Home Articles How is Efic helping Australia’s small business exporters overcome financial barriers?

How is Efic helping Australia’s small business exporters overcome financial barriers?

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Australian small business exporters are optimistic about the future.

Of the 800 plus exporters that we interviewed as part of our latest SME Exporter Index research, just over 40 per cent expected an increase in their overseas sales over the next 12 months, with one in five intending to launch new overseas operations within the next six months.

As a company that works with many small businesses every day, we’re excited to see growth opportunities available for those wanting to expand their business overseas.

Small businesses are uniquely confident and optimistic, which stands them in great stead for competing on an international stage.

However, winning an export contract is only the first step and often small businesses face challenges in delivering on export contracts due to financial constraints.

Small businesses typically do not have ready access to finance, so winning a significant export contract can place pressure on working capital to deliver what is required.

According to our research, 37.1 per cent of small businesses expect new financing to become more difficult over the course of this year. Fortunately, there is help available for small business exporters that find themselves in this situation.

Here is a global success story

Melbourne-based IT services company CPT Global is one such small business taking advantage of overseas growth opportunities. CPT specialises in solutions that enhance the control, stability, efficiency, reliability and cost-effectiveness of technology investments.

Established in 1993, CPT began to expand around the world as it won contracts in Europe, North America and Asia through referrals from existing clients. In its international markets, CPT specialises in providing innovative and automated solutions for tuning mainframe environments, based on a Risk/Reward model of service delivery.

Drawing on its own intellectual property that is built around deep experience, technical expertise, automated tools and highly effective methodologies, CPT’s strength lies in its independence and the expertise of its consultants.

This has allowed CPT to deliver real value to its clients, including a number of blue-chip multi-national financial services organisations.

When you run into finance constraints…

CPT recently secured a contract with UBIS, a wholly owned subsidiary of UniCredit, a large Italian global banking and financial services group with branches in 50 countries. The contract involved an assessment of the organisation’s mainframe IT systems and the subsequent implementation of a series of tailored efficiency improvements.

In order to fund the project, CPT needed additional working capital, given that its Risk/Reward model means that UBIS only pay for CPT’s services from the savings measured and realised.

The savings could take up to six months to be realised by UBIS, after the field work was completed. The time between providing the service and receiving payment meant CPT needed to fund the working capital required to deliver the services.

CPT’s bank wasn’t able to provide the finance needed for this overseas contract, and so CPT contacted Efic with a proposal.

…you can access export finance from Efic

Efic provided CPT with a A$1.5 million Export Contract Loan to support the working capital requirements of the project with UBIS.

This additional working capital has been used by CPT to fund labour and other project costs, allowing CPT to deliver on this contract, while also helping to balance the working capital needs across the business.

Being able to fast-track this project means CPT is now able to enter into discussions with other potential clients in Europe, Asia and North America and continue to grow.

All in all, overseas markets offer great opportunities for Australian small businesses like CPT looking to expand internationally. However, financial barriers can be a common challenge for small businesses to deliver on export contracts.

There are a number of options that can help small businesses finance an export or export-related contract. As Australia’s export credit agency, we’re able to provide financial support for small business exporters to help them fulfil export contracts.

For more information on how to overcome financial barriers to export, feel free to download our free eBook for SMEs, Export-related finance.

Andrew Watson is the Executive Director, Export Finance at Efic

Andrew Watson, Efic Executiver Director, SME

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