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Preparing for business with ICAEW and X-Forces: Part 7

Preparing for business with ICAEW and X-Forces: Part 7


19 Nov, 2018

Part 7: Financing exports

By Clive Lewis, ICAEW, in conjunction with X-Forces

For exporters, the longer lead times between providing goods or services and getting paid can present particular financial problems. A rof aange lternative methods of trade finance can help exporters finance export transactions. These include:

  • cash in advance - whereby the exporter receives payment in advance of the shipment of goods or receipt of the relevant services
  • letters of credit - here a bank specifies the terms under which it will pay the exporter, usually specifying the documents it must receive before making payment
  • collection (term and sight) ñ the exporter ships the goods before payment but retains control of them until payment (or a legal promise to pay) is received from the importer. 

However, most exporting is on 'open account', whereby the exporter despatches goods to the importer and sends an invoice for the goods for payment on an agreed date or after an agreed period.

Because of the additional risks in exporting it is important to insure against non-payment or some action outside the importerís control, e.g. political risks. A specialist broker or insurance company can advise on the insurances required.

Exporters should consider accessing the usual bank loans and overdrafts, or invoice factoring and discounting.

One handy cash flow solution is trade finance for businesses that are engaged in exports. This can take several forms, including advances of funds from a finance provider (like a bank). This provides a cash guarantee that can be used to cover the costs of your export operations.

Anthony, X-Forces senior business consultant 

UK Export Finance (UKEF) is a government agency that offers help to exporters to raise finance, such as:

  • Export Working Capital Scheme - UKEF provides partial guarantees to lenders to cover the credit risks associated with export working capital
  • Bond Support Scheme - if an exporter secures an advance payment, the export customer may ask for a guarantee, or the exporter may be asked for a tender, performance or warranty bond; UKEF provides a guarantee to the exporterís bank so that it will provide the guarantee to the importer
  • Letter of Credit Guarantee Scheme - UKEF provides a guarantee to the exporterís bank so that it can confirm a letter of credit.

UKEF also provides help to overseas buyers purchasing goods from UK exporters.

For further information, visit 

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Register for X-Forces' start-up and business planning support today at Help for businesses can be obtained from ICAEW's Business Advice Service, in the form of a free, straightforward discussion with an ICAEW Chartered Accountant. Find out more at