Export finance: how to fund an export order before your customer pays

Export finance covers the gap between paying to make and ship an export order and being paid for it, often months later. UK limited companies can use pre-shipment funding, finance against the export invoice, letters of credit, bonds, or credit insurance. Most of it is arranged through a bank, often backed by UK Export Finance.

Worth knowing: UK Export Finance rarely lends to a UK exporter directly. It guarantees up to 80% of a bank's facility, and 16 participating lenders can grant that guarantee themselves on facilities up to £10m per exporter (General Export Facility, GOV.UK, updated 23 June 2026). So the first conversation is with your bank, not with UKEF.

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What export finance is, and the gap it fills

Export finance is the set of funding and insurance products that cover the stretch between paying to produce and ship an export order and being paid for it. Trade finance is the wider family, which covers importing and domestic trade too.

You pay suppliers, staff, freight, and duties in the first few weeks. Your customer pays weeks or months later, once the goods have crossed a border and the paperwork has cleared. The money you need in between is working capital, and export finance is how exporters raise it.

Trade finance helps a company trade at home or abroad; export finance is the part that helps it sell overseas. If you are paying overseas suppliers rather than selling to overseas customers, trade finance is your subject.

Export finance products divide by when you need the money:

• Before you ship, to build the order
• After you ship, while your customer takes their payment terms
• Alongside both, to protect you if your customer doesn't pay

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Funding the gap before you ship

Pre-shipment finance pays for an order while you are still building it, lent against a confirmed purchase order rather than an invoice, because there is nothing to invoice yet.

The costs arrive in a run, almost all before anything leaves your warehouse:

• Materials and manufacturing
• Packaging, labelling, and storage
• Insuring goods in transit against loss or damage
• Transport, freight, and customs documents
• Licences and accreditations for the destination market

A bank can fund this as a trade loan or a purchase order facility, repaid when your customer pays. UK Export Finance guarantees up to 80% of the credit risk on that kind of facility through its Export Working Capital Scheme, which covers both the pre-shipment and post-shipment legs of one contract. Lenders want a firm order from a creditworthy buyer and clear delivery terms; a letter of intent usually isn't enough.

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Funding the gap from shipment until your customer pays

Post-shipment finance advances cash against your export invoice once the goods are on their way, so you are not waiting out your customer's payment terms. Export invoice discounting, export factoring, and a bank facility backed by UK Export Finance all do this job.

This is the stage exporters tend to underestimate. The goods have gone, the invoice is out, and the money that paid for them has gone too. A 60-day or 90-day term on top of a few weeks in transit can leave a sizeable share of your turnover sitting in someone else's accounts payable.

Three routes advance cash against an overseas invoice finance ledger:

• Export invoice discounting advances most of the invoice when you present the shipping documents, and you carry on collecting from your customer.
• Export invoice factoring advances the money and hands collection to the factor, which helps when nobody is chasing payment in your customer's time zone.
• A UKEF-backed facility under the Export Working Capital Scheme funds the same receivable where your bank wants the government to share the risk.

None of them advances the whole invoice. The lender holds a balance back until your customer pays, and how much you get up front depends on your customer's credit, their country, and the terms you agreed.

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Letters of credit and the bonds a buyer may ask for

A letter of credit is your buyer's bank promising to pay you once you present documents that match the contract, so payment turns on the paperwork as much as on the goods. A contract bond runs the other way: your bank promising your buyer that you will deliver.

Under a letter of credit, the bank pays against compliant documents: the bill of lading, the invoice, the certificate of origin, and whatever else the credit specifies. Get a date or a description wrong and it can refuse them and charge a discrepancy fee. Bonds are often required under international contracts to assure your buyer you will meet your obligations (UK Export Finance), and issuing one normally ties up cash as collateral.

UKEF's Bond Support Scheme guarantees up to 80% of a bond's value, with no maximum per bond and no maximum or minimum term, so your bank can release that collateral back to you.

