Access to Finance: Group Rhodes seizes international opportunity
GROUP Rhodes, one of the UK’s largest original equipment manufacturers in its field, did not let complex finance hurdles stand in its way when looking to deliver a major £9m contract in Asia.
The West Yorkshire-based group of seven companies supplies machinery for sectors including aerospace, metalforming, nuclear, off shore oil and gas and heavy ceramics, was commissioned to design and develop a one-stop-shop assembly line in Asia.
The 18-month-long contract involved four of Group Rhodes’ seven companies.
The group needed to source finance for staff salaries, supplier payments and other running costs. It also needed to provide its client with an Advance Payment Bond worth £2.7m and a Performance Guarantee worth £450,000.
“Doing business overseas comes with its challenges, not least of them finance,” says Mark Ridgeway, managing director at Group Rhodes.
“A bank guarantee reassures our clients that we have the resources to complete a contract, but this usually comes off our overdraft facility. So it doesn’t really provide us with any additional cash flow.”
The group’s bank worked closely with export cedit agency UK Export Finance, which works helps Yorkshire and Humber’s small and medium-sized businesses boost their export potential, and together they used the Bond Support Scheme (BSS) to approve a facility in which UKEF guaranteed 50% of the Advance Payment Guarantee’s value and 50% of the Performance Guarantee.
This gave the group enough cash flow to fulfil the contract and to reassure the buyer.
UKEF complements the financial support available to exporters from the private sector, providing insurance and guarantees to banks that help share the risks of exporting to new or developing markets.
Local export finance advisor Richard Clarke says the organisation’s aim is to ensure that companies wanting to export goods are not limited by a lack of finance or insurance and to help companies realise their export potential.
