The challenge: Multi-million-pound transactions
The logistical challenges are significant when dealing with overseas territories. In a post-COVID world, just getting a face-to-face meeting is more problematic than it used to be, with different quarantine requirements in different countries. It can also be difficult to obtain the right work visas, or knowing who to speak to at an embassy, when your starting point is a Google search. Many companies simply don’t have the resources or expertise to deal with the administrative burden, which takes up valuable time that could be spent focused on other priorities.
There are also financial challenges to overcome. In Mechatherm’s case, when dealing with multi-million-pound contracts and giant multinationals, the scale of the numbers involved is alarming. Mechatherm’s bank wanted it to deposit funds in a security account, and with no large parent company in the wings to provide support, there were huge implications for cashflow. There is also the question of foreign exchange risk. Mechatherm could be sourcing materials from five or six countries for a project in a different territory altogether. Funds might be coming in at payment milestones over a one-to-two- year period. Any move in exchange rates could potentially be fatal for a business, when working with such huge numbers
The solution: Tailor-made fx risk strategies
Mechatherm received the advice and guidance it needed on exporting from the Department for Business and Trade (DBT). With a named contact who was extremely responsive, they found it was easy to find out who to call in an embassy or what the fast-track route was to get work visas granted. The DBT also helped with applying for funding to partly fund overseas business trips, and the Bank Guarantee Support Scheme helped to free up cashflow and allow Mechatherm to forge more aggressive deals with clients.
Mechatherm also found support for managing its fx exposure through Convera, who provide support with strategies tailor-made for the large- scale, long-term, multi-currency projects that characterized Mechatherm’s business. Freed from the limits imposed by the bank, they were able to hedge much larger amounts, and with no need to deposit funds in a security account, cashflow was much more fluid.