28/01/2009 - 22:00

Ticking the boxes with EFIC

28/01/2009 - 22:00

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BARCLAYS Engineering chief executive Terry Barclay has faced down a number of challenges during his 30-year career in international trade, from knowing the ground rules to liquidity problems and getting paid on time.

Ticking the boxes with EFIC
USEFUL: Terry Barclay says EFIC has helped his business\'s overseas dealings

BARCLAYS Engineering chief executive Terry Barclay has faced down a number of challenges during his 30-year career in international trade, from knowing the ground rules to liquidity problems and getting paid on time.

In the current economic malaise, Mr Barclay says, companies would be well advised to use the services of the federal government to aid in borrowing and avoiding risk.

He recommends using the Export Finance and Insurance Corporation, which financed and guaranteed his company's involvement in the Qatar Gas Project 18 months ago.

"I would definitely go to EFIC to shore up my finances, obtain a guarantee for borrowing money and ensuring a regular cash flow," Mr Barclay told WA Business News.

"If you're going to do this, using EFIC helps you make sure you're doing it the right way. They're not going to back you if your company or project isn't viable, so it's a way of knowing you've done your homework and ticked all the boxes."

Mr Barclay said the biggest problem in exporting internationally was ensuring prompt payment for the delivery of project.

"Getting paid. That's always the biggest difficulty," he said.

Another pitfall was failing to ensure your company and those you were dealing with overseas had a shared understanding of the rules of doing business.

An example of this was when Barclays offered to store equipment for 30 days free of charge.

The other company involved understood this to mean the entire project had been delivered free of charge.

"There are lots of instances where you get those sorts of mixed messages," Mr Barclay said.

Mr Barclay expects the international trade environment will get tougher over the next 18 months, and companies will find it more difficult to borrow from banks, which had become extremely risk averse.

EFIC managing director Angus Armour said there was often a risk that exporters would not get paid, or would not get paid for a long time.

"The biggest concern with exporting internationally is 'how will I get paid for what I've done'," he said.

Mr Armour said the global credit crunch was severely constraining credit markets and limiting the capacity of banks to supply credit.

As a result, EFIC was experiencing a much greater demand for its services in delivering financing and insurance to Australian companies exporting overseas.

"We're finding we're having to step up and do more to help businesses in these times," he said.

Mr Armour said the current economic downturn was affecting business in several ways.

Not only was demand increasing, as more companies sought assistance for finance, but the need for more insurance was also arising as the risks of doing business overseas escalated.

"Some companies' risks are also increasing. Companies or entities have to make a profit year to year. Now they have to spend some time recalibrating the risk of making that profit," he said.

Mr Armour said EFIC was well aware of the effects of the general economic slowdown and contraction.

"In the past year, we've certainly enjoyed a resurgence in resources, and now we're having to recalibrate and revisit our approach," he said.

"Firms overseas are reconsidering their decisions to buy or invest. This has an impact on us as an export nation."

Mr Armour said the best part of the job was seeing how EFIC was able to help small companies grow.

"The truly exciting and value added activities from our perspective are the success stories where a smaller company becomes truly global," he said.

"A sustainable, durable company that can ride out the tough economic times."

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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