If you are planning to export goods or services from the UK then it is likely you’ll need some form of credit guarantee or insurance to protect you against non-payment or other financial issues.
If you can’t get what you need from the private market, UK Export Finance (UKEF) may be able to help. They provide guarantees, loans, insurance and advice in support of UK exports large and small. Working across a wide range of sectors, UKEF can consider support for exports to over 200 countries.
Here UKEF share how they were able to successfully help a UK exporter reduce risk, continue operating and avoid losing an important customer in the face of economic pressures in their export market.
When Gloucester-based GR Lane lost their private sector non-payment insurance for its buyer in Greece, they had to reduce the amount of business they did. UKEF stepped in to provide export insurance cover, which reduced the risk of the company losing business in an important market.
GR Lane had been selling its Greek buyer around £700,000 worth of herbal remedies and vitamins each year for around 20 years when, in 2012, its private insurance provider decided that the Greek economy had become too risky and declined further cover.
GR Lane started to make herbal remedies and dietary supplements in 1930. The company now supplies pharmacies, supermarkets and independent retailers in the UK and Europe, with 25 per cent of its business being overseas, mainly in Greece and Poland. Its best-known products are the cold-relief mixture Olbas Oil and the herbal sleep aid Kalms.
Paul Whatley, Finance Director at GR Lane, said:
Greece is an important and steady market for us. We had a £1 million policy for this contract, but this was reduced to £750,000 in 2011 and withdrawn in 2012. We secured a few orders in 2012, but on a cash up-front basis and only a quarter of the usual size. This affected trade and our relationship with the buyer. We approached UK Export Finance, who helped us to apply for an export insurance policy.
GR Lane applied to UKEF for an Export Insurance Policy, which insures an exporter against the risks of non-payment by the customer. It can cover up to 95 per cent of these costs. In October 2012 UK Export Finance offered GR Lane cover of up to £570,000 against the Greek buyer being unable to pay.
The cover started in December 2012 and GR Lane pays the premiums every time it sends an order to Greece. This arrangement will continue until private sector insurers consider Greece to be a good risk once more. Having secured its European trade, the company is now expanding into South America.
More information on the Export Insurance Policy
The Export Insurance Policy insures an exporter against the risk of not being paid under an export contract or of not being able to recover the costs of performing that contract because of certain events which prevent its performance or lead to its termination.
Criteria for eligibility are:
- the exporter must be carrying on business in the UK
- the buyer must carry on business overseas
- if the duration of the contract is less than 2 years, we are unable to offer cover if the buyer is in a country belonging to the European Union, or in certain other high income countries (Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland and the United States of America) – this restriction does not currently apply to Greece
- the exporter must demonstrate an inability to obtain credit insurance from the commercial market.
UK Export Finance is the UK’s export credit agency. They help UK businesses realise their ambitions for international expansion, working to help them access the export finance they need to grow.