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What UK Export Finance can do for a limited company

UK Export Finance is the government's export credit agency. It guarantees up to 80% of a bank's facility or bond rather than lending to you, and the General Export Facility is the product most small limited companies qualify for.

UKEF is a ministerial department, established in 1919 as the world's first export credit agency, and its stated purpose is ensuring no viable UK export fails for lack of finance or insurance (GOV.UK). It stands behind your bank, so the bank can lend or issue a bond it would otherwise decline.

The General Export Facility is the one to ask about first. It guarantees 80% of the facility while the lender keeps 20% of the credit risk, runs up to around £25m with terms up to five years, and isn't tied to a single export contract. UKEF sets no minimum business size, so a small limited company can use it.

You pass its turnover test if either of these is true:

• In any one of the last three financial years, at least 20% of your annual turnover came from UK export sales.
• In each of the last three financial years, at least 5% of your annual turnover came from UK export sales.

You also need UK premises, UK employees, UK National Insurance or corporation tax, and goods or services produced from the UK. A company that imports finished goods and re-exports them untouched will usually fail that last condition.

That last row matters more than it looks: the Export Development Guarantee gets listed next to the others in a lot of guides, but its floor puts it out of reach for a company reading this page (GOV.UK, updated 24 August 2026). UKEF's direct lending goes to overseas buyers buying British goods, not to you.

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Export credit insurance, and where UKEF cover stops

Export credit insurance pays out when your overseas customer doesn't, and private insurers write most of it. UKEF's Export Insurance Policy covers up to 95% of a loss, but only where a private insurer has already turned you down.

It covers buyer insolvency, non-payment, a contract cancelled before you ship, and political events that stop the money reaching you (Export Insurance Policy, GOV.UK, updated 27 January 2026). It doesn't cover a loss caused by a dispute you haven't settled with your customer, or the goods in transit, which needs cargo insurance. Credit insurance is also called trade credit insurance, and it does a second job: it often decides whether an invoice financier will fund an overseas debtor at all.

The gate most readers don't see coming is geography. UKEF is barred from short-term export credit insurance, meaning a risk horizon under 24 months, in all EU member states, Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, and the USA, which are treated as marketable risks the private sector should cover. Selling into Germany or the United States on short terms, you want a private insurer or a specialist broker.

For buyers in emerging and developing markets, UKEF is a realistic option. Its Small Export Builder opens with a credit limit of up to £25,000 and steps up in 50% increments to a maximum of £100,000 as your customer's payment record builds.

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Start with your bank, not with UK Export Finance

Apply through your bank or another participating lender, not through UKEF, for the General Export Facility, the Export Working Capital Scheme, and bond support. Export insurance is the only one you apply for directly.

Sixteen lenders participate in the General Export Facility, among them Barclays, HSBC UK, Lloyds, NatWest, Santander UK, and Virgin Money. They hold delegated authority up to £10m per exporter, so the bank can grant the guarantee itself where the criteria are met, which UKEF says shortens response times.

A sensible order to work through:

1. Talk to your own bank's trade finance team. For most of the UKEF schemes they are the only way in.
2. If the bank's appetite is the problem rather than your business, ask them to structure the facility under a UKEF guarantee.
3. If you need cover against your customer rather than cash, go to a credit insurer or broker first, and to UKEF only if they decline.
4. If you need money before any facility can be arranged, a commercial lender is quicker, at a price.

UKEF offers a free consultation with a regional export finance manager, worth taking before you commit. Expect to produce the export contract or order, recent accounts and bank statements, and the shipping and customs paperwork for the order being funded.

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What export finance looks like on one order

On a £60,000 export order with 60 days of payment terms, most of the money leaves in the first month and none comes back until the third. What you are financing is the peak funding need, which is a fraction of the order value.

These figures are illustrative rather than a quote.

Two things follow. You need to finance £38,500, not £60,000, so a facility sized on the order value is the wrong size. And the costly stretch is the last one, the terms you agreed to, which is the variable you control when you write the contract rather than when you chase the invoice.

