If you run a small to medium sized business (SME) you probably already feel like you’re trying to keep a million plates spinning at once – add international trading in to this and ensuring none of them fall can seem like impossibility. When you take the step to begin trading across borders, it’s understandable to feel like you’re exposing your business to a lot of risk: what the laws of your country may protect your business against, the laws in the company you are trading with may not. Thankfully, banks such as HSBC offer a number of services, from business credit cards to important export services, designed to support SMEs as they grow their business abroad. Let’s look at those services and how they could benefit your business.
Business credit cards are essential if you’re trading internationally, or have representatives who frequently make trips abroad. A credit card bearing a Visa or Mastercard shield can be expected to be accepted at millions of outlets all over the world, so whether it’s being used to pay for purchases located overseas online or on the phone, or simply by an employee on the move, there’s no need to worry about exchanging currency and losing pennies in the conversion process. Although these tiny amounts might not seem like much on the surface, they quickly add up. Of course one of the most obvious benefits to a business credit card is the protection it offers you against identity fraud – if the card is ever ghosted, costs can be reclaimed from the issuing bank.
If you are importing or exporting internationally, protecting your cash flow as well as your supply chain will be of paramount importance.
For importers, import services such as documentary credits, documentary collections and shipping guarantees can go a long way to protect small businesses. Documentary credits mean a bank takes the risk out of importing product or produce: the bank will offer to substitute its own credit in place of yours on the condition that the exporter submits a number of required documents within a predetermined time frame. Payment to the exporter is then made upon presentation of these documents, safe guarding your cash flow. Documentary collections follow a similar philosophy, but rather than the bank extending its credit it simply acts as an intermediary, releasing import documents to you upon payment, or promise of payment, to your supplier.
A shipping guarantee is for those times when your goods arrive ahead of the shipping documents required to release them. In this instance a bank can produce a shipping guarantee that will allow you to take control of the goods without these documents. This saves you from having to pay storage fees while you await the arrival of the shipping documents. It’s also vital if you are awaiting receipt of time-sensitive or goods that get spoiled easily.
Exporters have access to similar services, but they could also benefit from export loan. Pre-shipment finance on manufacturing or packing can aid in easing cash flow, while post-shipment finance is an advance against a shipment you have already made rather than having to wait for the importer to pay, allowing you to begin preparation of your next shipment before receiving payment for the one already in progress.
For SMEs looking to move in to international markets, banks that specialise in supporting these businesses are indispensable to your protecting your cash flow and nurturing your future growth.
