Manufacturing News

Exporting hurdles lowered

ANUFACTURERS who recognise the numerous sales opportunities for their products in other parts of the world, but are not sure how to manage their finances for export or need additional work ing capital should read on.

Whether exporting to New Zealand or Newfoundland, the need for dependable working capital support is critical if the venture is to be a financial suc cess.

To assist Australian exporters, the Government’s export credit agency, EFIC, has recently devel oped two such products that are distributed by 3 parties.

One involves a recent agree ment between EFIC and Travelex. It provides eligible exporters with higher foreign exchange trading limits without the need for additional security from the exporter.

The new EFIC/Travelex’s Foreign Exchange Facility Guarantee allows Travelex cus tomers to expand their hedging programs; thereby protecting their profits.

Melbourne- based GP Graders, Australia’s largest designer and manufacturer of produce handling equipment, is taking advantage of the scheme with Travelex providing a hedg ing limit that has now been increased by 50% with the EFIC Foreign Exchange Facility Guarantee

After not previously hedging its offshore sales, with no lines of credit for foreign exchange, the company is now utilising Forward Exchange Contracts to manage the foreign exchange risks associated with their export contracts.

Richard Lim, Financial Controller at GP Graders, said with 75% of its products now being exported, predominantly to South America (contracts in US$) and Eastern Europe (con tracts in Euros), this was a criti cal move.

“We are now protected against currency movements,” Lim told Manufacturers’ Monthly.

He admits some currency movements have worked in the company’s favour. “We have had some bumper years, but it can quickly go the other way.

“For example, when we costed a contract with the Australian dollar at 91c to the US$, which then fell to 79c, we lost a lot of money on the deal. We quickly realised then we had to do some thing to protect our profits.

“With machines costing $600,000 upwards, we don’t want to commit ourselves to contracts and maybe end up making the machine for nothing. Tracking currencies is very important,” Lim said.

Andrea Govaert, EFIC’s execu tive director for SMEs, says the new scheme broadens the ways in which EFIC can help exporters manage the risks of international trade.

“Designed to assist small and medium-sized businesses, the guarantee protects their export business from loss due to events beyond their control, and helps SME exporters move into global markets,” she said.

For more information call Travelex on 1800 730 400, or go to www.travelexbusiness.com/au.

Working capital finance

EFIC has also developed an exporting capital guarantee scheme which facilitates access to additional working capital through the exporters’ bank.

At this stage, ANZ has signed up to the facility, but other banks are expected to follow soon.

The agreement will support the bank’s exporter clients with overseas contracts and/or investments and subsidiaries who require incremental finance to fill orders.

ANZ’s global head of trade & supply chain, Mark Evans, said the working capital guarantee supports financing requirements before and after shipment across a wide range of industries covering both goods and certain services.

“The guarantee facility will assist small-to-medium-sized businesses with their export finance needs,” Evans said.

Typically, the scheme is applicable for companies who find they don’t have enough working capital to deliver on new export contracts, especially large one-off contracts.

For example, the company might be short of funds to hire more staff, buy raw materials, manufacture the product, or deliver the goods to the buyer.

The scheme can support a single export contract or multiple export contracts with different buyers.

For more information call EFIC on 1800 093 724, or go to www.efic.gov.au.

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