The story of North Sea Ventilation perfectly illustrates how UK Export Finance is improving cashflow in the UK supply chain.
In October 2017, UK Export Finance (UKEF), the government department that provides finance and insurance to UK exporters and their UK suppliers, launched a partnership with five high street banks to allow smaller businesses to access its support directly from their bank.
This means that, where previously it could take weeks in addition to the banks’ own turnaround times to access this support, it will now take a matter of seconds where the transaction is eligible.
When Noth Sea Ventilation (NSV), a specialist HVAC supplier from Hull, secured a contract with a new customer in Africa, UKEF’s trade finance support was delivered seamlessly through the new bank partnership model.
Noth Sea Ventilation
Established in 1992, the company now sells to customers around the world and has a £9m turnover. With 80% of its sales overseas, NSV’s is a truly global business, and its key markets include the US, Germany, Tunisia, South Africa, Qatar, Azerbaijan, China, India and Australia.
NSV secured a £500,000 order to supply cooling equipment to Nigeria LNG Ltd. Under the terms of the contract, the buyer agreed to provide a 50% advance payment to help fund the manufacturing process.
However, in return, NSV had to provide an advance payment guarantee through its bank, HSBC.
HSBC was not able to provide a bond of the size required within NSV’s existing credit arrangements, so the bank turned to UKEF for a guarantee under its Bond Support Scheme.
In the past, this process would have involved NSV and HSBC submitting another application to UKEF, with UKEF undertaking parallel due diligence and approvals to those HSBC will already have undertaken. This would have added days or even weeks to the process.
Thanks to UKEF’s new bank partnership model, HSBC was able to complete an online submission, and, because the transaction met all of UKEF’s criteria, the guarantee was issued automatically and instantly without the need for manual approval by UKEF.
John Parker, Finance Manager at North Sea Ventilation, commented: “Working with HSBC and UKEF has provided us the flexibility to realise export opportunities, securing larger contracts than we could otherwise be confident to fulfil, and the new application process couldn’t have been simpler: less paperwork, quick turnaround and a positive decision.”
Jana Horvath Pocciova, Export Finance Manager at UK Export Finance, said: “We’re delighted to be supporting world-leading suppliers like North Sea Ventilation as they grow their international reputation for quality, reliability and customer service.
“With this new bank partnership making it easier for SME exporters like these to access the finance they need to export, we hope to help even more in the future.”