diligence is imperative when entering into any new agreement — ensure payments are protected against failure of delivery and delivery of sub-standard products. It is also important to insist on pre-shipment inspections — you can invest in your own quality control or look to a third party to do this for you.
Always carry out a credit check on your potential customers and ensure you have accurate and up-to-date information on their financial situation. Consider taking out bad debt protection - a delayed or lost customer payment can have serious implications for your cash flow. Bad debt protection facilities can help minimise the impact of non payment.
- Seek advice
Think about the implications of your importing operation. You will of course have to pay tax somewhere but, by seeking proper tax advice, you can perhaps limit your liabilities and boost your margins. With VAT, Duty and freight costs to consider, it is important to ensure all costs have been accounted for because they could affect profit margins at a later date if overlooked. Trade finance experts can support with this and other key areas such as logistics, import licences and customs compliance.
- Know the law
Trading laws will vary between countries and are often significantly different from those practised in the UK. Read up about local business practices and customs, and make provisions for any that you are ill-equipped to deal with. UK Trade and Investment (UKTI) works with UK-based businesses to ensure their success in international markets. As a result, it is a great first port of call for any prospective importer looking to gain insight into local business protocols. It is also useful for importers operating in similar markets to share knowledge and experiences of international trading — this can also be facilitated by UKTI.
- Consider your funding options
To fund the fulfilment of confirmed sales orders, consider a trade finance facility which provides a reliable source of upfront funding against value of these orders. Trade finance experts, such as Bibby Financial Services, can open up letter of credit facilities on your behalf, and provide direct supplier payments through documentary collections or issue a Supplier Undertaking against confirmed customer orders. In addition to ensuring your business’ finance requirements are being met, a trade finance facility can also save you valuable management time by providing access to specialist credit control facilities. This allows you to spend less time chasing customer payments and more time chasing new business as these facilities generally co-exist alongside a factoring facility.
Funding for businesses looking to seize trading opportunities is still limited, despite government pledges to support ambitious, growing firms.
In order for UK businesses to make a significant difference to the UK economy, the Government and lenders need to make sure businesses have access to the funding they need to support growth strategies.
Now more than ever, specialist finance providers such as Bibby Financial Services can help fill the gap in lending from the banks and provide businesses with much needed liquidity to finance trading plans.
Do you trade in other countries and do you want to raise the profile of your company? Then apply for the 2012 International Trade Awards and propel your business into new markets and accelerated growth.
Now in their fifth year, the 2012 International Trade Awards is the only UK wide business awards to exclusively recognise the success of exporters, importers and those trading overseas.
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