Steel Services Direct Limited case study
Steel Services Direct Limited: One of the first companies to sign a deal under the Export Working Capital Scheme
In 2011, the UK Government launched the Export Working Capital Scheme to give the country’s export community access to vital funds. In September 2012, Steel Services Direct became the first NatWest client to sign a deal under the scheme.
Managed by UK Export Finance, previously the Export Credits Guarantee Department (ECGD), the Export Working Capital Scheme was introduced to help businesses access working capital for specific export contracts, before and after shipment.
The scheme’s launch came at a critical time. While a growing number of UK businesses recognised that exporting to the world’s emerging markets offered the best hope for economic recovery, many of these businesses have found it increasingly difficult to source the capital to capitalise on overseas opportunities. To compound the problem, UK banks have become increasingly risk averse.
According to Ian Fletcher, International Manager, Transaction Services UK, NatWest: “The principal benefit of the Export Working Capital Scheme is that it allows a UK exporter to source essential working capital from its bank to support an export transaction − even if its bank might not have the risk appetite to fund the full amount.”
Steel Services Direct was ideally placed to take advantage of the scheme. Based in the West Midlands, the business was established in 2000 by John Bradburn, who has been working and exporting overseas since the 1980s. “We specialise in manufacturing very high quality steel plate through various steel mills in Europe for clients worldwide, primarily in the pressure vessel, engineering and mining industries,” explains John. “In this case, the contract involved supplying a client in South Africa with pre-formed steel plate. Previously, I financed this contract through our normal cashflow. This time, we were looking for a flexible, cost-effective alternative to fund this export opportunity. Because the client needed the plate for routine maintenance, we had time to raise funds using the Export Working Capital Scheme.”
John first learned about the scheme at a NatWest Export Breakfast Seminar run by Ian Fletcher in Birmingham last April. Among those attending was Victoria Martin, Head of the Short-Term Products Branch, UK Export Finance. “We originally banked with NatWest when we started the business and returned to them about five years ago because their export expertise is so strong,” notes John. “The enthusiasm and experience of Ian’s team combined with their links to UK Export Finance were instrumental to achieving our aims. We would certainly use the scheme again.”
Working closely with John and his colleagues, Ian and his team structured an innovative preshipment working capital deal that allowed Steel Services Direct to buy the materials it needed to deliver the South African contract. Signed with the support of a 50% guarantee from UK Export Finance, it became the first deal of its type finalised by NatWest under the Export Working Capital Scheme.
As Ian explains, the advantages of the scheme benefit bank and client alike. “NatWest came away with a solidly structured deal that gave us clear sight of the suppliers we were dealing with, when they needed to be paid and when we would receive the repayments. Steel Services Direct received the funding they needed to deliver a contract on spec and on schedule.”
- NatWest helped client to secure first deal under the Export Working Capital Scheme
- The scheme offered Steel Services Direct a flexible and cost-effective alternative to fund a specific export project
- The Bank structured an innovative pre-shipment working capital deal that allowed Steel Services Direct to buy the materials it needed to honour the order it had committed to