Banking | Barclays W
ith over 100 projects in place, the UKTI High Value Opportunities programme is an exciting
prospect for UK businesses. For some, participating in an HVO will be their first foray into operating internationally. For others, an HVO could mean tendering for, and delivering on, significantly larger contracts than they have previously. Having the right financial support is critical to the success of the project - businesses are likely to need access to more working capital, as well as strategies to mitigate risk, and they may even need to consider the financial needs of their supply chain.
In this feature, we explore some of the financing considerations that will help you plan your approach to an HVO and help you to secure the funding you need to succeed. As well as giving our perspective, we asked Peter Budd, a Director at Arup, an independent professional services firm specialising in design, consultancy and engineering, to share his insight and experience of the HVOs programme.
Choosing the right HVO for you It is important to choose the HVO
which plays best to your company’s strengths. “Clients who have focused on a viable opportunity and present a comprehensive business plan are best placed to secure the right financial support from their bank”, says Gary Griffiths, Barclays’ Head of Trade and Working Capital, London. To ensure that you are choosing the right HVO, understanding the full scope of the project and your business’ role in it is a crucial first step. This process should involve detailed research on the project itself as well as the market that it is in. Many HVOs are based in emerging markets, so desk research is a good starting point, but it can also be worth commissioning bespoke research by an export specialist. By engaging UKTI at this stage you will be able to benefit from the wide range of research and expertise that they offer. Your bank can also be a good source of information, particularly where it has an on-the-ground presence in the market that you are looking at.
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‘To ensure that you are choosing the right HVO, understanding the full scope of the project and your business’ role in it is a crucial first step.’
Auditing your business’ capabilities
Once you have got to grips with the opportunity, the second step is to conduct an honest and objective assessment of your business’ current performance. This should include looking closely at your internal capacity, both in terms of resources and manpower, to deliver on the commitment effectively, promptly and profitably. The audit should also go a step further to consider your supply chain, including factors such as how reliant you are on any one supplier, how financially secure your suppliers are and your contingency plan should your suppliers be unable to deliver. Arup’s HVO experience includes
projects across Brazil, India, China and other key markets. In Peter Budd’s role as Chair of the Airports Advisory Council, working closely with UKTI, he sees the importance of having the right supply chain in place to deliver on HVO projects. “In aviation there are a small number of specialist suppliers who we work with, however in other industries accessing the right suppliers can be a real challenge. I would encourage businesses looking to supply into HVOs to involve their suppliers and financial partner from the beginning.” This audit can help you to
understand if you are ready to maximise this opportunity and could identify areas in your business that need further development. If it reveals that internal capacity might be a challenge it is worth considering
bidding for the project in partnership with another organisation, or looking for HVOs where there is a large UK-based contractor that you could support instead. If financial challenges present themselves, having an initial conversation with your bank can be beneficial.
Building your plan When it comes to planning your
approach you should consider how you are going to take advantage of the opportunity and devise strategies for overcoming the challenges of that particular market. “At this stage a short conversation with professional advisers could prove invaluable”, says Gary Griffiths. “Accountants, lawyers, bodies like UKTI, The British Chamber of Commerce, The Institute of Export and HMRC are likely to have relevant experience that you can draw on.” Following your background research, it is essential to develop an understanding of how easily your product or service will translate to the new market at the planning stage. At a practical level, you will need to consider local consumer preferences, local product standards and regulations, as well as the costs should there be a need to adapt the product or service. For example, in Zambia it is a legislative requirement that all transactions involving local goods and services are invoiced in the local currency, Kwacha, which can complicate international trade. Another layer of complication, and potentially cost, is added when dealing with non-English speaking countries and appointing a translator or local consultant could be necessary. Logistics planning is a major
part of an HVO. International transport can be complicated and getting it right depends on the agreements with suppliers and customers. By using the correct Incoterms (standard trade terms) you can make this a smoother process. These terms determine the responsibilities of each party, for example who is responsible if the goods are lost or damaged and where delivery is considered to take place.
Particular risks in the market may also shape your approach. In some emerging markets bribery and
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