In 2017, Newland Engineering won an export contract with a buyer in Switzerland for 14 conveyor machines to be installed in a soy-bean processing plant the company was setting up in Bangladesh. For a company with an annual turnover of £2 million, the £390,000 contract was an important opportunity.
Prepayment needed to ensure cashflow
Newland’s conveyors are custom-designed and built to suit the needs of each customer, meaning that each order requires a different production process. Newland usually requests a partial advance payment in order to cover the costs of buying the parts and materials prior to contract completion, but overseas buyers can be wary of providing money upfront.
Without prepayment, the cost of procurement would put real pressure on Newland’s cash flow. Complicating matters further, the export contract included a penalty clause which required delivery to a tight deadline, meaning the company had little time to find alternative funds. As it had only recently moved banks, Newland didn’t yet have an overdraft facility set up.
Loan and bond guarantees secure deal
Newland got in touch with UK Export Finance which worked with Santander to find a solution. Under its Export Working Capital and Bond Support Schemes, UKEF provided 80% guarantees on both a working capital loan and a performance bond.
Thanks to our support, Newland had the cash it needed to fulfil the contract successfully and on time. The deal’s success allowed the company to secure a significant stream of revenue and importantly support jobs back here in the UK, as all of Newland’s business and manufacturing operations, for both domestic and overseas sales, are carried out at its Manchester HQ.
Lynn Kerfoot, Managing Director of Newland Engineering, said:
As a manufacturer, we are exposed to peaks and troughs in our business – so securing big orders like this is really important. We’re really grateful to UKEF as without its offer of support, we may not have been able to secure the cash we needed to buy the parts and deliver within deadline.
Kevin Ledwith, Export Finance Manager for the North West for UK Export Finance, said:
UK Export Finance is here to make sure UK exporters can access the finance and support they need to sell internationally.
Newland is a specialist in its field and I’m proud UKEF helped the company make the most of the strong international demand for its products. UKEF works closely with the private sector, and as our first time working with Santander to support exporters in the North West, this is a landmark deal for UKEF as well.
About Newland Engineering
Newland Engineering has been manufacturing specialist conveyors for loading vehicles for over half a century. The company has been exporting since the early 1980s, and with customers in more than 90 countries and over half of its business coming from abroad, selling overseas has been vital to its success.