Currency movements cost UK SMEs over £10 billion a year
09/Sep/2014 • Currency Updates•
Expanding overseas is the perfect way to grow a business, especially for an SME. International trade, however, holds a number of risks, which can lead to substantial additional cost if they are not given due consideration.
The risks involved in currency exchange can go largely unnoticed, that is, until your business suffers directly from the impact of volatility. Underestimating the currency markets can have a devastating effect on your bottom line, but this can easily be avoided if you employ the right risk strategies and market insight.
Ebury has estimated that British SMEs have lost over £10bn in the past 12 months because of deficient risk management with regard to their currency exposure.
“The past year represents a missed opportunity for SME leaders,” comments Enrique Diaz, Chief Risk Officer at Ebury. “We need to see more SMEs empowered with the correct skills and knowledge to navigate international markets.”
“Having the ability to trade and pay a supplier in their local currency is extremely beneficial and can give the customer a competitive edge. Whilst banks may seem like an obvious choice, they can be reluctant to provide the level of service that SMEs require. That is where alternative service providers can prove more beneficial and it is certainly worthwhile for SMEs to review the available options.”
We have created a white paper that explains the ‘5 Major Foreign Exchange Risks’ your business might be making and how you can adopt a strategy to avoid them. Each risk is framed according to the type of company most likely to be affected and is followed by a clear strategy to tackle the risk, by either minimising the problem or avoiding it entirely.
Finally, you will be able to take away a set of questions that you need to ask your brokers, bankers and financial teams to make sure your risk exposure is as low as it can be.