Research by Censuswide for UK Export Finance (UKEF), the UK’s export credit
agency, shows that Scottish SME growth exceeds the United Kingdom average, and
SMEs that export grow at a faster rate than those that only have domestic
customers.
• Across the UK, SMEs with purely domestic customers reported an annual
growth of 8.4% over the last five years.1 In Scotland, this figure was higher, at
11%.
• Across the UK, SMEs that export reported growth as much as 15.2% over the
last five years.3 In Scotland, this was 16%.
• Just under a quarter of Scottish SMEs (22%) said a risk of not being paid by
foreign buyers limits the extent to which their business exports
internationally.
• Almost three quarters (74%) of Scottish SMEs would find a finance service
such as that offered by UKEF to be useful.
In Scotland, where SMEs account for 55% of private sector employment, only 14%
currently export.8 With growing demand from overseas for goods and services from
the United Kingdom, Scottish companies should be capitalising on the opportunity to
export. This is particularly the case with small to medium enterprises (SMEs) – the
research shows that those which do export outperform those which do not.
Across the UK, SMEs with purely domestic customers reported an annual growth of
8.4% over the last five years whereas this increased to as much as 15.2% for those
which export. Furthermore, 42% of SMEs say that exporting has increased profits by
up to 20% and almost one in 10 (9%) say it has increased profits by over 20%.
Yet the research has also confirmed that UK SMEs are not fulfilling their export
potential, due to a number of barriers. It is now estimated that 19% of SMEs nationwide believe they could export but don’t.10 60% of potential exporters cite
access to finance as a key factor in their export plans.
Late payments are the most critical issue nationwide, with 63% nationally citing it as
a barrier to entry. Whilst 52% of payments are made at the point of supply, 45% of
sales happen on credit. This means that at any one time SMEs are owed an average
of £64,000 in late payments, with 11% owed between £100,000 and £250,000. The
consequences of this can result in damaging ripple effects that have a greater impact
on SMEs compared with larger businesses.
In Scotland, specific financial barriers to export include concerns about cash flow or
lack of working capital (cited by 19%), the length of time it takes to be paid (21%),
the risk of not being paid at all by a foreign buyer (22%) and a lack of information
about foreign markets (12%).
UKEF helps companies of all sizes overcome these issues. Last year alone, it
supported over 250 businesses. From offering attractive financing terms to help
businesses win contracts, to providing insurance to safeguard against financial risks,
UKEF helps companies from all sectors to maximise the opportunities available in an
international market.
Secretary of State for International Trade, Rt Hon. Liz Truss MP, said: “Finance
is a key barrier coming between SMEs and their export potential. If small businesses
were to export more, Britain would see even more stronger economic growth.
“In its centenary year, UKEF continues to enable companies from across the UK to
expand their global reach by helping them succeed abroad. That’s why it is at the
heart of my plan to get businesses ready to trade as we leave the EU.”
Louis Taylor, chief executive officer of UK Export Finance, said: “The right finance and insurance
can make all the difference for a company that is looking to sell overseas. There’s a
wide range of specialist support on offer from both private sector providers and from
UK Export Finance working with private sector providers, and we’re here to help UK
companies access that support and realise their global ambitions.”
Appetite for export finance
When considering export, almost three quarters (74%) of Scottish SMEs state that
they would find a service that lends capital to international exporters while they await
payment, and insures them if their customers do not pay, to be useful. For the
proportion of SMEs that are refused support due to their lack of export experience,
UKEF’s financial services can be invaluable.