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The advantages and disadvantages of UK export finance

The advantage of UK export finance is access: a government guarantee lets a bank lend or issue a bond it would otherwise decline, and insurance covers a customer who doesn't pay. The disadvantages are that you still have to be creditworthy, the cost sits inside the bank's margin, and whole markets are shut out of UKEF insurance.

What it gives you:

• A facility or bond a bank wouldn't offer unsupported, because UKEF carries up to 80% of the risk.
• Cash released from collateral you had tied up behind a bond.
• Cover for a customer in a market private insurers won't touch.
• Longer terms than an unsecured facility, up to five years on a General Export Facility.

Where it costs you, or stops:

• A guarantee isn't a loan. The lender keeps 20% of the credit risk, so your company still has to be creditworthy and a lender still has to want the exposure.
• The guarantee fee is charged to the bank and reaches you inside the interest margin, so compare total cost rather than the headline rate.
• Access runs through a panel. If none of the 16 participating lenders wants the deal, the guarantee doesn't change that.
• Some of it is closed to you by market or by size: UKEF insurance is barred on short-term sales to the EU, the USA, and Japan, and the Export Development Guarantee starts at £25m.
• On medium and long-term export credit agency loans, the OECD arrangement caps support at 85% of the contract value, with 15% paid by your buyer (Bills and Notes Guarantee, GOV.UK).
• Borrowing in sterling against an invoice in dollars or euros leaves you carrying the currency movement.

Premiums and guarantee fees are set case by case rather than published, so the only way to learn your cost is to have the deal priced.

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Where an iwoca Flexi-Loan fits while you wait to be paid

An iwoca Flexi-Loan can cover the wait between shipping an order and being paid for it, which is the one part of export finance iwoca does. It is a business loan with flexible repayment options, not a letter of credit, a bond, or credit insurance.

You have shipped the order and the invoice is out. Your supplier, your freight forwarder, and your staff have all been paid, and your customer still has weeks of agreed terms to run. Nothing is wrong with the business; the money is arriving in the wrong order.

Morris Yudu runs TDSS UK, which loads containers for UK exporters and ships them to West Africa. Transit took about four weeks, his invoice went out two weeks after loading, and payment landed a week or two later: six weeks between doing the work and seeing the money. He now pays up front to clear and store the goods, loads the container, and invoices the same day, which brought the wait down from weeks to days.

'I'll be thrilled if we do two times a month,' he says. 'That shows we're getting back to when I was on it properly.'

Our Flexi-Loan is designed with small businesses in mind. It has flexible repayment options, you can borrow £1,000 to £1 million, repay monthly over one to five years, with interest charged only on what you have drawn and only for the days you hold it, and no fee for repaying early.

One final point. A Flexi-Loan won't make your overseas customer pay, and it isn't a letter of credit, a contract bond, or credit insurance. If your worry is whether the money arrives at all rather than when, credit insurance or a letter of credit is the answer, and borrowing against an invoice you may never collect makes the problem bigger.

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Export finance: common questions

What is forfaiting, and when would you use it?

Forfaiting is selling a bank-guaranteed bill of exchange or promissory note from your buyer to a forfaiter for cash now, without recourse, so the forfaiter takes the risk that your buyer doesn't pay. It suits one-off capital-goods sales on credit of 180 days or more.

UKEF's Bills and Notes Guarantee backs the same kind of deal on contracts typically between £1m and £30m.

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Are there export grants rather than loans?

UK Export Finance provides guarantees and insurance, not grants. Grant support for exporting comes through the Department for Business and Trade's export support service and, in some regions, local growth hubs.

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How long does an export finance application take?

How long an export finance application takes depends on the size of the facility. Participating banks can grant a General Export Facility guarantee themselves up to £10m per exporter, which UKEF says shortens response times, while larger or more complex deals go to UKEF underwriters and take longer.

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What happens if your overseas customer doesn't pay?

Credit insurance and a letter of credit are the two routes that cover non-payment. UKEF's Export Insurance Policy covers buyer insolvency, non-payment, and political events, but not a loss caused by a dispute you haven't resolved with your customer.