Between the lines: Navigating overseas markets

Scotland’s exports are booming. In the year to March, overseas sales from Scotland were worth almost £33 billion, an increase of nearly 13 per cent on the previous 12 months.

The Made in Scotland brand is creating opportunities, says Walls. Picture: Contributed
The Made in Scotland brand is creating opportunities, says Walls. Picture: Contributed

In the first quarter Asia and Oceania accounted for almost a quarter of all of Scotland’s exports by value. As more consumers around the world prioritise the quality and provenance of their food, strong demand for salmon, gin and – of course – whisky helped the value of Scottish food and drink sales overseas reach a record £1.4bn.

The Made in Scotland brand is creating opportunities, but businesses that trade overseas get more from exporting than just extra revenue streams. Exporters, particularly those who trade with a number of countries, tend to be more resilient to geopolitical risks and more profitable than those who only trade at home.

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Fortunately there are three key steps firms can take to ensure their exporting journey is as smooth and successful as possible. First, ensure that the new market is right for your product or service. Latvia, for example, is one of Scotland’s biggest food and drinks export markets per capita – with an average annual spend of £62 on our food and drink. Although it’s a much larger market per capita than Ireland – where the average spend is £47 a year – Latvia isn’t necessarily a better market for all exporters as it depends on where the demand lies.

At Bank of Scotland, we have worked with the Department of International Trade to develop our international trade portal which is full of valuable data like this – information on who’s buying overlaid with business knowledge means firms can research their next move before trying to make a sale.

Second, ensure you are dealing with reliable firms. There is always more uncertainty trading with new partners in new territories so do your due diligence while reassuring potential clients that you can be relied upon to deliver on time and to budget.Researching a new market will help with this, but many businesses will also want to use letters of credit from a bank or other forms of guarantee to vouch for their credentials overseas. Credit insurance can also mitigate the impact of anything going wrong once you start trading.

Finally mitigate a possible working capital squeeze. Shipping goods across borders takes time and typically customers take longer to pay – all squeezing an exporters’ working capital.

Export finance can help plug this gap by advancing cash for a portion of the invoice as soon as it is verified, giving certainty of payment and access to the cash required to pay extra staff or buy additional raw materials.

There are clearly huge export opportunities for Scottish businesses and following these steps will help to capitalise on opportunities without succumbing to some common risks.

- Colin Walls, regional trade director at Bank of Scotland