Market development can take time and cash flows must be carefully managed. Financial assistance and advice is available from a number of government and private sector agencies.
Steps to take include:
- Discussing your plans with the international department of your bank to ensure that you are in a position to finance your export investigations and market entry.
- Gaining an understanding of the advantages and disadvantages of various international payment methods and the terms used in international trade.
- Discussing costing for export with your accountant, including the issue of marginal costing.
- Determining transport and insurance costs with help from a customs broker or forwarding agent who will also help establish packaging needs (and costs).
- Developing an understanding of options for quoting buyers for export business. Common quotation modes will include FOB (free on board) and CIF (cost of goods plus insurance and freight).
- Where possible, applying for tax concessions on approved projects . This assists the companies win contracts against international bids.
What type of funding do I need to get into export?
Developing an export business involves market promotion, new production capacity, overseas travel, complying with overseas standards and a host of other factors. A return on this expenditure can take time. Fortunately, the cost of export marketing has been reduced by the use of the Internet, electronic transactions and international telecommunications. Your bankers will be familiar with a range of financial schemes to help you through the export market development process.
Which agencies can help finance my export business?
To help you establish your export business Austrade administers the Export Market Development Grants (EMDG) . This program has operated for over 30 years and provides small and medium business with up to 50% reimbursement of certain export promotion expenses above a $15,000 threshold. (First-time applicants can combine two years’ expenses in order to meet this threshold).
Eligible expenses claimable under EMDG include overseas marketing visits, producing promotional brochures for overseas markets, providing free samples to potential buyers and many other expenditure items.
State and territory governments can also provide financial assistance, often on a dollar-for-dollar basis. These schemes can help you in the preparation of your export strategy and other costs involved when starting to export.
What other financial techniques do I need to know about?
Your bank will offer a wide range of financial services for new exporters, ranging from letters of credit and foreign exchange management to bond financing and bank guarantees. Credit insurance is critical for first time exporters. While ‘open account’ transactions sound attractive, risks of default are high. Credit insurance protects your cashflow from payment default and customer insolvency.
The Export Finance and Insurance Corporation (EFIC) offers a range of products for new exporters, such as working capital guarantees and advanced payment and performance bond products. Many banks will also provide services to handle your export receivables.
Factoring is the assignment or sale of invoices for completed transactions to a third party at a discount to the face value. This enables small companies to convert their receivables to cash quickly to finance further sales and business expansion.
Resources to manage these programs
Most accountants are familiar with export assistance schemes and many programs have been simplified to meet the needs of small business. Your Export Adviser can help you through the process, and help you identify where to go to access available forms of financial assistance.
Additional information on business/export finance and pricing is available in PDF format.
For more information, please call 13 28 78 or email info@austrade.gov.au .
An Export Adviser can help you build and consolidate your export know-how. websites
What type of funding do I need to get into export?
Check out the websites of the major banks and look for services for exporters. Many of the websites also have good guides and manuals on export finance.
ANZ – www.anz.com/business/international_trade/INT_expbook.asp Has an Export Book which is a Windows-based electronic product.
The Commonwealth Bank of Australia – http://business.commbank.com.au Offers an Exporters Handbook which you can download in PDF format.
The National Australia Bank – www.national.com.au The NAB produces a publication ‘Finance of International Trade’ which covers payments, export financing and foreign exchange
Westpac – www.westpac.com.au Has a publication ‘Exporting for Small Businesses’, which you can download as a PDF file and select 'Export services' from 'International' in the Main menu.
Which agencies can help finance my export business?
The Australian Government Portal – www.business.gov.au/Business+Entry+Point Provides a good entry point for government agencies offering financial support for business development and export marketing. Most state and territory governments offer financial support programs – check their websites.
Ausindustry – www.ausindustry.gov.au Offers a range of grant programs that can help your business in its formative stages – one scheme is Commercial Ready, which supports innovation and its commercialisation.
What other financial techniques do I need to know about?
Atradius – www.atradius.com/au Another major credit insurer with Australian operations.
EFIC’s short term (up to six months) credit insurance business was sold to the Gerling Group www.gerling.com/local/au.
QBE – www.qbe.com Offers credit insurance.
Factoring companies offer a range of services by discounting current receivables to provide cash for business expansion, particularly for new exporters. Learn more about factoring at www.factors-chain.com/members/AUS.
Resources to manage these programs
BSI International – www.bsi.com.au BSI specialises in completing and lodging grant applications on your behalf.